GAO: Defense should use industry techniques to manage weapons projects

Private sector management techniques could help the Pentagon rein in the cost of big-ticket weapons projects, according to a new report from the General Accounting Office. In the report, "Best Practices: Capturing Design and Manufacturing Knowledge Early Improves Acquisition Outcomes," (02-701) GAO surveyed how such firms as Caterpillar and General Electric manage big manufacturing projects to see how they avoid cost overruns-a problem that plagues many Defense weapons projects. GAO found that these companies try to minimize risk at each step in production. For example, Caterpillar doesn't start work on a new product until the design is complete, and tries to avoid basing projects on unproven technology. But, to win funding, the Defense Department often rushes into production of weapons systems before the design is complete, creating numerous problems for program managers. "In [Defense], incentives are centered on obtaining scarce funding on an annual basis in a competitive environment to meet predetermined and typically optimistic program schedules," the report said. "These incentives actually work against the timely capture of knowledge, pushing it off until late in the process to avoid problems that might keep a program from being funded." The production of the Air Force's cutting-edge F-22 fighter jet is a case in point, according to GAO. In 1995, the service declared the jet was ready for production, even though 75 percent of the plane's design work had yet to be finished. The result was several design flaws and delays. In 1999, military leaders staved off a congressional effort to cancel the over-budget project. Now, the F-22 requires excessive maintenance and is more expensive to manufacture than the Air Force had predicted. Other weapons projects fared better by relying on proven technology and putting off production until the design was complete. For example, production of the Navy's F/A-18 E/F Hornet fighter, a modification of an existing aircraft, is on budget and has stayed on schedule, according to GAO. The Pentagon's ability to develop new weapons will face increased scrutiny in coming years, as the Bush administration seeks more research and development funds for the department. The administration plans to request $700 billion for weapons system development over the next five years. The Defense Department agreed with GAO's findings.