* Six programs certified vital to national security
* Officials to brief on process later Tuesday
(NSI News Source Info) WASHINGTON, - June 2, 2010: The Pentagon told Congress on Tuesday the Lockheed Martin Corp (LMT.N) F-35 fighter program and five other big weapons programs were vital to national security and should continue despite big cost overruns that triggered live-or-die reviews.
The U.S. Defense Department told lawmakers that all six programs met five conditions required to keep them going under the Nunn-McCurdy law which requires detailed reviews once a program's unit costs rise 50 percent above initial estimates. 
The cost of the F-35 program, for instance, is now expected to reach $382 billion over the life of the program. The expected cost of each aircraft rose from $50 million in fiscal year 2002 dollars to $92.4 million. But senior defense officials said they expected to undercut those estimates.
One senior defense official said the Pentagon was already doing detailed reviews of major weapons programs, given efforts to rein in cost overruns on many major weapons programs.
The Pentagon sent the certifications to Congress and then released details to reporters, but senior officials briefed on background and asked not to be named.
The official questioned how much value the time-consuming and costly Nunn-McCurdy reviews truly added to the Pentagon's oversight, noting that some cost increases reflected quantity changes and not management problems.
Officials were assessing the hours involved in the reviews, and trying to devise a more efficient process so senior acquisition officials could spend more time actually managing programs, the official said.
Part of the problem is that Nunn-McCurdy cost breaches actually occur long after program managers identified problems, said the official, who declined to speak on the record. "It's not the best mechanism for us."
The Pentagon in April said the F-35 and five other programs had exceeded certain cost thresholds, prompting reviews that could, but were not expected to, lead to termination.
"We are certifying these six programs," Pentagon spokesman Bryan Whitman told reporters on Wednesday after the department completed the reviews.
To allow continued funding, the Pentagon must certify that each program has no viable alternative; that new cost estimates are reasonable; that the program is vital to national security; that it rates a higher priority than other programs; and that it has an adequate management structure.
Defense officials told lawmakers in April that a restructuring of the F-35, or Joint Strike Fighter, would result in a sharp increase in unit costs, driving the overall program of the program to $328 billion. But new estimates indicate the cost will be even higher at $382 billion.
Other programs certified for continued work were:
-- the DDG-1000 destroyer built by General Dynamics Corp (GD.N), where the unit cost jumped by 86.5 percent due to the Navy's decision to buy just three ships instead of the 10 planned. To cut costs, Pentagon acquisition chief Ashton Carter ordered removal of a radar from the design, and a one-year delay in the initial use of the program to fiscal 2016.
-- Boeing Co's (BA.N) Apache Block III program to upgrade the AH-64 helicopter, which saw its unit costs increase by 25.5 percent due to the addition of 56 new aircraft to an existing program to upgrade 634 existing helicopters.
-- a remote mine-hunting system for use on a new class of coastal warships, which saw its unit cost increase by 79.5 percent after the Navy decided to buy 54 fewer systems.
-- Boeing's Wideband Global Satellite (WGS) program, whose unit cost rose by 27.2 percent due to a production break of three years and a decision to buy two more satellites.
-- a U.S. Army common missile warning program run by BAE Systems Plc (BAES.L), where unit costs nearly tripled after the Pentagon cut the quantity from 2,618 missiles to 208, spreading development costs over a much smaller overall number.
The Pentagon said the missile warning program was technologically immature and faced unrealistic performance expectations, but it needed to continue since the system was urgently needed in Afghanistan on CH-47 helicopters.
The cost of the F-35 program, for instance, is now expected to reach $382 billion over the life of the program. The expected cost of each aircraft rose from $50 million in fiscal year 2002 dollars to $92.4 million. But senior defense officials said they expected to undercut those estimates.
One senior defense official said the Pentagon was already doing detailed reviews of major weapons programs, given efforts to rein in cost overruns on many major weapons programs.
The Pentagon sent the certifications to Congress and then released details to reporters, but senior officials briefed on background and asked not to be named.
The official questioned how much value the time-consuming and costly Nunn-McCurdy reviews truly added to the Pentagon's oversight, noting that some cost increases reflected quantity changes and not management problems.
Officials were assessing the hours involved in the reviews, and trying to devise a more efficient process so senior acquisition officials could spend more time actually managing programs, the official said.
Part of the problem is that Nunn-McCurdy cost breaches actually occur long after program managers identified problems, said the official, who declined to speak on the record. "It's not the best mechanism for us."
The Pentagon in April said the F-35 and five other programs had exceeded certain cost thresholds, prompting reviews that could, but were not expected to, lead to termination.
"We are certifying these six programs," Pentagon spokesman Bryan Whitman told reporters on Wednesday after the department completed the reviews.
To allow continued funding, the Pentagon must certify that each program has no viable alternative; that new cost estimates are reasonable; that the program is vital to national security; that it rates a higher priority than other programs; and that it has an adequate management structure.
Defense officials told lawmakers in April that a restructuring of the F-35, or Joint Strike Fighter, would result in a sharp increase in unit costs, driving the overall program of the program to $328 billion. But new estimates indicate the cost will be even higher at $382 billion.
Other programs certified for continued work were:
-- the DDG-1000 destroyer built by General Dynamics Corp (GD.N), where the unit cost jumped by 86.5 percent due to the Navy's decision to buy just three ships instead of the 10 planned. To cut costs, Pentagon acquisition chief Ashton Carter ordered removal of a radar from the design, and a one-year delay in the initial use of the program to fiscal 2016.
-- Boeing Co's (BA.N) Apache Block III program to upgrade the AH-64 helicopter, which saw its unit costs increase by 25.5 percent due to the addition of 56 new aircraft to an existing program to upgrade 634 existing helicopters.
-- a remote mine-hunting system for use on a new class of coastal warships, which saw its unit cost increase by 79.5 percent after the Navy decided to buy 54 fewer systems.
-- Boeing's Wideband Global Satellite (WGS) program, whose unit cost rose by 27.2 percent due to a production break of three years and a decision to buy two more satellites.
-- a U.S. Army common missile warning program run by BAE Systems Plc (BAES.L), where unit costs nearly tripled after the Pentagon cut the quantity from 2,618 missiles to 208, spreading development costs over a much smaller overall number.
The Pentagon said the missile warning program was technologically immature and faced unrealistic performance expectations, but it needed to continue since the system was urgently needed in Afghanistan on CH-47 helicopters.
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