This third annual report continues the effort to provide data and analysis so the Department of Defense (DOD) can see how it is doing, measure the effectiveness of ongoing efforts to improve acquisition, and learn from past experience. Contents: (1) background material on acquisition, spending levels and trends, and general perspectives on measuring institutional performance; (2) analysis on outputs and outcomes of the defense acquisition system; (3) new analysis on broader factors that influence acquisition outcomes; (4) selected input and process measures, including the acquisition workforce improvements and incentives, bid-protest rates, usage of Lowest-Price, Technically Acceptable (LPTA) for selecting contracted services, performance relative to competition and small-business goals, and preliminary results on government execution costs. Figures and tables. This is a print on demand report.

Performance of the Defense Acquisition System 2016 Annual Report A key part of improving a system is objectively measuring its performance and the effects of policies, processes, and inputs on the outcomes of the system. Without this, we cannot tell where we have problems, what is working (or not), and whether management changes are making things better (or worse). In the case of defense acquisition, the primary outcome is the value of operational capabilities delivered in time for our warfighters to address threats. Unfortunately, it is very difficult to measure the final operational performance and value of our systems across systems and commodities. Our reports can objectively measure and thus focus on the cost, schedule, and technical performance of our acquisitions-aggregated to look for statistically significant trends together with correlates, institutional differences, and theory to inform ways to improve future outcomes. Each performance measure has its strengths and weaknesses, so we use multiple measures (e.g., at both the program and contract level) and subsequent analysis to see if the answers point in the same direction. We add experience and theoretical insights to guide our conclusions. This is the fourth annual report on the Performance of the Defense Acquisition System, using quantitative analysis of broad data to measure institutional performance. This annual report series is a central part of Better Buying Power (BBP). It continues to reflect results in defense acquisition performance from ongoing DoD compliance with the Improve Acquisition Act of 2010 and the earlier Weapon Systems Acquisition Reform Act of 2009. Although similarly motivated, our efforts go beyond the specifics of those laws to seek additional insights for improving the defense acquisition system's performance. This study also fulfills ongoing Office of Management and Budget (OMB) requests for evidence-based analytic studies on acquisition performance. It is encouraging to see evidence of performance improvement over the last few years. However, these results are not a reason to pause in our efforts. They should motivate us to press ahead even more vigorously.

While the United States achieves its national security missions by equipping its military forces with the best weapons systems in the world, questions continue about the performance of the defense acquisition system. How effective is it? How can that effectiveness be objectively measured? Can we use those measures to affect behaviors with appropriate incentives or determine which policies and procedures improve results and which turn out to be misguided?Answering these questions requires more than opinion. It requires analysis of unbiased data to discover insights into underlying effects. These, in turn, will inform better policy and programmatic decisions.This is the first in a series of planned annual reports on the performance of the defense acquisition system-its programs, institutions, workforce, managers, executives, and industrial partners.By using objective data and analysis to measure performance, these reports will identify underlying drivers and inform future decisions on programs, policies, and processes.This first report focuses primarily on performance related to Major Defense Acquisition Programs (MDAPs). The report focuses on more in-depth indicators of system outcomes, particularly with respect to cost and schedule, and does so by looking at various institutional trends.* How does the portfolio of major programs perform over time? What has changed, how, and by how much?* Are there differences associated with leadership?* Are there differences among DoD organizations?* Are there differences among our industrial partners?This report also reflects results to date from the compliance of the Department of Defense (DoD) with the Improve Acquisition Act of 2010 on performance assessments of the defense acquisition system. While similarly motivated, our efforts will go beyond the specifics of this act to seek additional insights for improving the performance of the defense acquisition system.In addition, this study will be used in part to fulfill a recent request from the Office of Management and Budget for an evidence-based analytic study on acquisition performance.Readily available data allowed us to provide historical baselines on acquisition performance and some initial insights into whether performance has, or has not, improved recently. They also demonstrate that it can take many years to see the results of new policies, making it even more important to test and inform those policies. Although existing data can be effectively leveraged to improve our understanding, a lesson learned is that gaps remain; therefore, I initiated a strategic initiative to identify those key data gaps and begin selective collection of new data for future analysis. That work will continue, and will inform future reports.Since this initial report focuses primarily on analyzing MDAP development and early production information, it cannot be considered a complete picture of the entire acquisition system. Future reports will delve into areas such as contracting, acquisition of services, technology development, industrial base concerns, etc.Value obtained in acquisition is a balance of costs, benefits, and prudent risks. Risks are a fact of life in acquiring the kinds of products our warfighters need, and these risks must be objectively managed. Additionally, demands and threats do change in both the short and long term, so the acquisition system must be able to respond. In some cases, cost growth results from prudent changes in quantity or capability of acquired systems. Our ultimate measure of performance is providing effective systems to the warfighter that are suitable for fielding, at costs that are affordable, while ensuring taxpayers' money is spent as productively as possible. Only through rigorous analysis and clear reporting will we be able to separate and account for acceptable and unacceptable types of cost growth, informing our discussions within DoD, with Congress, our Allies, and the American public.

This report is the second in an annual series examining trends in what the U.S. Department of Defense (DoD) is buying, how DoD is buying it, and from whom DoD is buying. This year’s study looks in depth at issues in research and development, acquisition reform in the FY2017 National Defense Authorization Act (NDAA), performance of the defense acquisition system, the future of cooperative International Joint Development Programs, and major trends apparent in the activities of the major defense components. By combining detailed policy and data analysis, the study provides a comprehensive overview of the current and future outlook for defense acquisition.

This is GAO's annual assessment of DOD major weapon system acquisitions, an area on GAO's high-risk list. DOD and Congress have taken meaningful steps to improve the acquisition of major weapon systems, yet programs continue to experience cost and schedule overruns. Further, GAO has emphasized the need to sustain the implementation of acquisition reforms and for programs to complete developmental testing before beginning production, thereby avoiding concurrency and its associated cost and schedule growth. With the continuing budgetary pressures, DOD cannot afford to miss opportunities to address inefficiencies in these programs to free up resources for higher priority needs. The joint explanatory statement to the DOD Appropriations Act, 2009 includes a provision for GAO to annually review DOD's portfolio of weapon systems. This report includes observations on (1) the cost and schedule performance of DOD's 2015 portfolio of 79 major defense acquisition programs; (2) the knowledge attained at key junctures in the acquisition process for 43 programs that were in development or early production; and (3) key acquisition reform initiatives and program concurrency. To develop the observations in this report, GAO analyzed cost, schedule, and quantity data from DOD's December 2014 Selected Acquisition Reports. GAO also collected data through two questionnaires to program offices on technology, design, and manufacturing knowledge; the use of knowledge-based acquisition practices; and the implementation of acquisition reforms

Congressional concern with cost overruns, or breaches, in several major defense acquisition programs led the authors, in a partnership with the Performance Assessments and Root Cause Analysis Office in the Office of the Secretary of Defense, Acquisition, Technology, and Logistics, to investigate root causes by examining program reviews, analyzing data, participating in contractor briefings, and holding meetings with diverse stakeholders.

For nearly 60 years, the Department of Defense (DoD) has been engaged in a continuous process of self-assessment to identify and improve the way it acquires weapons systems. Frequent major acquisition reform initiatives have responded to concerns that acquisition costs are too high, that DoD is buying the wrong things, or that the process is too slow. The need to review the process and to institute change has become very obvious to the acquisition community. The House and Senate Fiscal Year 2006 Defense Authorization Committee Reports addressed concerns about the ability of DoD's Acquisition System to develop and deliver required capabilities when needed and at predictable costs. The reports further stated that addressing symptoms one program or one process at a time is unlikely to result in substantial improvement. Both Congress and DoD senior leadership have lost confidence in the capability of the Acquisition System to determine what needs to be procured, or to predict with any degree of accuracy what things will cost, when they will be delivered, or how they will perform. On June 7, 2005, then Acting Deputy Secretary of Defense Gordon England authorized a sweeping and integrated assessment to consider every aspect of acquisition, giving rise to the Defense Acquisition Performance Assessment Project. The centerpiece of this project is a panel governed by the tenets of the Federal Advisory Committee Act of 1972 (Public Law 92-463). The panel concluded that the problems are deeply imbedded in many of the acquisition management processes that are used in the DoD and not just the traditional procurement processes. DoD needs a radical approach to improvements in its Acquisition System, and it needs to adapt these improvements to the new security environment of the 21st century. The panel's acquisition performance assessment process and conclusions are outlined in this report.