From the U.S. Government Accountability Office, www.gao.gov Transcript for: 2018 DOD Weapons Programs Quick Look Description: Join us as we explore how the Department of Defense has handled their major weapons systems acquisitions over the past year. Related GAO Work: GAO-18-360SP: Weapon Systems Annual Assessment: Knowledge Gaps Pose Risks to Sustaining Recent Positive Trends Released: April 2018 [ Background Music ] [ Shelby Oakley: ] The total cost of this year's portfolio is about $1.66 trillion. [ Matt Oldham: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. I'm Matt Oldham. Every year, GAO reports on Department of Defense major weapon systems acquisitions, providing a quick look at an area on GAO's High Risk List. This report covers changes to the DOD portfolio and the costs, schedule, and performance of weapons programs. I'm sitting with Shelby Oakley, a director in our Contracting and National Security Acquisitions team, to talk about GAO's 2018 report on this subject. Thank you for taking the time to speak with me, Shelby. [ Shelby Oakley: ] Thanks for having me. [ Matt Oldham: ] What does the report mean by major weapon systems? [ Shelby Oakley: ] Major weapon systems are really those big-ticket items that DOD buys to support its war fighter -- things like aircraft carriers, aircraft like the Joint Strike Fighter, missiles, satellites like the Global Positioning Satellites. We have about 86 of these major weapons programs in the current portfolio this year. This is the largest portfolio that we've assessed since 2010, and it also includes an assessment of 12 future programs that have really yet to enter the portfolio yet but that are coming down the pike. [ Matt Oldham: ] With these 86 programs, how much money are we talking? [ Shelby Oakley: ] Well, it's not insignificant. The total cost of this year's portfolio is about $1.66 trillion. Now, this is spread out over many, many years. These are multibillion-dollar, multiyear procurements in general. On average, DOD budgets about $56 billion per year for its major weapons acquisition programs. And this also, this $1.66 trillion, does not include those 12 future programs that I was talking to you about -- things like the new ground-based missile to support our nuclear deterrent. That's also coming down the pike soon, and it'll be a significant cost to the portfolio. [ Matt Oldham: ] You had mentioned this is the largest portfolio since 2010. Have you seen any improvements on how DOD has been taking care of the portfolio in that time? [ Shelby Oakley: ] We have. And in fact, the improvements that we can point to are really associated with those programs that have been started since 2010. Since 2010, many reforms were put in place by the Congress and by the Department of Defense that really focused on improving acquisition outcomes. And so those newer programs are displaying improved costs and schedule performance trends. DOD has really done a better job for those programs since 2010 at setting realistic costs and schedule baselines, and DOD is also continuing to gain buying power. That is, it's able to buy more for the same amount of money. Now, one caveat to that is, is we saw a little bit of a decrease this year -- actually, a significant decrease this year -- in the amount of buying power that DOD gained this year. [ Background Music ] [ Matt Oldham: ] Try wrapping your head around more than a trillion dollars spread out over 86 major weapon systems. This is the 16th GAO assessment of the DOD's acquisitions programs. And while there have been reforms during that time, last year's report on this topic found DOD to be missing key opportunities to reduce costs by increasing competition, I asked Shelby if the DOD is facing the same challenges or if there are any new ones. [ Shelby Oakley: ] There's a little bit of both. The department is continuing to face several external challenges that have been around for a while -- things like its programs needing to operate with funding stability caused by multiple and year after year continuing resolutions. Also, the challenge to continue to keep pace with the evolving threats that our adversaries present and ensuring that the systems that we developed are protected, for example, from a cyber security perspective. So those are some that continue. DOD also faces some internal challenges, some of which are new and some of which are continuing, such as the need to really recapitalize across a number of portfolio areas, such as its nuclear deterrent and its space-based capabilities. You know, the gaps that are apparent in these portfolios right now are driving DOD to start a lot of large, complex acquisitions at the same time, which can be tricky to execute. But I really think that the biggest challenge that we highlight this year that is different from in the past is that DOD's really going to have to focus on maintaining and increasing the discipline that it's put in place since 2010 for those programs, and that's going to be really important, especially as its budgets are increasing and as decision-making and oversight is being devolved to the services. Furthermore, there's really a lot of pressure on the services to field capabilities faster, get things faster to the war fighter, and we can see that that could lead to a situation where there's an increased acceptance of technical risk on programs, which has, in the past, really resulted in negative cost and schedule outcomes for programs. [ Matt Oldham: ] Shelby, what do you believe is the bottom line of your report? [ Shelby Oakley: ] We actually really have a mixed-message bottom line for the report this year -- first, that the newer programs, they're showing better performance than the older programs did, which really could indicate that some of the reforms over the past several years are beginning to take hold and are effective. But time will actually tell because, at the same time, we're seeing some of these newer programs head down the same path that the older programs did that really led to significant costs and schedule overruns. In particular, newer programs are continuing to proceed with critical knowledge gaps that really have proven to result in poor costs and schedule outcomes. [ Matt Oldham: ] Shelby Oakley is a director in our Contracting and National Security Acquisitions team, and she's the signer of a GAO report on major weapon systems acquisitions in the Department of Defense. Thank you for your time, Shelby. [ Shelby Oakley: ] Thanks for having me. [ Background Music ] [ Matt Oldham: ] Thanks for listening to the Watchdog Report. To hear more podcasts, subscribe to us on Apple Podcasts. [ Background Music ] [ Matt Oldham: ] For more from the congressional watchdog, the U.S. Government Accountability Office, visit us at gao.gov.