tell you 40 things that are wrong with a system, most of which are not well founded. But they never point out what's good about a system.

They'll tell you Aegis hasn't been subjected to testing, and when I talked to them about the thousands of hours we've gotten at the Norton Sound and the Combat System Engineering Development site and things like that, they're kind of at a loss to explain why they didn't cover that.

So I have a serious problem with the GAO insofar as I think they've become political tools in recent years as far as weapon systems go. They'll tell you anything you want about a system that's wrong but very little that's right.

That's just my evaluation. Tom, I don't know how you view them.

Mr. MOLLOHAN. I'm not defending GAO, but don't they have a policy when they find something that's questionable-and I'm talking about the military-they sit down with the responsible people and lay before them the problem as they see it, and discuss that problem, and if it's a valid one the military corrects it, the Defense Department corrects it, even though the report may no longer be viable, and the issue settled.

Mr. BATTISTA. That is the GAO as it ought to be, as opposed to the GAO as it's working these days.

Mr. MOLLOHAN. That's the way I understood it was.

Mr. BATTISTA. Not in all cases, Mr. Mollohan.

For example, I've talked to numerous project managers—and I'm not taking up for all project managers because some have been less than candid with us before-but there are many allegations that the GAO has made, for example, against the Aegis weapon system, against the Minuteman, against the MX that I don't think are very well founded, and I think they're at a loss to prove their case, and they have not coordinated with the program managers, or in cases where they have they've made a decision to ignore everything he had said.

I suggest you might approach Admiral Meyer with his experience in the recent GAO report on the CG-47 program. He'll be before us 2 weeks from now.

Dr. COOPER. The other thing I would add, too, is I think the GAO's work is of higher quality when they're looking at programs that are in production. One of the problems that concerns me is that they'll look at programs that are in the development stage and point out problems. I don't know of a program that's been in development that hasn't had problems. That's part of the reason you have a research and development process, to go out and test and find problems and correct them, and many times they'll be two or three steps behind where the Department has found problems and has made the correction and it's moved on, but they'll wave the red flag like that's terminal if there is a problem in the R. & D. stage.

Mr. Chairman, that basically is what I wanted to present in the way of a brief synopsis of our R. & D. process, just to give you an idea of some of the programs.

One other thing I did at Mr. Dickinson's request-and Mr. Dickinson, it's up to you, if you would like to go through it-you asked

about the SAR's, the selected acquisition report, and Ruth has some material that she can pass out, which basically is that material I gave you yesterday in full committee. That gives a summary of the last SAR.

Basically, what the SAR is is a report that the Department puts out every quarter that talks about the technical performance of the various systems it has under development and in production and the cost, and it looks at the program from about nine different ways, and basically usually comes up with the bottom line on what the program was estimated to cost and what it costs now, and also what it was supposed to have done in terms of performance and what it is doing now in terms of meeting that performance requirement.

I find these much handier than GAO reports, just to contrast them, because they are more complete as a rule than GAO reports. Mr. MOLLOHAN. Is this report confidential?

Dr. COOPER. Mr. Mollohan, if you have the summary page that says "Department of Defense Selected Acquisition Report as of December 31, 1980."

Mr. DICKINSON. That's what she just gave him.

Dr. COOPER. That one is not confidential. The one that Ruth is handing out is, and this is just an example that Ruth is handing out of a typical SAR report, and I've chosen here the Navy's LAMPS antisubmarine warfare system.

The first page that Diane handed out of the first set of sheets there is a summary of all the SAR's. When they come over every quarter they are in a book that's about 6 inches thick. This is a handy summary of it.

[The following information was received for the record:]

DEPARTMENT Of Defense Selected AcquisitION REPORTS As of December 31,

1980

An updated summary of DoD plans for the development and procurement of selected major defense systems has been submitted to the Congress. The Selected Acquisition Reports (SARS) are prepared every three months to provide the latest estimates of technical, schedule, quantity, and cost information concerning the major defense systems now approved within the Department of Defense.

The cost estimates provided in the 47 SAR programs include research, engineering, procurement, and military construction. Total program costs are updated to reflect actual cost on delivered systems, as well as anticipated cost for future procurements, including increased allowances for anticipated escalation.

The latest report, as of December 31, 1980, includes all changes to previous reports required by the Defense Appropriations Act for fiscal year 1981 and fiscal year 1982 budget requests now before the Congress. In addition, revisions in this report reflect the latest Five Year Defense Plan (FYDP) which includes, for the first time, the complete program for fiscal year 1986.

Reports on the 47 major acquisition programs transmitted to the Congress for December 31, 1980, reflect a total current estimate of program acquisition cost of $310.2 billion. This compares to a current estimate of $261.8 billion for the 46 major acquisitions in the September 30, 1980 reports. A reconciliation of the program adjustments for the two programs deleted and the three programs added and changes in the current estimate are provided below.

September 1980 (46 SAR's)

Plus added SAR's (AIM-9M, AIM-7M and NAVSTAR GPS)..

Current estimate (dollars in millions)

Minus deleted SAR's (AIM-9L and AIM-7F)....

$261,763.4

-3,485.1

+4,304.4

The net increase between September and December 1980 is $47.6 billion. Of the 44 programs reported in September and December 1980, the net increase is $46.2 billion. The difference of $1.4 billion represents current quarter changes to the Navy and Air Force Sidewinder (AIM-9M) and Sparrow (AIM-7M) programs. The $46.2 billion (18 percent) increase includes $16.0 billion (27 percent) for the Army, $23.5 billion (17 percent) for the Navy, and $6.7 billion (11 percent) for the Air Force. The overall cost for the 47 SAR programs is $310.2 billion.

Of the $47.6 billion increase being reported this quarter, $19.4 billion (41 percent) is attributable to three programs-the F/A-18, XM-1 tank, and Fighting Vehicle Systems. All three are reflecting large increases due to differences between Government inflation rate projections and current experience. Details are summarized below:

1. F/A-18.—Program costs increased by $8,177.9M, from $29,712.3M to $37,890.2M, due to (1) the application of higher anticipated escalation rates in program outyears ($+451.0M), (2) procurement schedule stretchout ($+907.0M), (3) support increase as a result of revised basing plan and repricing of support program ($+728.7M), and (4) reestimate of the R&D and procurement programs ($+6,091.2M). Of the $6,091.2M estimating increase, $3,855.8M represents the difference between Government inflation projections and actual experience on the fiscal year 1979-1981 production contracts and proposals. As a consequence, support purchases have been deferred and seven aircraft are being dropped from the fiscal year 1981 buy. Both actions contribute significantly to the schedule and support increases identified above.

2. XM-1.-Program costs increased by $5,871.1M, from $13,084.1M to $18,955.2M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+77.5M), (2) rescheduling of the production units due to budget constraints ($+412.3M), (3) revised R&D PIP engineering effort ($-8.9M), (4) increased support cost related to DT/OT III test activities and increased cost of initial spares and training ($+314.5M), and (5) revised R&D estimate associated with eventual integration of the 120mm gun ($+65.3M), and (6) revised current vehicle production costs ($+5,010.4). Of the $5,010.4M production cost increase, $2,070.7M is the difference between the Government inflation projections and actual experience on the fiscal year 1979-1981 production contracts and proposals. As a result of the current increased unit cost, the fiscal year 1979 procurement program has been reduced by 20 tanks and negotiations are under way to reduce the fiscal year 1980 program by up to 45 tanks. These restructuring efforts are responsible for the $412.3M schedule increase. Further restructuring plans for fiscal year 1981-1983 are under way. 3. Fighting Vehicle Systems.-Program costs increased by $5,337.9M, from $7,809.4M to $13,147.3M, due to (1) the application of higher anticipated escalation rates for program outyears ($+179.0M), (2) addition of 11.4M rounds of 25mm ammunition $+517.9M), (3) rescheduling of the vehicle production units ($+414.3M), (4) engineering changes to accommodate improved TOW and nuclear hardening ($+796.3M), (5) increased costs of the Test Measurement Diagnostic equipment and initial provisioning ($+4,681.0M), and (6) reestimate of the procurement program ($+2,749.4M). Of this $2,749.4M estimating increase, $2,324.6M is the difference between Government and contractor inflation rates for the outyears.

In summary, at least half of the $19.4 billion growth in these three programs can be directly or indirectly attributed to past policies regarding inflation projections. Differences in Government verus actual and predicted contractor inflation experience accounts for $8.3 billion of the total increase in these three systems. Funding shortfalls caused in part by low prior estimates of inflation contributed another $2.0 billion in schedule and support increases.

Other significant cost changes and program highlights reported in the SAR's this quarter are summarized below:

1. Hellfire.-Program costs increased by $631.5M, from $1,021.9M to $1,653.4M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+19.5M), (2) increase of 20 R&D seekers and 240 production launchers ($+7.0M), (3) rescheduling of procurement program as a result of fiscal year 1982, fiscal year 1983, and fiscal year 1984 funding decrements ($+178.4M), (4) engineering changes to the missile, warhead, and launcher ($+88.0M), (5) reestimation of missile and launcher costs ($+318.2M), and (6) increase in support costs ($+20.4M). 2. SOTAS-Program costs increased by $1,393.6M, from $1,053.0M to $2,446.6M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+20.3M), (2) reduction of DT/OT II hardware ($-21.5M), (3) 21-month stretchout of development program and 2-year delay of production award ($+285.5M), (4) engineering change of ground station modular design ($+26.4M), (5) reestimate of R&D and production program based on current R&D experience ($+979.3M), and (6) increase in initial spares and other support costs ($+103.6M). 3. DIVAD Gun.-Program costs increased by $991.8M, from $4,117.5M to $5,109.3M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+95.0M), (2) reprofiling of procurement program due to funding constraints in fiscal year 1982-fiscal year 1987 which resulted in a 5-year program stretchout ($+856.2M), (3) estimating change attributable to low quantity penalties, chassis and ammunition facilities increase ($13.2M), and (4) higher peculiar support equipment and spares costs ($+27.4M).

4. P-3C-Program costs increased by $2,885.0M, from $5,927.4M to $8,812.4M, due to (1) the application of higher anticipated escalation rates for the program outyears ($+55.4M), (2) addition of 42 aircraft ($+2,177.6M), (3) stretchout of the aircraft procurement program ($+409.1M), (4) estimating changes of $+6.0M, and (5) additional support requirement for the new 42 aircraft ($+236.9M).

5. LAMPS MK III-Program costs increased by $1,304.0M, from $5,401.1M to $6,705.1M, due to (1) the application of higher anticipated escalation rates ($+73.6M), (2) the addition of four ship systems and installation for backfit ($+81.5M), (3) revision of both the aircraft and ship installation schedules ($+42.6M), (4) engineering changes of ($+184.4M), (5) estimating changes to include aircraft manufacturing process changes, refinement of GFE, airframe, and contractor furnished equipment costs ($+604.3M), and (6) refinement of aircraft production support, aircraft spares and other support estimates ($+317.6M).

6. Captor.-Program costs increased by $1,189.0M, from $425.3M to $1,614.3M, due primarily to the restoration of funds for the procurement of 3,273 systems. The previous decision to terminate the program in fiscal year 1981, was reversed during formulation of the fiscal year 1982 budget.

7. Phoenix.-Program costs increased by $644.7M, from $2,021.14M to $2,666.1M, due to (1) an increase of 661 missiles ($+393.3M), (2) the addition of ECCM expansion program ($+21.8M), (3) repricing of the procurement program ($+127.9M), (4) repricing of support and addition of another program year ($+52.4M), and (5) the inclusion of 150 AIM-54A buy back of undelivered Iranian FMS missiles ($+40.7M), and (6) the application of higher anticipated escalation rates in the program outyears ($+8.6M).

8. Tomahawk.—Program costs increased by $644.6M, from $2,280.0M to $2,924.6M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+20.0M), (2) addition of 135 missiles ($+198.1M), (3) reprofiling of the procurement schedule for the 574 missiles ($-12.8M), (4) engineering effort for the improved booster, reactive warhead and defensive countermeasure ($+38.9M), (5) additional costs to complete nuclear full-scale engineering development through fiscal year 1984 and for warranty specification in production ($+187.9M), and (6) development of peculiar support software and revised procurement support costs ($+212.5M).

9. Trident.-Program costs increased $2,980.5M, from $28,751.3M to $31,731.8M, due to (1) the application of higher anticipated escalation rates in the program outyears ($-6.7M), (2) additional ship and associated missiles ($+2,749.3M), and (3) estimating changes of $+237.5M.

10. 5-Inch GP-Program costs increased by $495.5M, from $354.7M to $850.2M, due to (1) the application of higher anticipated escalation rates in the program

outyears ($+5.7M), (2) the addition of 7,468 rounds ($+288.5M), and (3) estimating changes of $+201.3M.

11. SSN-688 Class.-Program costs increased by $2,229.4M, from $12,126.6M to $14,356.0M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+353.3M), (2) addition of three ships ($+2,446.6M), (3) postponement of construction of one ship to fiscal year 1985 ($+45.8M), (4) configuration changes associated with the new ships and installation of the vertical launch systems beginning with the fiscal year 1980 ships ($+394.7M), (5) estimating component of the additional ships, including a total of $+21.8M for estimating changes related to the cost of the second fiscal year 1981 ship added by Congress for which DD 1415 Reprogramming Action is planned ($-1,015.6M), and (6) additional construction projects related to the SSN-688 program ($+4.6M).

12. CG-47.-Program costs increased by $4,615.8M, from $17,935.2M to $22,551.0M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+358.5M), (2) an increase of two ships ($+2,258.3M), (3) increased costs due to schedule changes ($+506.2M), (4) combat system engineering changes ($+250.8M), (5) estimating changes ($+1,104.7M), and (6) support costs associated with the addition of two ships ($+137.3M).

13. FFG-7.-Program costs decreased by $2,673.8M, from $11,464.6M to $8,790.8M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+89.2M), (2) deletion of eight ships ($-2,688.7M), (3) engineering changes reflecting deletion of TACTAS in fiscal year 1982 due to equipment nonavailability ($-7.2M), (4) estimating decreases due to refinement of estiamtes ($-88.6M), and (5) increased support costs due to battle spares allowance changes ($+21.5M). These changes do not reflect adjustments now deemed to be required by Navy to install LAMPS MK III on the fiscal year 1979-1981 ships.

14. A-10.-Program costs decreased by $1,289.3M, from $6,036.8M to $4,747.5M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+76.8M), (2) deletion of 138 aircraft from the program ($-592.0M), (3) schedule component of the quantity reduction ($-529.3M), (4) engineering changes to incorporate development and production of two-seat configuration, deletion of two-seat trainer, LANTIRN flight test and the component of the quantity reduction ($-55.6M), (5) estimating changes ($-43.7M), and (6) support changes to include deletion of simulators, reestimates of support equipment and initiali spares ($-145.5M).

15. F-16.-Program costs increased by $3,193.7M, from $18,712.1M to $21,905.8M, due to (1) the application of higher anticipated escalation rates in the program outyears and reestimate of currency exchange rate loss ($+398.9M), (2) production rate change from 10 aircraft to 8 aircraft per month commencing with the fiscal year 1982 program ($+1,063.2M), (3) development and integration of an advanced fire control radar, incorporation of AMRAAM, LANTIRN and ASPJ capability and deletion of Multiple Stores Ejector Rack ($+1,450.8M), (4) reestimate of flyaway costs and incorporation of Egyptian FMS ($-447.1M), and (5) additional flight test and test support, reestimate of initial spares, AIS, data maintenance, maintenance equipment deletion of simulator full visual system requirement, and additional maintenance training equipment requirements ($+727.9M).

16. Harm (AF).-Program costs increased by $1,600.7M, from $1,863.2M to $3,463.9M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+34.6M), (2) addition of 6,363 missiles ($+1,602.2M), (3) procurement rescheduling of 7,968 missiles ($+60.7M), (4) reestimate of total program ($-77.5M), and (5) changes in support item requirements and amount of spares ($-19.3M).

17. IR Maverick.-Program costs increased by $1,868.6M, from $2,532.5M to $4,401.1M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+58.2M), (2) the additional procurement of 28,144 missiles ($+1,459.8M), (3) estimating changes as a result of Laser MAVERICK cancellation and doubling of production rate ($+311.3M) and (4) additional spares and support items in support of the additional missiles ($+39.3M).

18. AIM-7M, (Sparrow) (AF).-Program costs increased by $1,046.2M, from $379.1M to $1,425.3M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+10.7M), (2) addition of 8,507 missiles to the procurement plan ($+920.2M), (3) rescheduling the procurement of 3,790 missiles ($-21.4M), (4) reestimate of procurement program based on actual developmental prototype costs ($+96.3M), and (5) increased support and spares cost due to additional quantities ($+40.4M).

19. GLCM.-Program costs increased by $599.8M, from $2,123.6M to $2,723.4M, due to (1) the application of higher anticipated escalation rates in the program outyears ($+48.8M), (2) reestimation of the TEL/LCC costs ($+186.3M), (3) increase