F-35, Apache AH-64 Get Votes Of Confidence

The Department of Defense has certified that six acquisition programs - including the Joint Strike Fighter and the Block 3 upgrade program for the Apache AH-64 helicopter, should continue under Nunn-McCurdy legislation.

The systems also include the the DDG-1000 destroyer, 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 Tuesday.

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 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.

In a report sent to Congress Tuesday, the Pentagon said that the price-per-plane, which includes R & D and well as construction, has ballooned to $112.4 million, or about 81 percent more than the 2002 $62 million price tag per airplane. The report shows it is also four years behind schedule.

Bloomberg reported that Lockheed Martin disputes the independently-produced estimate. Spokesman Chris Geisel wrote an e-mail saying that all of the airplane's contracts have come in below government estimates, and that there is "no scenario" that brings the cost of an F-35 "anywhere near" $112 million.

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.

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.

FMI: www.dod.gov