WASHINGTON — The estimated cost for procuring the Pentagon’s major weapon systems increased 10 percent in 2017, growing from $1.74 trillion to $1.92 trillion in projected costs.
Those numbers were released as part of the department’s annual Selected Acquisition Reports, released Tuesday. The SARs cover the 83 major defense acquisition programs that make up the largest programs managed by the former undersecretary of defense for acquisitions, technology and logistics.
However, that increase is not necessarily the result of problems within the acquisition programs, with the report starting that the cost increase is due in part to adding a new major program — the CH-47F Modernized Cargo Helicopter (CH-47F Block II) — to the SAR list, as well as increased quantities on various programs.
Only two programs had Nunn-McCurdy breaches, the government standard in judging unit cost increases, both from the Navy.
The Integrated Defensive Electronic Countermeasures (IDECM) Blocks 2/3 program suffered a critical Nunn-McCurdy breach, with an increase of almost 132.5 percent over the program acquisition unit cost. That is due primarily to quantity cuts on the Block 3 program, the result of the Pentagon shifting to another solution due to “threat changes” in the world.
Meanwhile, the littoral combat ship (LCS) mission modules (MM) suffered a significant Nunn-McCurdy breach, due again to quantity shortfalls. The Navy decided to cut the procurement plan of modules from 64 to 48, which naturally increased the unit cost.
The cost of the Pentagon’s biggest program, the F-35 joint strike fighter program, remained roughly the same – decreasing by about $350 million. The department now estimates that total acquisition costs for both F-35 air vehicles and its F135 engines will amount to about $406.1 billion.
“Overall, in 2017, the [F-35] development effort has stabilized with the delivery of full Block 3F Capabilities,” the report stated. “Operations and support cost estimates will be updated at Milestone C/Full-Rate Production, currently planned for April 2019.”
The majority of cost growth among programs within the Army are due to an increase in planned quantities and extensions of procurement timelines.
For instance, the Guided Multiple Launch Rocket System and the GMLRS Alternative warhead program costs increased to account for the service’s plans to buy an additional 52,760 rockets and extend procurement from FY24 to FY33.
Also, the Marine Corps is planning to buy more Joint Light Tactical Vehicles and the Army is going to buy 538 more Patriot Advanced Capability-3 Missile Segment Enhancement missiles.
The Missile Defense Agency’s Ballistic Missile Defense System (BMDS) program also saw a cost increase of $7.2 billion to account for major capability increases to include a discriminating radar for the Pacific theater, another radar for Hawaii and an additional 20 Ground-Based Mid-course Defense System Interceptors (GBIs) for silos at Fort Greely, Alaska.
The money also accounts for building two silos in Missile Field 1 at Greely to accommodate the new GBIs, six boosters to maintain 44 out of 64 deployed GBIs, and extending the time for the Sea Based X-Band radar to be deployed at sea.
Procurement increases of 100 more Terminal High Altitude Area Defense (THAAD) interceptors, 16 additional SM-3 Block IIA missiles and 62 SM-3 Block IB missiles also contributed to an overall BMDS program cost increase.
For the Air Force, the Joint Direct Attack Munition program showed the biggest cost growth of about $1.2 billion or almost 12 percent. The department now estimates acquisition costs will amount to about $11.4 billion.
However, that increase is due to an increase in the number of units the military plans to buy and not any technical problem. Most of the cost growth — about $911.3 million of the sum — could be attributed to a procurement increase of about 35,000 JDAM tailkits.
The report also stated that increased demand for JDAM production, growing requirements for “weapons instrumentation telemetry kits” for the Air Force, and revised Navy estimates also contributed to the rise in acquisition cost.
Other major cost increases were tied to GPS modernization. For example, the Operational Control Segment or OCX program — which will field new ground control stations for the next generation constellation of GPS satellites — grew about 12 percent to about $6.1 billion. The $665.3 million increase resulted from new requirements and an increased funding profile over the next five years.
The Military GPS User Equipment Increment 1 increased by $265.1 million, or about 23 percent. The new $1.43 billion projection aligns with the newly approved Milestone B cost estimate and further changes due to department-wide funding adjustments.
It will be interesting to track the cost of these programs in the coming year, as the 2018 figure will represent the first numbers under a push by the Pentagon to shift management of major acquisition programs away from AT&L and into the services.
While Ellen Lord, the undersecretary of acquisition and sustainment — one of two successor organizations to AT&L, which dissolved Feb. 1 — has said she will keep a few key projects under her direct oversight, she has made it a priority to hand day to day program management to the service level. As of Jan. 1 of this year, the Air Force had taken direct oversight of 21 programs, the Army 18, and the Navy 34.
Jen Judson, Defense News land warfare reporter, and Valerie Insinna, air warfare reporter, contributed to this report.
Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.
