Military

The Department of Defense (DoD) has released details on major defense acquisition program cost, schedule, and performance changes since the December 2011 reporting period.  This information is based on the Selected Acquisition Reports (SARs) submitted to the Congress for the December 2012 reporting period.  SelectedAcquisitionReportSummaryTables2012.pdf

          SARs summarize the latest estimates of cost, schedule and performance status.  These reports are prepared annually in conjunction with the 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 cost estimates provided in the SARs include research and development, procurement, military construction, and acquisition-related operation and maintenance.  Total program costs reflect actual costs to date as well as future anticipated costs.  All estimates are shown in fully inflated then-year dollars.

          The current estimate of program acquisition costs for programs covered by SARs for the prior reporting period (December 2011) was $1,617,549.2 million.  Final reports submitted for the annual December 2011 and for the March 2012, June 2012, and September 2012 quarterly exception reporting periods were subtracted.  Initial reports for the annual December 2011 and for the March 2012, June 2012 and September 2012 quarterly exception reporting periods were added.  Finally, the net cost changes for March 2012, June 2012 and September 2012 quarterly exception reporting periods were incorporated.

         For the December 2012 reporting period, there is a net cost increase of $39,617.7 million or +2.44 percent for the 78 programs that have reported previously in SARs.  This cost increase is due primarily to the application of higher escalation rates (+$21,816.4 million), a net increase in planned quantities to be purchased (+$21,615.6 million), and a net stretch-out of development and procurement schedules (+$436.3 million).  These increases were partially offset by net decreases in program cost estimates (-$2,561.4 million), engineering changes to hardware/ software (-$29.9 million) and reductions in associated support requirements (-$1,659.3 million).

New SARs

         DoD is submitting initial SARs for the following programs as of the December 2012 reporting period.  These reports do not represent cost growth.  The baselines established on these programs will be the point from which future changes will be measured.

 Summary Explanations of Selected[1]SAR Cost Changes

(As of December 31, 2012)

 Army:

AH-64E Apache New Build – Program costs increased $328.7 million (+15.3 percent) from $2,155.8 million to $2,484.5 million, due primarily to a stretch-out of the procurement buy profile (+$260.0 million).  Since Milestone C in September 2010, 46 of the 56 AH-64E New Build aircraft have been shifted outside the Future Year Defense Program to higher priority programs.  There were additional increases for other support (+$78.5 million) and initial spares (+$26.6 million) to reflect a revised Independent Cost Estimate by Cost Assessment and Program Evaluation (CAPE) in support of full rate production approval in March 2013.  These increases were partially offset by a quantity decrease of two Overseas Contingency Operations-funded aircraft from 58 to 56 aircraft (-$111.2 million) and associated schedule and estimating allocations* ($+46.3 million).

 AH-64E Apache Remanufacture – Program costs increased $1,791.9 million (+15.0 percent) from $11,968.3 million to $13,760.2 million, due primarily to reflect a revised Independent Cost Estimate (ICE) by CAPE in support of Full Rate Production (FRP) approval in September 2012 (+$1,339.5M).  There were additional increases for other support (+$347.8 million) and initial spares (+$151.0 million) to reflect the approved CAPE FRP ICE.

 UH-60M Black Hawk Helicopter– Program costs decreased $3,166.8 million (-11.0 percent) from $28,860.6 million to $25,693.8 million, due primarily to incorporation of Multi-Year VIII contracting with resulting cost savings (-$3,325.5 million), a net overall acceleration of the procurement buy schedule (-$123.7 million) and a reduction in engineering change orders (-$99.5 million).  These decreases were partially offset by revised escalation indices (+$394.0 million).

 Warfighter Information Network-Tactical (WIN-T) Increment 2 – Program costs decreased $1,323.9 million (-20.5 percent) from $6,461.3 million to $5,137.4 million, due primarily to a quantity decrease of 690 nodes from 2,790 to 2,100 nodes to align with the capability sets (-$1,115.8 million) and associated schedule and estimating allocations* (+$38.8 million).  Other decreases were due to the removal of the Armored Brigade Combat Team recurring A-Kit costs (-$150.8 million), a decrease in initial spares resulting from the decrease of 690 nodes (-$107.6 million), and decreases in fielding, new equipment training, and software maintenance resulting from 690 fewer nodes (-$83.5 million).  These decreases were partially offset by an increase due to revised escalation indices (+$82.7 million) and increases resulting from additional costs for follow-on operational test and evaluation; platform certification testing; initial operational testing; and joint command, control, communications, computers, intelligence, surveillance, and reconnaissance radio production qualification testing (+$70.4 million).

 Warfighter Information Network-Tactical (WIN-T) Increment 3 – Program costs increased $3,434.6 million (+23.8 percent) from $14,455.5 million to $17,890.1 million, due primarily to a procurement quantity increase of 404 nodes from 3,045 to 3,449 nodes (+$1,232.4 million) and associated schedule, engineering, and estimating allocations* (-$497.7 million), and a development quantity increase of 25 nodes from 39 to 64 nodes (+$158.2 million) for limited user testing.  Additional increases related to the increase of 404 procurement nodes include:  fielding, new equipment training and hardware end of life (technology refresh) (+$1,556.1 million), software licenses (+$230.9 million), initial spares requirements (+$99.5 million), and engineering change orders for hardware procurement (+$79.1 million).  There were other increases attributable to updates to the systems engineering and program management cost estimate (+$322.7 million) and the application of revised escalation indices (+$302.4 million).  These increases were partially offset by decreases resulting from descoping of the Point of Presence-Command and Modular Communication Node-Global Information Grid Interface (-$42.8 million) and a reduction in development engineering due to leveraging of the WIN-T Increment 2 design (-$42.5 million).

Navy:

CH-53K Heavy Lift Replacement Helicopter – Program costs increased $1,897.6 million (+7.1 percent) from $26,626.8 million to $28,524.4 million, due primarily to changing the cost estimating methodology from analogy-based to supplier bottom-up (+$1,796.6 million), use of commercial indices for materiel escalation costs (+$948.9 million), revised escalation indices (+$539.4 million), an increase in the production line shutdown estimate (+$120.7 million), and an increase in support equipment, repair of repairables, and spares costs (+$64.9 million).  These increases were partially offset by decreases in other support costs (-$664.0 million), initial spares requirements (-$589.0 million), and the application of new inflation indices (-$385.3 million).

 DDG 51 Arleigh Burke Class Guided Missile Destroyer– Program costs increased $3,896.8 million (+4.5 percnet) from $87,337.6 million to $91,234.4 million, due primarily to a quantity increase of two ships from 75 to 77 ships (+$2,686.5 million) and associated schedule, engineering, and estimating allocations* (+$1,271.3 million).  Additional increases were attributable to the application of revised escalation indices (+$738.1 million), incorporation of the Advanced Capability Build (ACB) 16 upgrades for improved radar and ballistic missile defense capability and electronic warfare (+$348.7 million), revised air and missile defense radar estimate to reflect near-term efficiencies and continued outyear support of Flight III integration (+$208.1 million), and procurement of ACB 16 baseline upgrades for DDG 119 and follow ships and additional updated Government Furnished Equipment (GFE) systems to resolve obsolescence and reliability issues (+$102.8 million).  These increases were partially offset by decreases resulting from revised estimates for ship construction and GFE associated with multi-year procurement (FY 2013 to FY 2017) and program efficiencies (-$715.7 million), the application of new outyear escalation indices (-$447.0 million), and adjustments for current and prior escalation (-$282.8 million).

 EA-18G Growler Aircraft– Program costs increased $2,023.9 million (+18.3 percent) from $11,060.3 million to $13,084.2 million, due primarily to a quantity increase of 21 aircraft from 114 to 135 aircraft (+$1,752.1 million) and associated schedule and estimating allocations* (-$60.7 million).  There were also increases in support costs for integrated logistics support/reliability demonstration, production engineering, and developmental testing) (+$306.6 million).

 Ground/Air Task Oriented Radar (G/ATOR)– Program costs decreased $912.1 million (-27.4 percent) from $3,325.9 million to $2,413.8 million, due primarily to a decrease in quantity of 12 systems from 57 to 45 systems (-$464.0 million) and associated estimating allocation* (+$0.9 million) and a revised cost estimate for anticipated production efficiencies associated with funded design investments (-$447.0 million).  Other decreases were attributable to a reduction in support costs (-$52.2 million) and initial spares requirements (-$12.9 million) resulting from investment in efficiencies and economic order discounts.  These decreases were partially offset by increases to the cost estimates for investments in the production efficiency initiative (+$33.3 million) and technology refresh assumptions and associated potential future change orders (+$18.8 million), and the application of revised escalation indices (+$27.5 million).

 Integrated Defensive Electronic Countermeasures (IDECM)– The IDECM program is comprised of two subprograms, Blocks 2/3 and Block 4.  Only the Blocks 2/3 subprogram had selected cost changes in the December 2012 SAR.

IDECM Blocks 2/3 – Subprogram costs increased $187.3 million (+11.3 percent) from $1,663.2 million to $1,850.5 million, due primarily to a revised estimate to reflect actual costs (+$122.0 million), a stretch-out of the procurement buy profile for the ALE-55 fiber-optic towed decoy from FY 2041 to FY 2045 (+$49.7 million), and revised escalation indices (+$25.1 million).

 Joint Precision Approach and Landing System (JPALS) Increment 1A  – Program costs increased $106.8 million (+10.7 percent) from $996.0 million to $1,102.8 million, due primarily to additional engineering effort for algorithm refinement and development of an alternate configuration for the JPALS Inc 1A ship system variant, resulting in a smaller footprint for air capable ships (small combatants) (+$84.5 million).  Additional increases were attributable to an extension of the procurement and installation profile from FY 2018 to FY 2020 (+$15.3 million) and a related increase in support costs (+$2.3 million), as well as a quantity increase of one system from 26 to 27 systems (+$7.5 million) and associated estimating allocation* (-$1.4 million).  These increases were offset by a decrease in initial spares requirements (-$1.5 million).

 Littoral Combat Ship (LCS)– Program costs decreased $3,485.0 million (-9.3 percent) from $37,440.5 million to $33,955.5 million, due primarily to the decision to purchase three fewer ships resulting in a quantity decrease from 53 to 50 ships (-$2,945.7 million) and associated schedule and estimating allocations* (+$150.0 million).  Additional decreases were attributable to the application of new outyear escalation indices ($-1,050.6 million), realignment of LCS in the 30-year shipbuilding plan in FY 2019 to FY 2034 (-$519.8 million), and adjustments to the seaframe requirements estimate in FY 2012 to FY 2018 (-$406.3 million).  These decreases were partially offset by the application of revised escalation indices (+1,216.4 million) and pricing changes for trainer and battle spare requirements (+$90.6 million).

 Multifunctional Information Distribution System (MIDS)– Program costs increased $325.8 million (10.8 percent) from $3,010.4 million to $3,336.2 million, due primarily to a quantity increase of 975 terminals from 5,258 to 6,233 terminals ($242.1 million).  There was also an increase to incorporate tactical targeting network technology into the MIDS Joint Tactical Radio System terminals ($74.8 million).

 Standard Missile-6 (SM-6)– Program costs increased $3,308.5 million (+51.2 percent) from $6,467.0 million to $9,775.5 million, due primarily to a quantity increase of 600 All Up Round (AUR) missiles from 1,200 to 1,800 (+$2,619.6 million) and associated schedule and estimating allocations* (-$79.5 million).  There were also increases in support costs (+$299.8 million) and initial spares requirements (+$120.0 million) resulting from the quantity increase and an extension of the procurement profile to FY 2024.  Additional increases were attributable to the application of new escalation indices (+$141.6 million), the loss of learning in the Future Years Defense Program and outyears due to a quantity reduction in FY 2014 (+$95.7 million), revised escalation indices (+$64.2 million), and the stretch-out of procurement buy profile from FY 2020 to FY 2024 (+$45.4 million).

 SSN 774 Virginia Class Submarine– Program costs decreased $1,428.8 million (-1.5 percent) from $93,276.2 million to $91,847.4 million, due primarily to a scheduling change in which a submarine that was to be purchased in FY 2020 will now begin construction in FY 2014 (the tenth ship of the multi-year procurement block buy) (-$1,845.3 million), the application of new outyear escalation indices (-$1,274.0 million), adjustments for current and prior escalation calculations (-$483.0 million), and a reduction in the estimate for the Virginia Class total ownership cost reduction program (-$133.0 million).  These decreases were partially offset by the application of revised escalation indices (+$1,794.8 million) and the addition of advance procurement in FY 2018 to fund class extension (+$591.8 million).

 V-22 Osprey Joint Services Advanced Vertical Lift Aircraft– Program costs increased $1,567.3 million (2.9 percent) from $53,494.5 million to $55,061.8 million, due primarily to a stretch-out of the procurement buy profile of 52 aircraft from FY 2018-2019 to FY 2020-2022 (+$1,008.2 million), the application of revised escalation indices (+$345.2 million), increases in other support costs due to the change in the procurement profile (+$131.3 million), and the addition of an improved inlet for increased Time on Wing (+$91.5 million).  Other increases were attributed to beyond-Future Years Defense Program costs for follow-on test and evaluation (+$90.9 million), revised estimates to reflect actual costs (+$68.6 million), updated estimates for government furnished equipment, engine, ancillary, and non-recurring costs (+$66.9 million), and incorporation of production shutdown costs (+$55.5 million).  These increases were partially offset by the application of new inflation indices (-$192.0 million) and adjustments for current and prior escalation (-$80.2 million).

 Air Force:

Advanced Extremely High Frequency (AEHF) Satellite– The AEHF program is comprised of two subprograms, Space Vehicles 1-4 and Space Vehicles 5-6.  Only the Space Vehicles 5-6 subprogram had selected cost changes in the December 2012 SAR.

AEHF Space Vehicles 5-6 – Subprogram costs decreased $510.4 million (-14.6 percent) from $3,488.2 million to $2,977.8 million, due primarily to a reduced estimate to reflect program efficiencies for production and launch operations for Space Vehicles 5-6 (-$507.1 million).  The savings were applied to higher Air Force needs.

 Evolved Expendable Launch Vehicle (EELV)– Program costs increased $35,717.0 million (+102.1 percent) from $34,968.1 million to $70,685.1 million, due primarily to a quantity increase of 60 launch services from 91 to 151 launch services (+$16,040.5 million) resulting from an extension of the launch manifest from FY 2018 to FY 2028 and the program life extension from FY 2020 to FY 2030 that was directed in Space Command's Strategic Master Plan (+$20,987.5 million).  These increases incorporate cost saving methodologies implemented in the revised contracting strategy, to include incentivizing the contractor, enabling the government to implement cost cutting initiatives during technical evaluations and contract negotiations,  improving insight into the contractors' costs, and enforcing better cost management.  These increases were partially offset by cost savings realized in the FY 2014 President's Budget Future Years Defense Program due to a revised acquisition strategy and other initiatives (-$1,671.6 million).

 Joint Air-to-Surface Standoff Missile Baseline (JASSM)– The JASSM program is comprised of two subprograms, JASSM Baseline and JASSM-Extended Range (ER).  Both subprograms had selected cost changes in the December 2012 SAR.

JASSM Baseline – Subprogram costs decreased $641.5 million (-18.0 percent) from $3,555.6 million to $2,914.1 million, due primarily to a quantity reduction of 447 missiles from 2,400 to 1,953 missiles (-$313.0 million) and associated schedule, engineering, and estimating allocations* (-$198.0 million).  There were additional decreases related to the movement of all support requirements from the JASSM Baseline subprogram to the JASSM-Extended Range (ER) subprogram starting in FY 2017, since the JASSM Baseline program ends in FY 2016 (-$210.9 million).  These decreases were partially offset by the reallocation of development work from the JASSM-ER subprogram to the JASSM Baseline subprogram (+$48.9 million).

JASSM-ER – Subprogram costs increased $653.6 million (+17.4 percent) from $3,750.5 million to $4,404.1 million, due primarily to a quantity increase of 447 missiles from 2,500 to 2,947 missiles (+$436.6 million) and associated schedule, engineering, and estimating allocations*
 (+$108.1 million).  There were additional increases in support, since the JASSM program will transition to an all JASSM-ER missile in FY 2017. All support funding from the JASSM Baseline program transitioned to the JASSM-ER program between FY 2017 to FY 2035 (+$193.5 million).

 DoD:

Ballistic Missile Defense System (BMDS)– Program costs decreased $1,124.3 million (-0.8 percent) from $133,271.0 million to $132,146.7 million, due primarily to a restructuring of the Aegis Standard Missile-3 (SM-3) Block IIB program (-$1,679.0 million), cancellation of the Precision Tracking Space Sensor (PTSS) program (-$1,171.7 million), an adjustment to the Aegis SM-3 Block IB missile ramp-up rates(-$466.0 million), and a FY 2012 reduction to Terminal High Altitude Area Defense (THAAD) interceptors to align with production capacity (-$104.5 million).  These decreases were partially offset by the application of revised escalation indices (+$382.5 million), additional ground-based interceptors to implement the Ground-Based Midcourse Homeland Hedge Strategy (+$591.8 million), advanced technology/risk reduction efforts (+$489.0 million), and establishment of the Common Kill Vehicle program (+$280.6 million).  There were additional increases for Sea-Based X-band (SBX) radar limited test support (+$145.7 million), the Iron Dome Missile Defense System (+$396.3 million), and AN/TPY-2 radar spares (+$159.6 million). [Note:  In addition to the cost changes above, $7,064.9 million ofdevelopment, procurement, and construction funding for FY 2018 was added to the BMDS program; previous reports limited total funding through FY 2017. This adjustment is not considered cost growth.]

 F-35 Joint Strike Fighter– The F-35 program is comprised of two subprograms, Aircraft and Engine.  Only the Aircraft subprogram had selected cost changes in the December 2012 SAR; however, the cost changes for the Engine subprogram are also provided.

F-35 Aircraft  – Subprogram costs decreased -$4,942.4 million (-1.5 percent) from $331,855.2 million to $326,912.8 million, due primarily to decreases in the prime contractor and subcontractor labor rates (-$7,853.3 million) and revised airframe and subcontractor estimates that incorporate the latest actual costs from early Low Rate Initial Production (LRIP) lots (-$1,121.3 million).  There were additional decreases to correct cost allocations between the aircraft and engine subprograms that were established in the December 2011 SAR (-$981.0 million), lower estimates of required risk for initial spares (-$698.3 million), other support reductions due to maturation of the technical baseline and further definition of customer requirements and Service beddown plans (-$1,032.9 million).  These decreases were partially offset by the application of revised escalation indices (+$7,016.4 million).

F-35 Engine – Subprogram costs increased $442.1 million (+0.7 percent) from $63,856.6 million to $64,298.7 million, due primarily to revised escalation indices (+$1,301.3 million), correction of cost allocations between the aircraft and engine subprograms (+$981.0 million), and a lower near-term ramp that extended completion from FY 2029 to FY 2032 (+$230.7 million).  These increases were partially offset by revised estimates to incorporate the latest actual costs from early LRIP lots (-$848.8 million), outyear offsets of new escalation indices (-$865.2 million), and lower estimates of required risk for initial spares (-$362.9 million). 

 * Note:  Quantity changes are estimated based on the original SAR baseline cost-quantity relationship.  Cost changes since the original baseline are separately categorized as schedule, engineering, or estimating "allocations."  The total impact of a quantity change is the identified "quantity" change plus all associated "allocations."