GAO: Air Force Needs Timely and Accurate Estimates of Costs

It seems like a lot of the advice for improving spending at the Department of Defense (DOD) comes down to pretty common sense concepts: don't accept shoddy ships, don't give the Department of Defense things they didn't ask for. Maybe even choose programs based on strategic needs.>> And a report released Friday by the Government Accountability Office (GAO) points out another problem that seems to be able to be solved by the common sense solution of making procurement decisions based on, oh, realistic cost estimates.>> Yet again, the Air Force is being criticized for low-balling cost estimates. This time, the GAO is concerned about the Air Force's numbers for their Future Strategic Airlift. From the report:>> The Air Force currently estimates it will spend $9.1 billion on upgrading the C-5s. However, this estimate may be understated because DOD did not apply risk or uncertainty analyses...At the same time, the Air Force has not priced or budgeted for a new upgrade program it plans to begin in fiscal year 2010 to address certain modernization deficiencies and to add new capabilities.>> And possibly even worse, it sounds like the manufacturer is even telling the Air Force that they're severely underestimating costs:>> At some point, the C-17 production line will shut down, and DOD will have to pay substantial costs that have not yet been budgeted. The manufacturer and Air Force shutdown estimates differ significantly--about $1 billion and $465 million, respectively--in large part because the manufacturers estimate included assumptions about demolishing facilities and environmental remediation, while the Air Force's did not.