Saturday, April 08, 2006

Pentagon tells Congress of weapons cost overruns

Pentagon tells Congress of weapons cost overruns
By Jim Wolf

WASHINGTON (Reuters) - Two multibillion-dollar Northrop Grumman Corp. projects -- the Global Hawk surveillance drone and a weather satellite system -- are running more than 25 percent over budget, the U.S. Defense Department told Congress on Friday in a filing that could lead to program cancellations.

Another Northrop project, a mini-submarine designed to deliver elite Navy Sea-Air-Land special forces, is being terminated. It too was running more than 25 percent over budget as of December 31, 2005, the Pentagon reported.

The department said Lockheed Martin Corp.'s multiple launch rocket system, being co-developed with Britain, Italy, France and Germany, was more than 15 percent over budget. That is below the 25 percent threshold risking cancellation but enough to require Congress be advised.

The notifications were required under a newly tightened, 24-year-old law known as Nunn-McCurdy.

The filing, known as Selected Acquisition Reports and due to Congress 60 days after President Bush's fiscal 2007 budget proposal, covered 89 major arms programs.

Programs running 25 percent or more over budget risk termination unless certified by the secretary of defense as vital to national security and meeting three other conditions.

Those additional conditions are that no alternatives exist, that costs are under control and that the management structure is adequate to keep costs under control.

The Pentagon has 60 days -- until June 5 -- to certify conditions have been met for Global Hawk and the National Polar-Orbiting Operational Environmental Satellite System (NPOESS) or terminate them.

Global Hawk is a high-altitude, long-endurance unmanned aerial vehicle. It entered limited production in March 2001. The program, valued at more than $6 billion, was restructured twice in 2002.

The $8 billion NPOESS system is designed to increase the accuracy of weather forecasts so that five- to seven-day forecasts are as reliable as those now looking three days out.

Under the Nunn-McCurdy rule changes enacted in January, the Pentagon also said 25 other programs were more than 50 percent over their original "baseline." In the case of the oldest program, Boeing Co.'s C-17 cargo plane, this harked backed to 1981.

Eleven other programs were reported for unit-cost breaches of more than 30 percent but less than 50 percent of their original "baseline" estimate.

The Aerospace Industries Association, a trade group that represents many U.S. military contractors, said on Thursday that these baseline "breaches" reflected the stepped-up reporting requirements, not programs gone awry.