GAO: 'Inconsistent' cost estimates plague DoD reports

Monday - 2/6/2012, 4:57pm EST

Cary Russell, acting director of defense capabilities and management issues, GAO

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As Pentagon budgets become tighter, the Defense Department is looking for ways to cut costs in weapons systems.

But the only way to make cuts is to know how and where money is being spent. Ostensibly, the full lifecycle-cost estimates for DoD's major acquisition programs are collected in the Pentagon's selected acquisition report — or SAR.

'Inconsistent practices'

The Government Accountability Office, which examined DoD's reporting process for its major weapons programs, called the SAR the "key recurring summary status report to Congress on the cost, schedule and performance of DOD's major defense acquisition programs."

But while DoD is required to report uniform information across major weapons systems, GAO found "a number of inconsistent practices," dealing with how life-cycle operation and support costs were reported.

Cary Russell, the acting director for defense capabilities and management issues at GAO, told In Depth with Francis Rose that operating and support costs play a large role in DoD acquisition spending.

"These are the long-term, life-cycle costs of a weapons system, that occur after it's been fielded," Russell said, including spare parts, fuel, maintenance and personnel.

About 70 percent of the total cost of a weapons system is tied up in operating and support costs, he said, which represents about $132 billion spent annually.

"So we were looking at the extent to which these cost reports provide consistent and reliable support-cost estimates to enable effective congressional oversight."

GAO analyzed the annual SAR reports for more than 80 major weapons systems from 2005 through 2010. Then, 15 programs were singled out for further review.

Harmful to oversight?

The inconsistent data GAO documented ranged from a lack of explanatory information, missing sources and the frequency with which reported costs were updated.

Sometimes, important data were simply left out, Russell said. For example explanatory information, which Russell called "narratives that provide context and background for understanding report costs" were often minimal at best, he said.

The lack of clear cost estimates can be particularly harmful in the beginning stages of an acquisition, Russell said. And it also complicates the oversight process undertaken by lawmakers.

"Without clear information on the long-lasting impacts of some of these estimates, it's difficult for [Congress] to be able to know when trade-offs are being made — such as designs are changed out or materials are changed — [and] what the implications are going to be for the operating and support costs. So as a result, they're unable to evaluate the full effects of decisions that are being made on these weapons systems early on."

GAO recommended the Pentagon clarify its reporting requirements. Acquisition officials should also incorporate best-practices into their report-making, Russell said, such as including major cost drivers in estimates and discussing how frequently cost estimates should be updated.

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