_______________________________________________________________ _______________________________________________________________ Report Information from ProQuest January 24 2016 20:03 _______________________________________________________________ 24 January 2016 ProQuest Table of contents 1. COULD THE WEAPON SYSTEMS ACQUISITION REFORM ACT OF 2009 HAVE FIXED THE PROBLEMS THAT PLAGUED THE F-22 ACQUISITION PROJECT BACK IN 1981?................................... 24 January 2016 ii 1 ProQuest Document 1 of 1 COULD THE WEAPON SYSTEMS ACQUISITION REFORM ACT OF 2009 HAVE FIXED THE PROBLEMS THAT PLAGUED THE F-22 ACQUISITION PROJECT BACK IN 1981? Author: Gabriele, Thomas A ProQuest document link Abstract: The Department of Defense's ninety-six major defense acquisition programs were a combined $296 billion over budget. Of the many Department of Defense (DoD) major acquisition programs that have experienced significant cost growth, few have experienced increases to the degree of the Air Force F-22 fighter jet program. The problems with cost growth, however, are attributable to all of the services. This article will describe the provisions contained in WSARA and apply them retroactively to the F-22 procurement process. The Weapon Systems Acquisition Reform Act of 2009 was enacted with the aim of reforming DoD's processes for purchasing major weapon systems. The new law consists of three titles, which create a number of new acquisition positions and assign new responsibilities; provide for a number of specific policy goals, the most important of which are the mandatory termination provisions; and provide for a number of additional miscellaneous acquisition issues. Links: Check for full text in other resources Full text: Headnote The key to successful acquisition programs is getting things right from the start with sound systems engineering, cost-estimating, and developmental testing early in the program cycle. Programs that are built on a weak initial foundation, including immature technologies, inadequate development and testing, and unrealistic requirements, are likely to have big problems in the long run. I. INTRODUCTION At the close of the 2008 fiscal year, the Department of Defense's ninetysix major defense acquisition programs were a combined $296 billion over budget.2 Of the many Department of Defense (DoD) major acquisition programs that have experienced significant cost growth, few have experienced increases to the degree of the Air Force F-22 fighter jet program.3 The problems with cost growth, however, are attributable to all of the services. Senators Carl Levin and John McCain recognized the cost overrun problem and, on February 23, 2009, introduced the Weapon Systems Acquisition Reform Act of 2009 ("WSARA") to Congress in order to cure these budget problems. WSARA reforms the way DoD develops requirements for and purchases major defense acquisition programs.4 In offering this legislation, Senator Levin attributed the numerous and historical cost overruns to four flaws endemic to DoD acquisitions: "DoD acquisition programs fail because the Department continues to rely on unreasonable cost and schedule estimates, establish unrealistic performance expectations, insist on the use of immature technologies, and adopt costly changes to performance requirements, production quantities and funding levels in the middle of ongoing programs."5 Congress passed WSARA unanimously, and President Barack Obama ultimately signed it into law on May 22, 2009. 6 As for the F-22, its fate was sealed on October 28, 2009, when President Obama officially terminated the program.7 This Article will describe the provisions contained in WSARA and apply them retroactively to the F-22 procurement process. First, this Article will examine each of the new law's provisions and describe how they fit into the DoD acquisition process, critique three of the law's provisions and discuss how each is ambiguous and subject to future debate or abuse, and discuss why over-budgeted acquisitions may survive the law's mandatory termination provisions. Next, the Article will provide a background to the F-22 procurement, with specific emphasis placed on the areas of the project that experienced the most significant cost and schedule growth. Finally, the Article will apply the provisions of WSARA to the F-22 acquisition by applying the facts of the 24 January 2016 Page 1 of 29 ProQuest procurement to the new law and its requirements. When taking into account the increased oversight and congressional reporting requirements, the new law, as written, may have provided some well -needed oversight for the F-22 acquisition and helped control costs early in the process. While WSARA provides potential for reform, the key to controlling cost and schedule growth sits squarely on the shoulders of DoD personnel. The U.S. Congress has taken an interest in defense acquisitions over the past few years and has predictably generated numerous reporting requirements for major defense acquisition programs that experience budget overruns.8 While Congress has rightfully pointed the finger at DoD, it also has shown that it struggles when dealing with problematic programs. Some argue that Congress should have terminated funding for the F-22 program years ago,9 but such a decision may have been too sensitive in the political arena. The F-22 project supports jobs in forty-four states, and Congress continued to fund the project despite the increased costs.10 WSARA, however, does provide DoD acquisition officials with the potential to address and tackle up front some of the issues that plague defense acquisitions. The success of this new law is dependent upon DoD living up to its responsibilities by taking charge of major defense acquisition programs at their inception. If DoD lives up to these responsibilities, reform can happen. II. THE WEAPON SYSTEMS ACQUISITION REFORM ACT OF 2009 Title 10 of the United States Code, part G?? chapter 144, governs the procurement of major defense items for DoD and the Armed Forces.11 Congressional efforts to reform DoD's acquisition processes have generally been accomplished by modifying Title 1 0 via section VIII of the National Defense Authorization Act.12 These modifications usually address specific procurement issues as opposed to large-scale overhaul.13 The DoD, in turn, implements the statute via the Federal Acquisition Regulation, Defense Federal Acquisition Regulation Supplement, service component supplements, DoD Instructions, and individual service component instructions.14 WSARA was Congress's most recent attempt to overhaul DoD's processes for the acquisition of major defense weapon systems.15 The new law is composed of three specific titles.16 Title I, entitled "Acquisition Organization," establishes a number of new directors within DoD and assigns each specific responsibilities relevant to his or her particular field of expertise.17 It also assigns new responsibilities to a number of current DoD officials.18 Title II, entitled "Acquisition Policy," provides for a number of specific policy goals, to include mandatory termination provisions for select problematic acquisition programs.19 Finally, Title III, entitled "Additional Acquisition Provisions," provides for a number of miscellaneous acquisition issues, to include bonuses, earned-value management, and additional reporting requirements.20 By creating these titles, Congress anticipates that DoD will become better and more efficient at acquiring major defense weapon systems. WSARA can provide for reform within DoD at the early stages of an acquisition's life cycle. This success, however, is dependent on the successful implementation of the law's three titles, each of which the next sections address in turn.21 A. Title I: Acquisition Organization Section 101 establishes the position of Director of Cost Assessment and Program Evaluation ("DCAPE").22 The secretary of defense ("SECDEF") is to designate a candidate to be appointed by the president and confirmed with the advice and consent of the U.S. Senate.23 The DCAPE shall serve as principal advisor to the SECDEF and other DoD officials and provide independent advice on DoD's acquisition programs, policies, costs, and matters.24 The goal of this section is to apply stringent cost estimating in order to reduce cost variance by improving the planning, execution, and oversight of major defense acquisitions early in the acquisition timeline. In an effort to control costs, the law mandates the DCAPE accomplish certain enumerated requirements.25 Specifically, the DCAPE shall provide unbiased, accurate, and realistic cost estimates and cost analysis for DoD's major defense acquisition programs.26 In doing so, the DCAPE shall issue cost analysis policies and requirements, as well as conduct independent cost estimates and cost analyses for all major defense acquisition programs in which the Under Secretary of Defense for Acquisition, Technology, and Logistics is the 24 January 2016 Page 2 of 29 ProQuest Milestone Decision Authority ("MDA") in advance of Milestones A and B certification, low-rate initial production certification, full-rate production certification, and any critical cost growth certifications.27 The DCAPE shall also issue guidance for the proper selection of confidence levels28 in major defense acquisition programs, comment on any methodology issues, and review the confidence levels for all major defense acquisitions.29 Finally, the DCAPE is required to file an annual report with Congress assessing the previous year's activities.30 Prior to WSARA, the Director of Program Analysis and Evaluation and the Cost Analysis Improvement Group handled cost estimates at the DoD level.31 WSARA eliminates these positions and transfers all functions and personnel to the office ofthe DCAPE.32 This new director will also perform a number of new functions, with the requirement for cost estimates to be prepared prior to Milestone A certification being of particular importance.33 These changes and new requirements were presumably enacted to consolidate these functions at the DoD level with the intent to ensure that cost assessments are generated early, remain independent, and are based on conclusive cost data. It will also generate greater accountability at the DoD level. In sum, these requirements require the DCAPE to provide realistic cost estimates, as well as manage and review cost and performance data throughout the life cycle of the program. The successful completion of these responsibilities will help control cost issues and concerns in real time as they arise. Section 1 02 establishes the positions of Director of Developmental Test and Evaluation ("DDT&E") and Director of Systems Engineering ("DSE").34 Both directors are appointed by the SECDEF from a pool of individuals with the required expertise in each respective field, and each will report to the Under Secretary of Defense for Acquisition, Technology, and Logistics.35 The DDT&E and DSE will work closely with one another to ensure that DoD test and evaluation policies, guidance, and activities are consistent with and fully integrated into the DoD's systems engineering and developmental planning processes.36 While each director is required to fulfill a number of individual duties, the meat of this section lies in the new joint guidance requirements, which aim to identify design flaws and problems early in the acquisition process.37 Specifically, DDT&E and DSE must implement joint guidance on the development and tracking of detailed and measurable performance criteria for systems engineering master plans and developmental test evaluation plans; the use of developmental test and evaluation criteria to measure performance objectives; and systems in place to memorialize performance criteria and objectives for major defense acquisition programs.38 Finally, a joint annual report shall be filed with congressional defense committees detailing the prior year's activities.39 Prior to enactment of WSARA, program managers generated testing and engineering plans, and the Director of Operational Testing and Evaluation for DoD approved the plans for all major defense acquisition programs.40 WSARA consolidated all functions at the DoD level and added additional requirements that focus on the early stages of an acquisition. Satisfying these requirements will help ensure that reasonable developmental test and evaluation and system engineering criteria and metrics are developed, published, and monitored early in the process. Section 1 02 also places responsibilities on each of the services acquisition secretaries. Each secretary is required to develop plans to ensure adequate planning, personnel, testing, and training have been appropriated for developmental testing, training, and system engineering for each major acquisition.41 Each secretary shall also provide a report that discusses the implementation of these plans, as well as any additional resources required to carry out departmental responsibilities.42 This section places an affirmative duty on each service to consider developmental testing and system engineering early and often in the acquisition process, follow prescribed guidance, train and monitor relevant personnel, and report departmental activities. Section 103 directs the SECDEF to designate a senior departmental official to conduct and oversee "performance assessments43 and root cause analysis44 for major defense acquisition programs."45 This newly established director ("DPARCA") is required to issue policies and guidance governing the conduct of performance assessments and root cause analyses and evaluate, monitor, and advise on performance metrics 24 January 2016 Page 3 of 29 ProQuest used to measure cost, schedule, and performance of major defense acquisitions. The DPARCA will also advise on performance issues at various stages of the procurement, if necessary. However, the DPARCA will advise on all programs that achieve critical cost growth.46 Finally, the DPARCA will be required to submit an annual report to congressional defense committees detailing the previous year's activities.47 By continually assessing problematic acquisitions, the DPARCA can analyze the symptoms for cost growth, advise program managers on solutions, and generate policies that will help address programs that experience cost, schedule, or performance growth. Section 104 requires the newly created Director of Defense Research and Engineering ("DDR&E") to periodically assess "the technological maturity and integration risk of critical technologies" of DoD's major defense acquisition programs.48 In addition, the DDR&E, in consultation with the DDT&E, "shall develop knowledge-based standards against which to measure the technological maturity and integration risk of critical technologies at key stages in the acquisition process for purposes of conducting the reviews and assessments of major defense acquisition programs required" by this new law.49 Finally, the DDR&E is required to satisfy a number of congressional reporting requirements.50 Prior to WSARA, program managers were responsible for technology readiness assessments.51 The DDR&E will now prescribe relevant policy, as well as analyze technological integration risk at various key points in a particular acquisition with the hopes of identifying and addressing concerns critical to a program prior to continuing with the acquisition. Elevating these responsibilities to the DoD level will help ensure unbiased reviews are performed, as well as generate greater accountability. Section 105 directs the Joint Requirements Oversight Council ("JROC")52 to seek input from combatant commanders prior to identifying joint military requirements.53 It also directs the comptroller general to submit a report to Congress detailing the implementation of this section's requirement.54 The successful implementation will help ensure that combatant commanders are equipped with the resources they truly need.55 In sum, Title I creates a number of new directors and assigns each specific responsibilities in his/her fields of expertise. A number of provisions also expand the responsibilities of a number of current DoD officials. The language in the various provisions makes it clear that the continuous monitoring and analysis of major defense acquisition programs early in the process should help DoD stay on top of problems that arise in the life cycle of a program. The many reporting requirements also will keep both Congress and DoD officials abreast of problems as they arise. B. Title II: Acquisition Policy Title II provides for the transition from DoD's acquisition personnel to acquisition policies. Section 201 addresses trade-offs among cost, schedule, and performance objectives in major defense acquisition programs.56 Specifically, this section requires the SECDEF to "ensure that mechanisms are developed and implemented to require consideration of trade-offs among cost, schedule, and performance objectives as part of the process for developing requirements for Department of Defense acquisition programs" in which the JROC is the validation authority.57 These requirements will help ensure that DoD personnel consider all alternative requirements, as well as ensure that personnel in charge of planning, budget, and performance consult with each other to consider how decisions affect each department. Doing so will help ensure that a proposed acquisition is necessary, feasible, and affordable. While this section generally formalizes things already being done within DoD, it does mandate that cost and schedule be considered prior to developing performance estimates.58 It also places the new, affirmative duty upon the DCAPE to spearhead the development of study guidance for the analysis of alternatives for new requirements in which the JROC chairman is the validation authority.59 This responsibility used to fall on the shoulders ofthe MDA, who is now required to certify that an analysis of alternative programs has been accomplished in accordance with DCAPE's guidance, and that the proposed program is affordable.60 These additional requirements will also help ensure that DoD is considering alternative programs in accordance with the director's guidance. 24 January 2016 Page 4 of 29 ProQuest Section 202 is dedicated to ensuring competition throughout the life cycle of an acquisition.61 This section directs the SECDEF to ensure that the acquisition strategy for each major defense acquisition program includes measures to secure competition at both the prime and subcontractor levels throughout the life cycle of the acquisition, as long as they are costeffective.62 Competition is the goal ofthe federal procurement system, and this section strengthens current practices by requiring detailed documentation of rationales for planned subcontracting tiers, as well as increased surveillance of contractor compliance.63 The satisfactory execution of these requirements should not only increase competition, but also prompt contractors to become more innovative and efficient. Section 203 reinforces the importance of prototyping for major defense acquisition programs.64 Specifically, it requires that acquisition strategies provide for competitive prototyping prior to Milestone B approval unless waived by the MDA.65 In the event a competitive prototyping waiver is issued, a prototype must still be produced prior to Milestone B approval if the life-cycle benefits of the prototype exceed its cost and if production is consistent with achieving national security objectives.66 If competitive prototyping is waived, the MDA is required to file a report with congressional defense committees and the comptroller general.67 This section emphasizes the importance of prototyping, and if a program's MDA chooses to utilize the prototype waiver, the MDA must articulate the reasons to Congress. This new requirement for prototypes should, in theory, help DoD better understand the system, ensure its readiness, and identify and address potential issues, which would help in selecting the most advantageous system. Section 204 outlines actions required to identify and address system problems in major defense acquisition programs prior to receiving Milestone B approval.68 When notified by the Program Manager that a program is experiencing cost or schedule delays of twenty-five percent or more, the MDA shall identify the root causes for the cost or schedule growth and identify appropriate performance measures for the remainder of the program, or terminate the program.69 This review is similar to a Nunn McCurdy analysis.70 Congress shall be notified of all programs that survive termination.71 These requirements force program managers and the MDA to identify cost and schedule growth early in the technology development phase and consider termination prior to Milestone B approval. The continued development of a problematic program triggers congressional reporting requirements, which will force the MDA to take a hard look at these programs and address the root causes that are plaguing it. It also will help ensure problematic programs are filtered out early in the acquisition process. Section 205 prescribes additional requirements for major defense acquisition programs.72 Under this section, the MDA shall receive a preliminary design review and conduct a formal post-preliminary design review assessment prior to the issuance of Milestone B approval.73 There were no prior requirements for the MDA to receive a preliminary design review prior to Milestone B approval. This section also directs the MDA that waived normal Milestone B certification requirements for a particular program to perform an annual review of the program and determine the extent to which the program is currently meeting any of the waived requirements.74 Finally, the DPARCA is now required to conduct an annual review of all current major defense acquisition programs that have exceeded critical cost thresholds and received waivers, and assess each for potential performance successes.75 These new provisions will ensure that the MDA reviews preliminary design reviews for all programs, as well as monitors and assesses all problematic programs that received milestone certification waivers. Section 206 provides guidance on critical cost growth76 in major defense acquisition programs.77 In the event a program's acquisition or procurement unit cost increases by a "percentage equal to or greater than the critical cost growth or threshold,"78 the SECDEF shall determine the root causes of the critical growth and terminate programs that do not warrant a waiver.79 For programs that warrant a waiver of termination, the SECDEF shall submit a report to Congress certifying that the program is essential to national security, there are no acceptable alternatives, new cost estimates have been determined to be reasonable, the program is of a higher priority than others whose funding will be reduced, and the management structure of the program is sufficient to 24 January 2016 Page 5 of 29 ProQuest manage and control costs.80 As such, the specific presumption of termination for programs that suffer critical cost or schedule growth is subject only to a limited waiver. In the event the SECDEF elects to continue with such a program, the SECDEF must also restructure the program to address the root causes for the identified cost growth, rescind the most recent milestone approval, require a new milestone approval prior to continuing with the acquisition, identify any funding changes, and conduct regular reviews of the program.81 If the SECDEF terminates a project pursuant to the section, the SECDEF must submit a report to Congress explaining the reasons for the termination, any alternatives considered, and any plans in place to meet the current joint military requirement.82 This presumption of termination is significant, as the SECDEF will have to take a close look at all programs that experience critical cost growth, determine whether a case can be made for continued performance, address the root causes of growth, and report those findings to Congress. In 1982, Congress added a provision to the 1983 National Defense Authorization Act that is referred to today as the Nunn McCurdy Amendment.83 The Nunn McCurdy Amendment mandated two changes in DoD's acquisition processes in an effort to address over-budgeted programs.84 The first provision requires DoD to inform Congress of any major defense acquisition programs that experience a more than fifteen percent increase in either procurement unit cost or total program acquisition unit cost, or a more than thirty percent increase in the original baseline estimate.85 The second provision requires DoD to terminate any major defense acquisition program that experiences a more than twenty-five percent increase in total program acquisition unit cost or a more than fifty percent increase in the original baseline estimate, unless the SECDEF provides Congress with a certification that the program is essential to national security, no suitable alternatives exist, new unit-cost estimates are reasonable, and the management structure of the program is adequate.86 WSARA strengthens Nunn McCurdy when addressing programs that survive the law's mandatory termination provisions. Under section 206, programs that exceed the critical cost threshold are presumed to be terminated.87 Programs that warrant waivers of termination are required to be restructured to address the root causes of cost growth. Specifically, the most recent milestone approval must be revoked, new milestone approval must be required before making any new contract actions or exercising actions under an existing contract,88 and all funding changes must be fully reported, including any reductions of funding in other programs.89 These requirements will force the SECDEF to scrutinize problematic programs and present a detailed justification for continuing a program, especially when considering the effects of the milestone termination. Section 207 addresses organizational conflicts of interest ("OCIs") in major defense acquisition programs.90 This section directs the SECDEF to revise the Defense Supplement to the Federal Acquisition Regulation to provide uniform guidance for OCIs by contractors in major defense acquisition programs.91 Congress did not define any principles or criteria, and only laid out four circumstances in which OCIs could occur. While it is unclear as to what form the new guidance will take, the intent of this section is to help DoD identify conflicts of interest early on in an effort to maintain integrity in the procurement process. In sum, Title II delineates a number of policy considerations aimed at making DoD's major defense acquisitions more accountable. The successful implementation of the various provisions will help ensure that estimates are generated early in the process, alternatives are analyzed, trade-offs occur as necessary, prototypes are produced, and problematic programs are monitored and scrutinized. The presumption of termination is also significant, ensuring that only necessary programs receive a waiver. C. Title III: Additional Acquisition Provisions Title III addresses ancillary issues not included in other titles. Specifically, section 301 authorizes awards to DoD personnel who demonstrate excellence in the acquisition of products and services.92 Section 302 amends the Duncan Hunter National Defense Authorization Act for Fiscal Year 2 009 by requiring four additional elements to a previously enacted earned value management study93 Section 303 requires DoD to assess and consider the effects that a program's termination will have on the industrial bases that are supporting the system 24 January 2016 Page 6 of 29 ProQuest in question.94 Finally, section 304 requires the comptroller general to provide Congress with unbiased information concerning the cost and financial concerns of major defense acquisitions.95 The successes of these provisions will allow Congress to reign in and analyze additional issues related to the acquisition of major weapon systems. III. WEAPON SYSTEMS ACQUISITION REFORM ACT CRITIQUE There are three sections of WSARA that could prevent this law from having any real and meaningful influence on DoD's major defense acquisitions. As discussed in detail below, these particular provisions are loosely worded and therefore subject to various interpretations. Any future expansions or changes to the law should address these concerns. A. Section 203: Prototyping Requirements The first potential obstacle is section 203. Section 203 allows the MDA to waive prototyping requirements if "the cost of producing competitive prototypes exceeds the expected life-cycle benefits ... of producing such prototypes," or the DoD would be unable to meet critical national security objectives without such a waiver.96 In the event a waiver is authorized, the MDA must provide congressional defense committees with written notice within thirty days that provides a rationale for the waiver.97 This section reemphasizes the importance of prototypes, and if a program's MDA chooses to utilize the prototype waiver, the MDA must articulate the reasons to Congress. The waiver provision provided in this section is vague and subject to potential abuse, as it provides no definition or criteria to assist the MDA in determining when a program's continuance is critical to national security interests. While some discretion might be a good thing, it also can be problematic, as MDAs could abuse this provision when a program may be unworthy of a prototyping waiver. Additionally, this provision does not require concurrence from the SECDEE It would seem logical that decisions of this magnitude filter through the SECDEF prior to congressional notification. As such, any amended law should provide further guidance as to what national security interests are and establish actual, measurable criteria for supporting any such conclusions. If there are current sources of law or other sources that have already provided a satisfactory level of detail, they should be specifically incorporated or referenced. Finally, all waivers should require concurrence from the SECDEE These changes would help ensure that only worthy programs receive prototype waivers. B. Section 204: Identification and Address of Systematic Problems Another potential obstacle is section 204. Section 204 outlines actions required to identify and address system problems in major defense acquisitions prior to receiving Milestone B approval.98 If a particular program is experiencing critical cost growth, the MDA must submit a report to Congress that contains either a written certification of the necessity of the acquisition or a plan for terminating the acquisition's development or Milestone A approval.99 If the MDA deems the acquisition to be necessary despite the cost and schedule delays, the written certification shall be generated with information to support a finding that (I) the program is essential to national security; (II) there are no alternatives to the program that will provide acceptable military capability at less cost; (III) new estimates of the development cost or schedule, as appropriate, are reasonable; and (TV) the management structure for the program is adequate to manage and control program development cost and schedule.100 This section gives the MDA great responsibility and discretion in determining which programs should continue despite the cost and schedule delays. The main concern with section 204 deals with the four requirements the written certification shall contain. Turning first to whether or not a program is essential to national security, this language provides the MDA with the broad discretion to determine what is in the national security interests, as no definition or criteria are provided for in the law. The second requirement that there are no suitable alternatives at a lesser cost is also unclear, as the money and time invested in a particular acquisition may be so substantial that starting from scratch with new contractors may never provide a cost advantage. Given the challenges in the design and 24 January 2016 Page 7 of 29 ProQuest production of revolutionary weapon systems, arguing that the time and money invested be ignored and that the project be re-competed may be impracticable. Such vagueness undoubtedly provides the MDA with great discretion in satisfying this requirement. The final two requirements are equally broad, as the provisions provide no additional information as to what would make new estimates of the development cost or schedule reasonable, nor do they provide standards to help satisfy the requirement that the management structure for the program be adequate to manage and control program development cost and schedule. Without any concrete criteria, the requirements of this section are extremely broad and subject to abuse. Congress should consider amending section 2 04 in a future law to strengthen these weaknesses. First, as discussed above in section 203, any amended law should provide further guidance as to what national security interests are and establish actual, measurable criteria for supporting any such conclusions. Additionally, any amended law should discuss how "acceptable military capability at less cost" should be defined and measured. In doing so, Congress should provide procedures for how DoD should account for funds already expended on a major defense acquisition that has exceeded preplanned budgets when analyzing alternatives. Based on the funds already expended, it may be cheaper to continue with the current project that has worked out some of its issues than to invest more money in a new project. Additional guidance would be beneficial to DoD personnel. Further guidance also would be helpful when determining what would make new cost and schedule estimates reasonable and what type of management program would suffice as adequate. Finally, the SECDEF should be required to sign off on any waiver documentation prior to its submission to Congress. This section as written seems to provide the MDA with great discretion that could potentially keep many over-budgeted acquisitions alive. Strengthening this section could go a long way in identifying and extinguishing costly and unnecessary acquisitions. C. Section 206: Critical Cost Growth The final potential obstacle is section 206. Section 206 is similar to section 204 in that it focuses on critical cost growth in major defense acquisition programs. Section 204 addresses critical cost growth prior to Milestone B certification, whereas section 206 addresses per-unit cost increases, which generally occur post-Milestone B certification. Both sections call for the termination of programs that have exceeded the critical cost threshold, and the waiver requirements are very similar. Under section 206, in the event a program's acquisition or procurement unit cost increases by a "percentage equal to or greater than the critical cost growth threshold," the SECDEF shall research and determine the root causes of the critical growth and assess (1) the projected cost of completing the acquisition without modifying any of the original requirements, (2) the projected cost of completing the acquisition when reasonably modifying the acquisition's original requirements, (3) costs associated with pursuing alternate systems, and (4) the extent to which the growth will affect funding for other programs.101 The SECDEF is required to terminate programs that experience critical growth unless (1) the program is essential to national security, (2) there are no acceptable alternatives, (3) the new cost estimates have been determined to be reasonable, (4) the program is of a higher priority than others whose funding will be reduced, and (5) the management structure of the program is sufficient to manage and control costs.102 The presumption of termination is important, as the SECDEF will have to take a hard look at all programs that experience critical cost growth, determine whether a case can be made for continued performance, and report those findings to Congress. This section provides the SECDEF with the broad authority to continue programs that have exceeded critical cost growth so long as they are essential to national security. As with sections 203 and 204, this section does not define national security interests or provide any references that may assist the SECDEF in making a national security determination. While this broad authority may afford well-needed flexibility, it also may lead to abuse. Any future amendments should provide definitions and measurable criteria that the SECDEF may use in identifying programs that are truly in the interest of national security. Section 206 does, however, provide some positive aspects. First, the presumption of termination is significant, 24 January 2016 Page 8 of 29 ProQuest and will require the SECDEF to clear a high hurdle when continuing with a program that has experienced critical cost growth. If the SECDEF chooses to continue with such a program, the SECDEF is required to not only examine the reasons and possible cures for a particular project's growth, but also examine the extent to which the project, if continued, would affect the funding for other DoD programs. The decisionmaking process is more arduous when making such a recommendation, and the SECDEF may be required to make some difficult tradeoffs with respect to other projects. Finally, this section requires the SECDEF to rescind the most recent milestone approval and reseek milestone approval prior to continuing with the project.103 This requirement could be of significance to the future of problematic acquisitions, so long as Congress enforces this provision. With jobs potentially on the line, it will be interesting to see if this requirement is actually enforced in future breaches. First, the delays associated with milestone rescission and reapprovai could be expensive, which could negatively affect jobs. Congress has the power to amend the law and waive this requirement for a program that breaches the critical cost threshold. Additionally, the timeline between the actual discovery of critical cost growth and congressional reporting can be lengthy104 This extended period may afford the Government and contractor time to set the recertification process in motion prior to congressional notification, with an eye towards securing reapprovai shortly after milestone recession. This scenario also could soften the blow that this provision could have on a program. This section does, however, have serious potential for the desired reform, and a few adjustments would really strengthen the mandatory termination provisions. D. The Weapon Systems Acquisition Reform Act of 2009 Provides Potential for Reform WSARA is a step in the right direction with respect to potential reform. While it does provide additional bureaucratic layers and increased congressional oversight, the law provides DoD with a chance to get things right at the beginning. The new personnel and policies provide DoD with the opportunity to solve some of the issues that have plagued DoD's major acquisition programs and restore integrity and accountability into the process. IV THE F-22 PROGRAM A perfect example of a major weapon system that could have benefited from WSARA is the Air Force's F-22 fighter jet. The F-22 experienced continual cost growth throughout the life of the project.105 If the new law had been in place at the project's inception in 1 981 , some ofthe problems that contributed to cost growth may have been controlled and prevented. A. Brief History In 2001, the U.S. Air Force commissioned the RAND Corporation106 to review the F-22 acquisition history and provide feedback that may be beneficial in estimating the potential costs of future major weapon systems.107 The F-22 was initially designed as an air-to-air108 supersonic stealth fighter to combat the then-growing Soviet Union fighter threat, and was targeted to replace the service's aging McDonnell Douglas F- 15 fleet.109 Unfortunately, the program experienced continual cost growth and schedule growth from its inception.110 As noted by Senator John McCain during discussions for the 2007 National Defense Authorization Act: The F-22 experienced an initial operational capability delay of 9 years 9 months; initial operational test and evaluation delayed [sic] 5 years 3 months; full rate production delay of 5 years 3 months; low rate initial production, 4 years 9 months; first delivery of operational aircraft delayed 4 years 7 months; first flight delayed 2 years; and completion of critical design review delayed 1 year 4 months. The record is not good. In fact, the record is terrible. In 1991, the estimated cost, according to the U.S. Air Force, for the aircraft was going to be $114 million ? in then-year dollars; now, $354 million per copy.111 When the Air Force launched the F-22 acquisition, it intended to purchase 750 aircraft for approximately $99 billion.112 The final numbers, however, are drastically different. The F-22 program was terminated in July 2009, and the Air Force will end up with only 187 aircraft for approximately $65 billion.113 The Air Force launched its Advanced Tactical Fighter program in 1 98 1 . 114 In May 1981, the Air Force issued 24 January 2016 Page 9 of 29 ProQuest a Request for Information calling for conceptual designs, and all nine potential defense contractors submitted responses.115 In 1983, the Air Force decided that the Advanced Tactical Fighter would be designed to replace the F-15, and in September of thatyear, it issued concept development contracts to all nine potential contractors.116 In May 1 984, seven contractors submitted final reports.117 After reviewing all ofthe reports and taking into consideration the aircraft's daunting technological requirements, the Air Force issued requests for a demonstration and validation phase of the Advanced Tactical Fighter in October 1985. 118 The Presidential Blue Ribbon Commission of 1986 ("Commission") affected the demonstration and validation phase.119 The Commission recommended mandatory government procurement initiatives, one of which required competing contractors to generate and develop technology demonstration prototypes during the demonstration and validation phase in an effort to reduce technological risk.120 Other important initiatives included a greater emphasis on performance specifications, greater contractor sharing in development costs, and significant control given to competing contractors in deciding the structure ofthe prototype technology demonstration effort.121 Finally, the Commission required the Air Force to alter its traditional project management structure to resemble a government-industry integrated product team.122 The Advanced Tactical Fighter was one of the Air Force's first major acquisitions to implement this integrated product team structure, and when coupled with the new prototyping requirements, it forced the demonstration and validation program schedule to be restructured and extended.123 As a result, the Milestone II deadline slipped two years to December 1990.124 The following chart illustrates the milestone decision points in place during the F-22 program.125 Seven contractors responded to the Air Force's demonstration and validation request for proposals with legitimate design plans.126 In October 1986, the Office of the Secretary of Defense granted Milestone I approval and the Air Force selected Lockheed Martin and Northrop Grumman to lead competing teams in a fiftyfour-month demonstration and validation phase.127 Each team received a $691 million, fixed-price contract to design and build a prototype.128 Due to the unique and challenging technological requirements, as well as the fact that the magnitude of the acquisition could affect the industrial bases, the Air Force recommended that the two prime contractors team with other contractors when designing the Advanced Tactical Fighter prototypes.129 Following the Air Force's advice, Lockheed Martin teamed with General Dynamics and Boeing, while Northrop Grumman teamed with McDonnell Douglas.130 By August 1990, Lockheed Martin and Northrop Grumman began test flights on their respective prototypes (Lockheed's prototype was the YF-22 and Northrop 's, the YF-23).131 Milestone II approval was then granted in April 199 1.132 On April 23, 1991, after extensive flight testing, the Air Force awarded a cost-plus-award-fee Engineering and Manufacturing Development contract to Lockheed Martin and Pratt &Whitney133 for the development of the now-designated F-22 fighter jet.134 Even though the demonstration and validation phase experienced cost growth and schedule slippage, RAND determined that the phase was generally well managed and successful.135 The first flight of the development program occurred in September 1 997. 136 Full-scale procurement of F-22 s was then authorized during the 1999 fiscal year.137 In August of 2001, the F-22 received approval for Low Rate Initial Production, and the first Low Rate Initial Production aircraft was delivered in June of 2003. 138 In 2003, the Air Force also launched the F-22 modernization program, which upgraded the aircraft's air-to-ground strike capabilities, intelligence-gathering capabilities, and surveillance and reconnaissance capabilities.139 This program required an upgrade to the aircraft's avionics and an additional $8 billion in funding.140 Full rate production was authorized on March 29, 2005, and Initial Operational Capability was finally achieved in December 2005.141 By 2001, both the demonstration and validation and engineering and manufacturing had grown by a combined $7.6 billion 1990 dollars.142 The cost and schedule growth has continued since.143 By April 2009, Secretary Gates recommended terminating the F-22 program and production ended later that year.144 When the 24 January 2016 Page 10 of 29 ProQuest production lines finally shut down, the Air Force will have purchased 187 aircraft for approximately $65 billion, with a per-unit cost of approximately $354 million.145 B. Sources of Cost and Schedule Growth RAND studied the F-22's history and identified a number of major sources that contributed to the persistent cost and schedule growth.146 These sources are (1) the program's acquisition strategy and industrial base, (2) the airframe, (3) the avionics suite, (4) the propulsion system, and (5) the modernization program.147 Each source contained its own unique requirements, and the technological challenges of each wreaked havoc on the F-22's cost and schedule. 1. Acquisition Strategy and Industrial Base Issues The first major source of cost growth and schedule delays was attributable to both the acquisition strategy itself, as well as the various industrial base issues that slowed the manufacturing of the initial test aircraft.148 The issues with the acquisition strategy revolved around the division of work during the engineering and manufacturing development phase.149 Lockheed, General Dynamics, Boeing, and Pratt &Whitney were each responsible for the production of separate, yet major elements of the aircraft.150 According to RAND, because the expertise was spread between companies, it was not uncommon for issues to arise during assembly that proved challenging for Lockheed personnel.151 These challenges ultimately led to increases in both costs and schedule. There were also issues with the F-22's industrial base.152 First, the engineering and manufacturing development phase design and oversight moved from California to Georgia in 199 1.153 The core team in Georgia had few members that were part of the demonstration and validation phase, and coupled with their limited experience in producing and assembling hightechnology aircraft, this severely delayed the assembly and delivery of test aircraft.154 Additionally, changes in suppliers for composite materials for the wings of the F-22 and untimely supplier workforce strikes further delayed the delivery of test aircraft.155 These instabilities and challenges proved to be both time-consuming and costly to completing such a complex and advanced aircraft. Some of these strategy and industrial base issues, such as subcontractor logistics, subcontractor strikes, and assembly issues, were unfortunate, and likely unforeseeable. Future DoD acquisition programs should continue to analyze a program's strategy and industrial base issues for adequacy and sustainability, understanding that unforeseeable issues can arise that may prove costly and timely. 2. Airframe Issues The second source of cost and schedule growth was the airframe.156 The F-22 was to be a technological marvel and it required complex, technological advancements in all major areas of the aircraft.157 An analysis of the engineering and manufacturing development phase "shows that the more far-reaching innovations in the F/A-22's airframe, avionics, and propulsion contributed to the cost overruns in that program."158 These factors proved to be problematic given the nature of the aircraft, as it required technologies that had yet to be developed.159 Current technologies were not an option for the F-22, and the concurrent development of new technologies proved to be too ambitious, which increased the risk to the Government.160 The F-22's airframe required composite materials and titanium to satisfy its low-level stealth requirements and weight restrictions.161 Engineering the materials required to satisfy these constraints proved challenging and timeconsuming, as the more traditional materials used in former fighter aircraft were useless.162 The time and labor required to develop the revolutionary airframe grew with each design problem, which led to continual increases in the overall weight of the F-22.163 Weight is an extremely important element of an aircraft, and fluctuations can both affect performance and threaten the stability of the airframe.164 The skin of the F-22 required new radar-absorbing materials and structures.165 Coupled with internal weapons carriage capabilities and wing stabilizers, the airframe's design allowed for radar-evading "exceptional lowobservable" characteristics of the aircraft.166 These low-observable characteristics were a major challenge for designers and often resulted in design difficulties.167 The two principal materials that make up the aircraft's 24 January 2016 Page 11 of 29 ProQuest nontraditional skin are carbon epoxy composites (twenty-four percent) and titanium (forty percent).168 The composites are low weight and provide for the low-observable features, where the titanium provides the strength and temperature control to achieve low-observable superiority.169 These materials differ from the steel and aluminum that are traditionally used to construct airframes, and the manufacturing and design costs increased because of these new challenges.170 The advanced requirements led to the continual readjustment of the skin, which was ultimately far more problematic than planners anticipated, and the constant tinkering predictably took its toll on the aircraft's weight.171 The process of striking the correct balance with these materials affected the cost and schedule.172 As mentioned above, weight has been a historical challenge for aircraft designers, and the F-22's weight fluctuated along with the many design changes and performance adjustments.173 Tb date, the F-2 2 's weight is greater than the originally targeted weight.174 By 2002, the airframe experienced a greater percentage of cost and schedule growth than any other subsystem.175 Because the revolutionary airframe technologies proved to be so problematic, future DoD acquisition programs that require revolutionary technologies should ensure that the requirements are researched, properly estimated, closely monitored, and immediately addressed. 3. Avionics Suite Issues The third source of cost and schedule growth was the avionics suite.176 Like the airframe, the state-of-the-art avionics suite required revolutionary technologies that were not available in any other aircraft.177 The F-22's avionics suite is designed to collect data from several sensors and to incorporate the information into one display for the pilot.178 The avionics suite also contains a unique electronic warfare system; technologically advanced scanned radar; and upgraded communication, navigation, and identification suites.179 The aircraft's central core processor collects and fuses the data and presents the pilot with an integrated picture.180 The new approach "integrates all the information from numerous subsystems, and therefore these components need a significant processing capability ? somewhere on the order of 250 million instructions per second for data processing, and more than 100 times that ? 10 billion instructions per second ? for signal processing."181 In addition to these great demands, the avionics suite for each F-22 must be able to harmonize data from other F22s flying a particular mission.182 These demands proved challenging, and systems frequently "lock[ed]-up" during test flights.183 As noted by RAND, "problems with developing, testing, and correcting deficiencies in the ambitious avionics on the F/A-22 have caused problem stretch-out and delays."184 In addition, the continued delays in the production of F-2 2 s are so profound that many analysts believe that components of the avionics suite, to include the core chips and software, will be outdated and in need of replacement before future aircraft roll off the production line.185 As such, the record indicates that future updates will continue to be demanding, expensive, and time-consuming. The avionics suite was funded during the engineering and manufacturing development phase, and the greatest percentages of cost growth were attributable to the core processor; the electronic warfare system; and the communication, navigation, and identification system.186 Approximately onethird of the F-22's budget was spent on avionics, which was more than any other subsystem.187 By 2002, the F-22's integrated avionics suite had a greater overall dollar increase than any other subsystem.188 This example shows that revolutionary, immature technologies can be problematic, and future DoD programs need to ensure that such requirements are properly understood, researched, and budgeted prior to product development. If not, the resulting issues can drain a program. 4. Propulsion System Issues The fourth source of cost and schedule growth was the propulsion system.189 The F-22's propulsion system features two high-thrust Pratt &Whitney F-1 19 engines that permit the aircraft to travel at supersonic speeds without the use of a fuel -consuming afterburner.190 These engines were revolutionary and they incorporated very few characteristics of engines used in other fighter aircraft. These new core engines proved to be more 24 January 2016 Page 12 of 29 ProQuest expensive, as they "experienced some problems with blade failure stemming from overheating and variability in material properties."191 There were also problems with fuel consumption levels, core engine combustors that resulted in undesirable temperature levels, and fuel-air heat exchanges that resulted in reduced engine effectiveness.192 Problems were addressed as they arose, but engines with new core designs are more costly and require more engineering than established designs.193 As with the other identified sources, the new and demanding technologies proved to be challenging for the designers, and costs and schedule growth soared.194 The propulsion system is yet another example of how revolutionary, concurrent technologies can affect a program. Future DoD acquisition programs will need to properly research and address these issues early in the program to avoid similar outcomes. 5. 2003 Modernization Program Issues Finally, the Government Accountability Office (GAO) noted that the F-22's $8 billion modernization plan has been costly and challenging.195 In its March 2009 Assessments of Selected Programs, the GAO commented that changes in the modernization requirements, schedule slippages, program restructurings, and funding decreases have delayed the modernization program by more than three years.196 When discussing the program's technology, the GAO noted, "two of the three critical technologies are still nearing maturity and others have been deferred to future modernization efforts."197 Additionally, the design maturity of the program is now stable, though it did not stabilize until two years after its critical design review.198 The modernization program relied on new and costly technologies; slippages, new requirements, and funding cuts resulted in significant cost and schedule growth.199 The F-22 has shown that modernization programs can significantly drive up overall cost, and any future programs of a similar nature need to be scrutinized prior to receiving funding. F-22 personnel have worked tirelessly through the years and have produced a superb fighter jet that is unmatched by any competitor or adversary. As dominant as the F-22 is, it experienced continual cost growth throughout the life of the project. The major sources of cost growth highlight the importance of obtaining proper cost estimates and technology assessments early in an acquisition's life cycle. Proper acquisition planning is crucial and if WSARA had been in place at the project's inception, some of the problems that contributed to the cost growth may have been controlled and prevented. V WEAPON SYSTEMS ACQUISITION REFORM ACT APPLIED TO F-22 It is arguable whether Congress is the right body to fix cost issues that arise in major defense acquisition programs. WSARA provides for increased congressional oversight and intervention, but as will be shown by the F-22, canceling big programs can have major ramifications for Congress. DoD, on the other hand, is in a position to achieve reform. The F-22 was one ofthe most heavily monitored, regulated, and scrutinized major defense acquisitions in history, and if WSARA had been in place at the program's inception, it may have provided some needed and meaningful oversight at the DoD level during the early stages of the project. In 1982, Congress enacted the Nunn McCurdy Amendment to help address costly acquisition programs.200 The F-22 survived the law's termination provision twice, and on fourteen occasions, DoD rebaselined201 its estimates and started over.202 The F-22 was designed to combat a Soviet fighter threat that no longer exists, and it has not flown a single mission over Iraq or Afghanistan.203 The program never fully appeared to be on sound footing, and Congress should have followed the law and terminated the project or forced the Air Force and Lockheed to fix the program's problems prior to granting additional funding. Congress continued to fund the F-22 program despite its enormous cost and schedule growth. The F-22 program employs around 25,000 workers that are associated with over 1 ,000 suppliers in forty-four different states.204 In January 2009, 44 senators and 194 members of the House of Representatives delivered a signed memorandum to President Barack Obama urging him to support the continued production of the F-22.205 In addition to describing the F-22's critical role in securing our nation's security, the members stated: The F-22 program annually provides over $12 billion of economic activity to the national economy. As our nation faces one of the most trying economic times in recent history, it is imperative to preserve existing high paying, 24 January 2016 Page 13 of 29 ProQuest specialized jobs that are critical to our national defense. Over 25,000 Americans working for more than 1,000 suppliers in 44 states manufacture this aircraft. Moreover, it is estimated that another 70,000 Americans indirectly owe their jobs to this program.206 The intense lobbying had little effect; Secretary of Defense Robert Gates decided to recommend the F-22's termination. Secretary Gates enlisted and received the support of the secretary of the Air Force and chief of staff of the Air Force, and on April 6, 2009, he announced plans to terminate the F-22 program.207 In arriving at this decision, Secretary Gates made it clear that DoD wanted to funnel its resources to the continued development of the F-35 Joint Strike Fighter.208 Congress, however, was not ready to budge. Members ofthe House Armed Services Committee were unfazed by the Obama administration's decision to terminate the F-22 program. On June 18, 2009, the committee report for the 2010 Fiscal Year National Defense Authorization Act recommended the authorization of $368.8 million for twelve F-22s in fiscal year 2011. The Senate Armed Services Committee shortly followed suit. On July 2, 2009, the Senate committee recommended authorizing $1.75 billion for seven F-22s for fiscal year 2010.209 The White House responded on July 13, 2009, threatening to veto any bill that supported the acquisition of any additional F-22s beyond the 187 already funded through fiscal year 2009.210 Undeterred by the veto threat, Representative John Murtha issued a statement on July 16, 2009, stating that he would seek $369 million for procurement of twelve F-22s.211 The political process was in full swing and the White House had a battle on its hands. Following intense discussions with Secretary Gates, the Senate voted 58-40 on July 21, 2009, to terminate production ofthe F-22.212 Senator Carl Levin stated after the vote "the President really needed this win ... in terms of changing the way we do business in Washington."213 This statement highlights the challenges the political process can have on defense acquisitions. Billions of dollars had been invested in the F-22 and jobs were ultimately at stake, and Congress planned to press with F-22 production despite the White House's desire to terminate the F-22. In the end, it took intense discussions and veto threats to gather the requisite congressional support to terminate the F-22 program. The termination provisions in sections 204 and 206 place large responsibilities on the MDA and the SECDEF, and each is required to put forth a compelling "national security" case to continue over-budgeted acquisitions. If President Obama had been a staunch supporter ofthe F-22 and believed that its continued production was essential to national security, termination would not likely have occurred. President Obama did not support continued funding, and members of Congress fought the decision and defied the president by including funding provisions in national defense authorization act drafts. Given the history of the F-22 program, it is debatable whether Congress would have allowed the MDA or the SECDEF to end the program under section 204 or 206 had the law been enacted prior to the program's commencement. In the end, the F-22 acquisition was highly political and required presidential involvement, so any meaningful reform needed to occur earlier in the program and at the DoD level. Some of WSARA's other provisions may have been helpful had this law been enacted prior to the acquisition. As mentioned earlier, Senators Carl Levin and John McCain attributed the numerous and historical cost overruns to four flaws endemic to DoD acquisitions: "DOD acquisition programs fail because the Department continues to rely on unreasonable cost and schedule estimates, establish unrealistic performance expectations, insist on the use of immature technologies, and adopt costly changes to performance requirements, production quantities and funding levels in the middle of ongoing programs."214 These four flaws were endemic to the F22, and while the acquisition was no stranger to congressional scrutiny, monitoring, and oversight, the positions and responsibilities outlined in Title I of the new law may have helped control the ongoing cost and schedule growth in the earlier phases of the acquisition. These new positions and responsibilities are designed to ensure expertise and oversight are applied early on in the process, and the successful implementation of these responsibilities could have provided the needed oversight for the F-22. A. Unreasonable Cost and Schedule Estimates 24 January 2016 Page 14 of 29 ProQuest As mentioned earlier, the F-22 likely started with unreasonable cost and schedule estimates. When the F-22 project commenced in 1981, DoD anticipated that it would purchase 750 aircraft at a cost of around $99 billion.215 The actual numbers are much different, and hindsight indicates that the project started with unreasonable cost and schedule estimates. Section 101 of WSARA establishes the position of DCAPE, who shall (1) provide unbiased, accurate, and realistic cost estimates and cost analysis for DoD acquisition programs; (2) formulate guidance for the analysis of potential alternate