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GAO-06-222R 1 (2005-12-15)

handle is hein.gao/gaocrptashh0001 and id is 1 raw text is: A, GA 0 A ountabiity Integrty - Relabidlty United States Government Accountability Office Washington, DC 20548 December 15, 2005 The Honorable John W. Warner Chairman The Honorable Carl Levin Ranking Minority Member Committee on Armed Services United States Senate Subject: Unmanned Aircraft Systems: Global Hawk Cost Increase Understated in Nunn-McCurdy Report To provide for oversight of cost growth in DOD major defense acquisition programs, Congress passed legislation, commonly referred to as Nunn- McCurdy, which requires DOD to notify Congress when a program's unit cost growth exceeds (or breaches) the latest approved acquisition program baseline by at least 15 percent.' If the cost growth has increased at least 25 percent over the baseline, the Secretary of Defense must certify to Congress that (1) the program is essential to national security; (2) no alternatives exist which will provide equal or greater military capability at less cost; (3) new program acquisition or procurement unit cost estimates are reasonable; and (4) the management structure is adequate to control unit cost. On April 13, 2005, the Acting Secretary of the Air Force formally notified Congress that the procurement unit cost of the Global Hawk had increased 18 percent over the baseline estimate. As you requested, we are in the process of reviewing the acquisition strategies and requirements for 110 U.S.C. 2433 establishes the requirement for unit cost reports. The requirement became permanent law in 1982 in Public Law 97-252, section 1107. Two measures are tracked: procurement unit cost (total funds programmed for procurement divided by the total number of fully configured items to be procured) and program acquisition unit cost (total cost of development, procurement, and system-specific military construction divided by the number of fully configured end items to be produced). To eliminate the effects of inflation, costs are expressed in constant base year dollars. GAO-06-222R Global Hawk Unit Cost Increases Page 1