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Department of Defense Comprehensive Selected Acquisition Reports (SARs)

 

 

 

 

Department of Defense
Comprehensive Selected Acquisition Reports (SARs)
For the December 31, 2017 Reporting Requirement as Updated by the President’s FY 2019 Budget.

The Department of Defense (DoD) has released details on major defense acquisition program cost, schedule, and performance changes since the December 2016 reporting period. This
information is based on the comprehensive annual Selected Acquisition Reports (SARs) for the first quarter of FY 2018, as updated by the President’s FY 2019 budget submitted to Congress on February 12, 2018.

SARs summarize the latest estimates of cost, schedule, and performance status. These reports are prepared annually in conjunction with submission of the President’s Budget. Subsequent
quarterly exception reports are required only for those programs experiencing unit cost increases of at least 15 percent or schedule delays of at least six months. Quarterly SARs are also submitted for
initial reports, final reports, and for programs that are rebaselined at major milestone decisions. The total program acquisition cost estimates provided in the SARs include research and development, procurement, military construction, and acquisition-related operations and maintenance. These totals reflect actual costs to date as well as future anticipated costs. All estimates are shown in fully inflated then-year dollars. The current estimate of program acquisition costs for programs covered by SARs for the prior
reporting period (December 2016) was $1,748,659 million. Final reports submitted for the annual December 2016 and for the June 2017 and September 2017 quarterly exception reporting periods
were subtracted. Initial reports for the annual December 2016 and for the June 2017 and September 2017 quarterly exception reporting periods were added. Finally, the net cost changes for the June 2017 and September 2017 quarterly exception reporting periods were incorporated.

Current Estimate
(TY$ in Millions)

December 2016 (87 programs) $ 1,748,659
Less six final reports on C-5 Reliability Enhancement Re-engining
Program (C-5 RERP), Enhanced Polar System (EPS), Global Broadcast
Service (GBS), Wideband Global SATCOM (WGS), MH-60R MultiMission
Helicopter (MH-60R), Warfighter Information-Tactical Increment
3 (WIN-T Inc 3), and the Space Vehicle (SV) 1-4 subprogram of the
Advanced Extremely High Frequency Satellite (AEHF).*
-38,550

Plus one initial report on the T-AO 205 John Lewis Class Fleet Oiler (TAO 205 Class). Includes seven initial reports from December 2016 not included in the previous current estimate. M88A2 Heavy Equipment Recovery Combat Utility Lift Evacuation System (M88A2 HERCULES), Advanced

Arresting Gear (AAG), F/A-18 E/F Infrared Search and Track (IRST),
+10,300
+140,595

Offensive Anti-Surface Warfare Increment 1 (Long Range Anti-Ship
Missile) (OASuW Inc 1 LRASM)), SSBN 826 COLUMBIA Class
Submarine (SSBN 826), F-15 Eagle Passive Active Warning Survivability System (F-15 EPAWSS), and Military Global Positioning System User Equipment Increment (MGUE Inc 1).
Net cost changes reported as of June 2017 and September 2017 quarterly exception SARs.** +0.0

*Note: The dollars for the SV 1-4 subprogram were subtracted because a final report for that subprogram was submitted for the December 2016 reporting period. The SV 5-6 subprogram continues to report SARs as the AEHF program.
**Note: There were no June 2017 SARs submitted to Congress.

There was no cost variance associated with the September 2017 quarterly SARs.

Changes Since Last Report:
Economic $ -7,516
Quantity +22,923
Schedule +2,932
Engineering +3,947
Estimating +13,761
Other +0.00
Support -2,831
Net Cost Change $ +33,216

Plus Ballistic Missile Defense System (BMDS) development,
procurement, and construction funding for Fiscal Year (FY) 2023;
previous reports limited total funding through FY 2022
+8,342

New SARs
DoD is submitting an initial SAR for the following program. This report does not represent cost growth. The baselines established on this program will be the point from which future changes
will be measured. Program

Current Estimate
($ in Millions)

CH-47F Modernized Cargo Helicopter (CH-47F Block II) $22,437
December 2017 (83 programs) $1,925,000

For the December 2017 reporting period, there is a net cost increase of $33,216 million or +1.78 percent for the 82 programs that have reported in previous SARs. This cost increase is due
primarily to a net increase in the planned quantities to be purchased (+$22,923 million), a net stretch-out of development and procurement schedules (+$2,932 million), engineering changes to hardware and software (+$3,947 million), and increases in program cost estimates (+$13,761 million). These increases were partially offset by a net decrease in the application of higher escalation rates (-$7,516 million) and decreases in support requirements (-$2,831 million).

Summary Explanations of Selected SAR Cost Changes
(As of December 31, 2017)

A. Nunn-McCurdy Unit Cost Breaches for 2017

For the December 2017 reporting period, there are two programs with critical or significant Nunn-McCurdy unit cost breaches to their current or original Acquisition Program Baseline (APB)
(see below). In accordance with the provisions of sections 2433 and 2433a of title 10, United States Code, the Department will notify Congress and provide the required unit cost breach information in
the SARs for these two programs.

Critical Breach: (Unit cost increases of 25 percent or more to the current APB or of 50 percent or more to the original APB)

Integrated Defense Electronic Countermeasures (IDECM) (Navy) Blocks 2/3 – This subprogram has a critical Nunn-McCurdy unit cost breach. The current estimates for Program Acquisition Unit
Cost (PAUC) and Average Procurement Unit Cost (APUC) breach both the current APB (PAUC +132.5% and APUC +92.6%) and the original APB (PAUC +147.3% and APUC +108.0%) thresholds. The cost breaches are due to quantity reductions in the IDECM Block 3 program (IDECM Block 2 is 100% delivered/expended). Threat changes have led to the selection of a different material solution to counter future threats. As a result, the quantity projections for the
ALE-55 Expendable Fiber Optic Towed Decoy were reduced by -69%, or 8,875 units relative to the baseline. The program costs decreased by $937.5 million (-47.5%) from $1,971.9 million to
$1,034.4 million. The FY 2019 President’s Budget includes the requirement (both RDT&E and Procurement) for a different material solution to counter future threats, which will not be part of
either the IDECM Blocks 2/3 or Block 4 subprograms. Significant Breach: (Unit cost increases of 15 percent, but less than 25 percent, to the current APB or of 30 percent, but less than 50 percent, to the original APB)

Littoral Combat Ship (LCS) Mission Modules (MM) (Navy) – This program has a significant Nunn-McCurdy unit cost breach because the current estimate breached the PAUC against the current APB (+16.6%) due primarily to a reduction to Mission Package (MP) quantities of 16, from 64 to 48 MPs (a mix of 44 deployable and 4 non-deployable engineering development model MPs) which increased the average MP cost. The Under Secretary of Defense for Acquisition and Sustainment certified these quantities for the FY 2019 President’s Budget based upon the Navy LCS MM program of record. Program costs decreased $1,352.4 million (-17.3%) from $7,831.1 million to $6,478.7 million, due primarily to the decrease of MPs (-$1,832.3 million).

B. Program Cost Changes Greater than $1B, or 10%

Army:
Guided Multiple Launch Rocket System/Guided Multiple Launch Rocket System AlternativeWarhead (GMLRS/GMLRS AW) – Program costs increased $9,192.0 million (+121.5%) from  $7,568.1 million to $16,760.1 million, due primarily to an increase of 52,670 rockets from 43,936 to 96,606 (+$5,171.5 million) and associated schedule, engineering, and estimating allocations*** (+$3,926.0 million). There were also increases due to a revised estimate based on total rockets required and extension in the procurement buy profile from FY 2024 to FY 2033 (+$227.8 million), and an adjustment for current and prior escalation indices (+$11.8 million). These increases were partially offset by an acceleration of the procurement buy profile due to an increased production capacity in FY 2019 (-$81.5 million), revised escalation indices (-$34.8
million), and a revised estimate to support Extended Range GMLRS development (-$34.0 million).

Joint Light Tactical Vehicle (JLTV) – Program costs increased $2,752.8 million (+10.9%) from $25,276.1 million to $28,028.1 million, due primarily to an increase in Marine Corps quantities of
1,850 vehicles from 7,241 to 9,091 (+$675.6 million), updates in vehicle configuration and kit mix for Army units (+$1,957.1 million), updates in vehicles and kits based on vehicle configuration mix for Marine Corps units (+$200.5 million), a stretch-out of the procurement buy profile from FY 2015 to FY 2036 for the Army and from FY 2019 to FY 2023 for the Marine Corps (+$41.2 million), and an increase in Other Support and initial spares for the Army and the
Marine Corps (+$62.8 million).  These cost increases were partially offset by revised escalation
indices (-$209.9 million).

Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) – Program costs increased $2,009.0 million (+28.2%) from $7,114.0 million to $9,123.0 million, due primarily to an increase of 538 missiles from 1,185 to 1,723 (+$2,500.1 million). There were also increases due to a revised estimate of weapon system support costs to reflect the missile quantity increase (+$221.2 million) and an adjustment for current and prior escalation (+$11.9 million). These increases were partially offset by a revised estimate for program increases in FY 2017 – FY 2023 and missile production realignment (-$531.3 million), a schedule variance due to missile procurement realignment in FY 2018 – FY 2025 (-$151.0 million), and revised escalation indices (-$41.9 million).

Warfighter Information Network-Tactical Increment 2 (WIN-T Inc 2) – Program costs decreased $7,780.6 million (-63.2%) from $12,311.7 million to $4,531.1 million, due primarily to a quantity
variance resulting from a decrease of 2,107 nodes from 3,674 to 1,567 due to changes in the Army Network Modernization Strategy (-$4,885.9 million), revised escalation indices (-$78.4 million), a decrease in Other Support due to a change in fielding, new equipment training, and software maintenance costs (-$2,793.6 million), and a decrease in initial spares (-$310.8 million).
These decreases were partially offset by an increase in additional quantity variance to account for non-node configuration items (+104.2 million), and a revised estimate to reflect the procurement
of Tactical Communications Node – Lites (TCN-L) and Network Operations Support CentersLite (NOSC-L) configuration items for modernizing previously procured Infantry Brigade Combat Teams (+169.5 million).

Navy:

Advanced Arresting Gear (AAG) – Program costs increased $206.1 million (+10.1%) from $2,050.2 million to $2,256.3 million, due primarily to fully funding the revised estimate stemming from the Nunn-McCurdy review and certification (+$124.1 million). There were also increases from additional funding for reliability growth testing and full envelope testing requirements (+$53.2 million), revised estimates to reflect actuals (+$32.4 million). These increases were partially offset by revised escalation indices (-$4.8 million).

CVN 78 Gerald R. Ford Class Nuclear Aircraft Carrier (CVN 78) – Program costs increased $12,160.5 million (+28.3%) from $42,910.6 million to $55,071.1 million, due primarily to an increase of one ship, from three to four, to reflect funding for the CVN 81 (+$12,631.9 million). There were also increases for additional funding for CVN 80 for Integrated Digital shipbuilding (+$275.8 million), the potential shift of Full Ship Shock Trial from CVN 78 to CVN 79 (+$26.3 million), revised estimates to support CVN 78 Class Follow-On Test and Evaluation efforts (+$33.2 million), revised estimate for CVN 78 post delivery (+$33.9 million), a revised estimate for CVN
78 due to extended shipboard and integration testing (+57.0 million), adjustment for current and prior escalation (+$85.5 million), and revised estimates due to application of new out year
escalation indices (+$109.1 million). These increases were partially offset by revisions to escalation indices (-$199.0 million), funding adjustments associated with the increase of one ship in FY 2023
(-$87.6 million), revised estimates due to service wide adjustments (-$109.0 million), revised estimates due to efficiency efforts (-$61.3 million), and the reallocation of funds from CVN 81 to EMALS (-$659.4 million).

CVN 78 – Electromagnetic Aircraft Launching System (EMALS) – Subprogram costs increased $743.0 million (+26.3%) from $2,824.9 million to $3,567.9 million, due primarily to a reallocation of funds to EMALS from CVN 81 (+$659.4 million). There were also increases for additional funding for CVN 78 Class EMALS depot planning (+$56.4 million), and additional funding for CVN 78 EMALS interim spares (+$28.1 million).

DDG 51 Arleigh Burke Class Guided Missile Destroyer (DDG 51) – Program costs increased $10,616.8 million (+9.6%) from $111,131.1 million to $121,747.9 million, due primarily to an increase of six ships from 89 to 95 (+$7,786.6 million) and associated schedule, engineering, and estimating allocations*** (+$3,676.0 million). There were also increases due to revised estimates to reflect the application of new out year escalation indices (+$292.2 million), the cost of incorporating the SPECTRAL Combat Direction Finder System for ships in FY 2020 – FY 2023 (+$187.0 million), adjustment for current and prior escalation (+$115.5 million), and a revised estimate for development of future Aegis requirements (+$71.9 million). These increases were partially offset by a revised estimate to refinement of FY 2010 and FY 2023 shipbuilding estimates (-$374.9 million); revised escalation indices (-$301.3 million), a revised shipbuilding estimate for additional ships and Economic Order Quantity in FY 2019 and FY 2021 – FY 2024 (-$244.4 million), a revised estimate for economic rate adjustment, which incorporates assumed efficiencies for new procurement buy (-$226.0 million), acceleration of the procurement buy profile resulting in an increase of a total of six ships in FY 2019 and FY 2021 – FY 2024 (-$218.8 million), and a revised estimate to reflect refinement of outfitting and post delivery requirements (-$147.0 million).

Offensive Anti-Surface Warfare (OASuW) Increment 1 (Inc 1) (Long Range Anti-Ship Missile (LRASM)) – Program costs increased $236.8 million (+14.5%) from $1,634.2 million to $1,871.0 million, due primarily to a quantity increase of 26 All-Up-Rounds (AURs) across the Navy and Air Force, from 135 to 161 AURs (+$128.3 million), and associated engineering for capability improvement and wholeness requirements (+$129.5 million). These increases were partially offset by a decrease in Navy personnel requirement in production and decrease in other support due to
refinement of Air Force estimates (-$9.1 million).

P-8A Poseidon Multi-Mission Maritime Aircraft (P-8A) – Program costs increased $1,134.8 million (3.4%) from $33,378.5 million to $34,513.3 million, due primarily to a quantity increase of six aircraft, from 111 to 117 aircraft (+$965.6 million), revised estimate for continued P-8A Increment 3 development and testing activities (+$92.9 million), scope increases to include the Advanced
Airborne Sensor capability to address Tactical Operations Center, Fleet Support Activity, and Fleet Maintenance Activity requirements (+$58.9 million). Costs also increased due to re-phasing of aircraft (+$14.7 million), an increase to Non-Recurring Engineering and configuration changes (+$24.8 million), a revised estimate to reflect increases due to cost estimating methodologies for Airframe, Contractor and Government Furnished Equipment, and engineering change orders (+$18.7 million) and adjustments for current and prior year escalation (+$30.4 million). These
increases were partially offset by revisions to escalation indices (-$52.4 million), and re-phasing of ancillary equipment (-$19.9 million).

Standard Missile-6 (SM-6) – Program costs decreased $1,458.6 million (-14.3%) from $10,225.2 million to $8,766.6 million, due primarily to cost reductions associated with the FY 2019 – FY 2023
Multi-Year procurement (-$692.6 million), decreases to SM-6 Block 1A unit costs to reflect contract negotiations and affordability initiatives (-$245.8 million), and revised estimates to reflect the SM-6 Block 1 and Block 1A procurement mix within the Future Years Defense Program (-$221.2 million). Costs also decreased due to acceleration of the SM-6 procurement buy profile (-$65.1 million), accelerated procurement for spares hardware (-$72.2 million), Congressional reductions (-$42.0 million), decreases in other support equipment due to realignment of funds to support accelerated procurement buy profile (-$50.9 million), and revised escalation indices (-$63.0 million).

Air Force:

C-130J Hercules Transport Aircraft (C-130J) – Program costs decreased -$1,569.5 million (-9.9%) from $15,803.5 million to $14,234.0 million, due primarily to a revised estimate resulting from
removal of the Block Upgrade 7.0/8.1 Retrofit modification from the program (-$1,464.1 million), a decrease in Diminishing Manufacturing Sources and Material Shortage costs and Government Furnished Equipment costs (-$123.3 million), and a decrease in Initial Spares (-$91.6 million). These decreases were partially offset by an increase in Other Support (+$78.0 million), revised estimating (+$23.7 million), and stretch-out of the procurement buy profile due to two Congressionally-added aircraft in FY 2017 and reduction of aircraft buys in FY 2024 (+$14.9
million).

Evolved Expendable Launch Vehicle (EELV) – Program costs decreased $2,002.9 million (-3.4%) from $59,226.8 million to $57,223.9 million, due primarily to a quantity decrease of eight launch services, from 168 to 160, based on decreased satellite vehicle requirements (-$2,514.1 million), and revised escalation indices (-$184.2 million). These decreases were partially offset by an
RDT&E increase due to a revised estimate to align with the FY 2019 President’s Budget for launch systems investment (+$190.1 million), and a procurement increase based on a revised estimate due
to changes in satellite vehicle requirements necessitating assignment of missions to different configurations (+$477.0 million), and an adjustment for current and prior escalation (+$35.6
million).

Joint Direct Attack Munition (JDAM) – Program costs increased $1,197.1 million (+11.8%) from $10,166.5 million to $11,363.6 million, due primarily to a quantity increase of 34,690 tailkits from

395,532 to 430,222 (+$911.3 million), increased demand for Laser JDAM production (+248.1 million), a revised estimate to reflect the funding profile on new Navy budget line item (+$64.9 million), increased need for weapons instrumentation telemetry kits to support Air Force testing (+$38.9 million), and adjustments for current and prior escalation indices (+$15.6 million). These
increases were partially offset by revised escalation indices (-$30.2 million), and the acceleration of the procurement buy profile based on Warfighter urgent operational needs (-$52.4 million).
Military GPS User Equipment Increment 1 (MGUE Inc 1) – Program costs increased $265.1 million. (+22.7%) from $1,166.4 million to $1,431.5 million, to align with the approved Milestone B Cost
Estimate (+$237.4 million), and a revised estimate to reflect Department-wide funding adjustments (+$29.4 million).

Next Generation Operational Control System (OCX) – Program costs increased $665.3 million (+12.3%) from $5,394.8 million to $6,060.1 million, due primarily to increased funding to support
the Regional Military Protection requirement (+$212.3 million), and increased funding in FY 2019 through FY 2023 to align with the Service Cost Position dated May 25, 2017 (+$496.8 million).
These increases were partially offset by revised escalation indices (-$16.9 million), revised estimates to align with the FY 2019 President’s Budget (-$16.3 million), and revised estimates to
reflect actuals (-$15.9 million).

DoD:

Ballistic Missile Defense System (BMDS) – Program costs increased $7,185.7 million (+4.4%) from $164,994.1 million to $180,522.0 million (includes program adjustment of +$8,342.2 million for BMDS development, procurement, and construction funding for FY 2023 which is not attributed to program cost growth), due primarily to additional funds in RDT&E, Procurement, and MILCON. RDT&E funds were added for a new discriminating radar for the Pacific Theater (+$739.5 million), an increase for improved Hawaii Radar sensitivity capability (+$203.0 million), a transfer of the Israeli Program funding from Procurement to align with the continued development and production profiles (+756.0 million), for Special Programs (+$659.5 million), revisions to the BMDS Test Program (+$399.2 million), addition of 20 Ground Based Interceptors (GBIs) and silos at Fort Greely, Alaska (+$1,103.9 million), completion of two silos at Missile Field 1 at Fort Greely, Alaska and six boosters to maintain 44/64 deployed GBIs (+$247.0 million), extension of Sea Based X-Band Radar operational days at sea and necessary software upgrades (+$204.1 million), and funds to continue support of the United States Forces Korea (USFK) Joint Emergent Operational Need (JEON) (+$167.7 million). The increase in RDT&E funding was partially offset by rephasing of the Multi Object Kill Vehicle program to extend risk reduction activities (-$138.2 million), and the deferral of Terminal High Altitude Area Defense (THAAD) III software (-$162.0 million). Procurement funds were added to support the addition of 20 GBIs and silos at Fort Greely, Alaska (+$1,770.0 million), an additional 100 THAAD interceptors (+$910.0 million), 16 additional SM-3 Block IIA missiles (+$451.0 million), support to USFK JEON (+$61.9 million), and implementation of SM-3 Block IB Multi Year Procurement and addition of 62 missiles (+$553.5 million). The increase in Procurement funding was partially offset by a reduction of 20 SM-3 Block IIA missiles starting in FY 2020 (-$504.2 million), and the transfer of the Israeli Program funding to RDT&E (-$756.0 million). MILCON funds were added for Missile Field 4 construction at Fort Greely, Alaska (+$200.0 million), funding for the new discriminating radar in the Pacific Theater (+$409.9 million), for alternative sites for the Hawaii Radar including an InFlight Interceptor Communications System Data Terminal (+$189.6 million), and for Phase 2 of the Long Range Discrimination Radar System Complex (+$24.0 million). The increased MILCON funding was partially offset by a revised Consolidated Test Complex construction start from FY 2022 to FY 2023 (-$177.9 million).

C. Other, Key Programs of Interest
F-35 Joint Strike Fighter – Acquisition costs (RDT&E + Procurement + MILCON) for the overall program decreased $349.9 million (-0.09%) from $406,480.9 million to $406,131.0 million (TY$). The breakdown by subprogram is: F-35 Aircraft – Subprogram costs decreased $589.6 million (-0.17%) from $342,081.9 million
to $341,492.3 million, due primarily to revised escalation indices (-$1,562.3 million) and decreases due to adjustments in the U.S. procurement quantity schedule profile (-$819.2 million). These decreases were offset by increases due primarily to the application of new outyear escalation indices (+1,020.9 million), revised estimating assumptions (+393.3 million), and revised estimates as the result of refined military construction requirements (+$471.4
million). F-35 Engine – Subprogram costs increased $239.7 million (+0.37%) from $64,399.0 million to $64,638.7 million, due primarily to the application of new outyear escalation indices (+$297.2
million), revised estimating assumptions (+$64.7 million), and increases in other support due to the maturation of technical baseline, definition of customer requirements, and further definition
of Services bed down/fielding plans (+$174.5 million). These increases were offset by decreases due to revised escalation indices (-$307.3 million).

Overall, in 2017, the development effort has stabilized with the delivery of full Block 3F Capabilities. In procurement, the program had achieved its planned delivery goals (66 aircraft) and is focusing on aggressively reducing the cost to procure the F-35. Operations and Support cost estimates will be updated at Milestone C/Full-Rate Production, currently planned for April 2019.

SSBN 826 COLUMBIA Class Submarine (SSBN 826) – Program costs decreased $161.6 million (-0.13%) from $127,036.4 million to $126,874.8 million, due primarily to cost reductions in procurement associated with revised escalation indices (-$889.2 million), and revised estimates in Shipbuilding & Conversion, Navy, based on updated Department-wide adjustments and incorporation of updated escalation assumptions (-$164.2 million). These decreases were partially offset by revised estimates, and increases in Other Support, to reflect application of new out year escalation indices (+884.0 million).
***Note: Quantity changes are estimated based on the original SAR baseline cost-quantity relationship. Cost changes
since the original baseline are separately categorized as schedule, engineering, or estimating “allocations.” The total
impact of a quantity change is the identified “quantity” change plus all associated “allocations.”

 

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