DoD Certifies 6 Programs Under Nunn-McCurdy Law Breaches

By Jim Garamone
American Forces Press Service

June 2, 2010 - The Department of Defense has certified that six acquisition programs – including the Joint Strike Fighter and the DDG-1000 destroyer – should continue under Nunn-McCurdy legislation. The systems also include the Block 3 upgrade program for the Apache AH-64 helicopter, the advanced threat infrared countermeasures/common missile warning system, the wideband global satellite communications program and the remote mine hunting system.

Nunn-McCurdy legislation requires DoD to constantly estimate the cost of programs and compare it to the estimate of the cost when the program started.

When a program grows more than 50 percent beyond the original estimate, the legislation requires the DoD acquisition executive to certify to Congress "that the program is essential to national security, that there are no alternatives to the program which will provide acceptable capability," a senior defense official speaking on background said yesterday.

None of the programs on the Nunn-McCurdy list are surprises to the department or to Congress, the official said. DoD notified Congress that the programs were in Nunn-McCurdy breach 90 days ago.

The Apache Block 3 program is on the list because the department added new aircraft to a program that was refurbishing existing aircraft. "We're very satisfied with the program, but the additional aircraft pushed it into Nunn-McCurdy breach," the official said.

The satellite system is in breach because the department developed the system, then changed its mind and interrupted the buy. Now the system is moving forward again, but that has pushed the program into a Nunn-McCurdy breach, the official said.

The principle factor pushing the DDG-1000 destroyer over the Nunn-McCurdy threshold was the department reduced the buy from 10 ships to three.

The Joint Strike Fighter program began in 2001. Officials then estimated the per plane cost at $50 million. The program has had problems and Defense Secretary Robert M. Gates restructured it last year. The cost per aircraft has risen to $92.4 million, triggering Nunn-McCurdy. Other aspects contributed to the breach: the Navy reduced its buy by 409 aircraft. Also, contractor labor, overhead rates and fees have increased significantly. This last is the single-largest contributor to cost growth, officials said. They called this cost growth unacceptable and vowed to drive those costs down.

DoD cannot wait until a program is in Nunn-McCurdy breach before acting. "We should know and do know ... well before it gets to 50 percent cost growth," the senior official said.

Officials, he said, must know early on when program costs exceed estimates, ask questions, and then act on what they learn.

"The Nunn-McCurdy 'bell' rings well after the managers of the enterprise should know about what is happening and should be acting," the senior official said. "It comes along late."

The legislation is good for taxpayer transparency, but there are other ways to do that, the official said.

"We need and are building better tools," he said.