DOD’s rationale for waiving WSARA’s competitive prototyping requirement for CRH addresses one of the two bases provided in the statute; namely that the cost of producing competitive prototypes exceeds the expected life-cycle benefits (in constant dollars) of producing the prototypes. The CRH program’s acquisition strategy, which anticipates integrating an existing, in-production and flight-proven aircraft with technologically mature subsystems, is consistent with this rationale. The Air Force believes that any technology risk reduction associated with, or potentially benefitting, the CRH program has already occurred during the efforts to develop these in-production aircraft. This includes any risk reduction that could be achieved through competitive prototyping. In granting the waiver, DOD also found reasonable the Air Force’s conclusion that the estimated $725 million cost of conducting competitive prototyping exceeded the maximum expected life-cycle benefits of $12 million. However, the Air Force only evaluated one potential approach to implementing competitive prototyping, which involved funding two contractors for much of the program’s system development. This resulted in a high cost estimate for competitive prototyping that is more than 10 times greater than the target unit cost of the helicopter. DOD’s policy on economic analysis states that each feasible alternative for meeting an objective must be considered, and its life-cycle costs and benefits evaluated. The Air Force could have more fully evaluated the cost and benefits of additional prototyping strategies, including more limited approaches that are mentioned in WSARA or DOD’s implementing memorandum, such as producing a single prototype or prototyping critical subsystems before Milestone B. The potential cost and benefits of these strategies were not included in the Air Force’s supporting analysis. While there are questions about the methodology the Air Force used to evaluate the cost and benefits of competitive prototyping for the CRH program, the decision to not pursue prototyping may still be sound given the other actions that the Air Force has taken to reduce cost and risk on the program.

Why GAO Did This Study

The Weapon Systems Acquisition Reform Act of 2009, as amended (WSARA), requires the Secretary of Defense to modify guidance to ensure that the acquisition strategy for each major defense acquisition program provides for competitive prototypes before Milestone B approval–which authorizes entry into system development–unless the Milestone Decision Authority waives the requirement. Competitive prototyping, which involves commercial, government, or academic sources producing early prototypes of weapon systems or critical subsystems, can help Department of Defense (DOD) programs reduce technical risk, refine requirements, validate designs and cost estimates, and evaluate manufacturing processes prior to making major commitments of resources. It can also help reduce the time it takes to field a system, and as a result, reduce its acquisition cost. WSARA states that the Milestone Decision Authority may waive the competitive prototyping requirement only on the basis that (1) the cost of producing competitive prototypes exceeds the expected life-cycle benefits (in constant dollars) of producing such prototypes, including the benefits of improved performance and increased technological and design maturity that may be achieved through competitive prototyping; or (2) but for such a waiver, DOD would be unable to meet critical national security objectives.

WSARA also provides that whenever a Milestone Decision Authority authorizes a waiver of the competitive prototyping requirement on the basis of what WSARA describes as “excessive cost,” the Milestone Decision Authority is required to submit notification of the waiver, together with the rationale, to the Comptroller General of the United States at the same time it is submitted to the congressional defense committees. WSARA further provides that no later than 60 days after receipt of a notification of a waiver, GAO is to review the rationale for the waiver and submit a written assessment of that rationale to the congressional defense committees.

On November 27, 2012, GAO received notice from DOD that it had waived the competitive prototyping requirement for the Combat Rescue Helicopter (CRH). The Air Force’s CRH program, formerly called HH-60 Recapitalization, is an effort to replace aging HH-60G Pave Hawk helicopters. The CRH’s primary mission is to recover personnel from hostile or denied territory. It will also conduct humanitarian, civil search and rescue, disaster relief, and non-combatant evacuation missions. The program is the Air Force’s second effort to replace the HH-60G. The first effort, the Combat Search and Rescue Replacement Vehicle (CSAR-X), was canceled in 2009. Since then, the Air Force has reduced the helicopter’s combat radius, survivability, cabin space, payload, and airspeed requirements to lower the program’s cost and ensure that no technology development was needed to satisfy these requirements.

In this report, GAO assesses DOD’s rationale for waiving the competitive prototyping requirement for CRH and the analysis used to support it.