US report says arms programs face overruns, delays

* Most programs facing changing requirements

* Overall affordability must be addressed

By Andrea Shalal-Esa

Defense News: WASHINGTON, March 30 (Reuters) - The Pentagon and Congress have taken meaningful steps to reform chronic cost overruns and schedule delays on big weapons programs, but the government still needs to downsize existing weapons programs, eliminate them, or both, a new congressional report said on Tuesday.

The Government Accountability Office (GAO), the research arm of Congress, said 42 programs it assessed in depth had shown continued improvement in terms of technology, design, and manufacturing processes, but most programs still lacked the levels of knowledge needed for best management practices.

That put them at higher risk for cost growth and schedule delays, the report concluded.

A majority of programs had also seen changes in military requirements, software development challenges, or workforce issues, or a combination -- all factors that could affect program stability and execution.

GAO lauded Defense Secretary Robert Gates for proposing to terminate all or part of seven major acquisition programs with a combined projected cost of at least $126 billion.

But it said pressures on the defense budget continued to build, given the wars in Iraq and Afghanistan, rising health care costs and initiatives to modernize military equipment.

"The department must still address the overall affordability of its weapon system investments," GAO said, noting that the number of major weapons programs actually grew by six to 102 last year, despite Gates' cuts.

Pentagon acquisition chief Ashton Carter struck a similar theme in a speech to industry executives on Monday, saying he planned to use more independent cost estimates and step up oversight to identify problems with arms programs sooner.

Using such tools had helped bring to light issues with the Lockheed Martin Corp's (LMT.N) F-35 fighter jet program, and allowed a major restructuring to put the program on a more realistic footing for success, Carter said.

The GAO said it was unable to analyze the overall performance of the Pentagon's weapons portfolio because the department had not issued complete reports on the costs of major acquisition programs for fiscal year 2009.

In previous years, GAO reported cumulative cost growth on weapons programs of $300 billion in fiscal year 2010 dollars. It said it expected to resume that analysis next year.

The GAO report included details on dozens of specific programs, including the F-35, the Navy's Littoral Combat Ship program, several satellites and the Army's canceled Future Combat Systems modernization program. [ID:nN30162613]

GAO warned that even some of the early spinouts from the FCS program, which were supposed to be more advanced than other technologies, faced reliability and performance issues.

For instance, a small unmanned ground vehicle was unable to provide the infrared imagery needed to recognize a person at required distances. And an unattended ground sensor that was supposed to run for 127 hours only ran for five.

It warned that problems that arose during testing could require costly redesigns and retrofits of Northrop Grumman Corp's (NOC.N) Global Hawk unmanned plane, which could lead to further delays in a program that is already more than 3 years behind schedule.

Lockheed's Space Based Infrared System (SBIRS) satellite also faced software development issues and hardware defects that could add to cost overruns and schedule delays, it said. (Reporting by Andrea Shalal-Esa)