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No Surprises Among New Cost-Breach Programs

Mar. 30, 2012 - 05:08PM   |  
By CHRISTOPHER P. CAVAS   |   Comments
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Only three new Pentagon programs breached the critical Nunn-McCurdy cost growth threshold this year, the Defense Department says, and all new breaches were due to the programs being severely cut back or canceled.

Similar situations affected a number of other acquisition programs that showed significant cost changes over the past year.

The annual Selected Acquisition Report (SAR) summaries were released March 30, covering 83 weapon programs in various stages of production. Nunn-McCurdy breaches occur primarily when a program’s unit cost rises 25 percent or more, and can trigger a number of revalidation requirements or cancellation.

The three new Nunn-McCurdy breaches for 2011 are:

• The AIM-9X Block I air-to-air missile. The breach happened because procurement of Block I missiles was cut from 10,142 to 3,142 missiles as the program moved to Block II missiles. The reduction in the number of missiles to be bought drove the unit costs up 49 percent over the existing price baseline.

• The Avionics Modernization Program (AMP) for the C-130 transport aircraft, canceled in the 2013 budget request.

• The Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System (JLENS) radar system, which more than doubled its unit cost when the test program was cut from 16 to two systems.

Other programs experiencing unit cost hikes after cuts in the overall buy include the Navy’s Joint High Speed Vessel (JHSV) — cut from 13 to six ships — and the Air Force’s RQ-4 Global Hawk unmanned aircraft system, where acquisition of 21 Block 30 aircraft was cancelled.

The Navy’s CVN 78-class aircraft carrier program saw an increase of $2.23 billion, or 5.5 percent, in its overall cost, due, the Pentagon said, to revised escalation indices and estimates for non-recurring engineering, the dual-band radar, and variances in construction performance. The Navy has stated repeatedly that many fundamental problems with the program are long-standing in nature, many coming from earlier decisions to push too much new technology into the design before the costs were understood.

The F-35 Joint Strike Fighter program, as expected, also showed additional cost increases and was reported by the SAR in increased detail.

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