The Department of Defense’s (DOD) rationale for waiving the competitive prototyping requirement in the Weapon Systems Acquisition Reform Act of 2009, as amended (WSARA), for the VXX program 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 VXX program’s acquisition strategy provided the primary justification for the prototyping waiver. According to the waiver, VXX requirements can be met by integrating an existing, in-production, flight-proven aircraft with mature mission systems. The Navy in its waiver request also concluded that the integration activities planned for the VXX program do not require additional technology maturation or risk reduction beyond that already being accomplished by the government through its own prototyping of certain critical mission subsystems. Recognizing that the intent of competitive prototyping is to reduce cost and risk, DOD took other actions that could arguably achieve these goals. Specifically, DOD decided to reduce requirements, use an existing aircraft, and mature critical subsystems before integrating them on the aircraft. In the waiver, DOD also found reasonable the Navy’s cost-benefit analysis, which examined multiple acquisition strategies with system- and subsystem-level prototyping from one or two contractors. In all, the Navy examined six different acquisition strategies and concluded that requiring competitive prototyping would delay fielding an initial operational capability by 16 months and increase development costs by about $782 million to $3.38 billion (in base year 2011 dollars), depending on the type and number of prototypes. The Navy also estimated that the more costly system-level prototyping strategies could achieve an estimated $542 million in life-cycle cost benefits by improving the reliability of the aircraft, which in turn could reduce the number of helicopters required. According to the Navy, the cost data used in its cost-benefit analysis were drawn from the VXX analysis of alternatives study and related activities. The Navy used cost estimating procedures on the VXX analysis of alternatives that substantially complied with best practices.

Why GAO Did This Study

WSARA required 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 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 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. 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 July 10, 2013, GAO received notice from DOD that it had waived the competitive prototyping requirement for the VXX Presidential Helicopter Replacement Program. In this report, GAO assesses DOD’s rationale for waiving the competitive prototyping requirement for VXX and the analysis used to support it.

see also –  Full Report