-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-839		

TITLE:     Weapons Acquisition: DOD Should Strengthen Policies 
for Assessing Technical Data Needs to Support Weapon Systems

DATE:   07/14/2006 
				                                                                         
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GAO-06-839

     

     * Report to Congressional Committees
          * July 2006
     * WEAPONS ACQUISITION
          * DOD Should Strengthen Policies for Assessing Technical Data Needs
            to Support Weapon Systems
     * Contents
          * Results in Brief
          * Background
          * Army and Air Force Encountered Limitations in Their Sustainment
            Plans for Some Fielded Weapon Systems
          * DOD Acquisition Policies Do Not Specifically Address Long-term
            Needs for Technical Data Rights
               * DOD Acquisition Policies Do Not Specifically Require Program
                 Managers to Assess Long-term Needs for Technical Data Rights
                 or Develop Corresponding Acquisition Strategies
               * Army and Air Force Are Working to Develop Structured
                 Approaches for Assessing Technical Data Needs and Securing
                 Long- term Rights to Those Data
                    * Army Technical Data Efforts
                    * Air Force Technical Data Efforts
          * Conclusions
          * Recommendations for Executive Action
          * Agency Comments and Our Evaluation
          * Scope and Methodology
     * GAO's Preliminary Observations on the Department of Defense's
       Acquisition of Technical Data to Support Weapons Systems
     * Comments from the Department of Defense
     * GAO Contact and Staff Acknowledgments

Report to Congressional Committees

July 2006

WEAPONS ACQUISITION

DOD Should Strengthen Policies for Assessing Technical Data Needs to
Support Weapon Systems

Contents

July 14, 2006Letter

The Honorable John Warner Chairman The Honorable Carl Levin Ranking
Minority Member Committee on Armed Services United States Senate

The Honorable Duncan L. Hunter Chairman The Honorable Ike Skelton Ranking
Minority Member Committee on Armed Services House of Representatives

A critical element in the life cycle of a weapon system is the
availability of the item's technical data-that is, recorded information
used to define a design and to produce, support, maintain, or operate the
item.1 The Department of Defense (DOD) negotiates its rights to weapon
system technical data when it contracts with defense equipment
manufacturers. During the acquisition process, DOD determines what
technical data rights it requires from the manufacturer in order to meet
its future weapon support needs. Because a weapon system may remain in the
defense inventory for decades following initial acquisition, decisions
made at the time of acquisition can have far-reaching implications for
weapon system support over the system's life cycle, and the failure to
negotiate adequate technical data rights may impede the government's
ability to sustain the weapon system. For example, DOD would need
technical data rights to develop new sources of supply, to recompete
follow-on procurements of equipment, or to develop depot-level maintenance
capabilities. In an August 2004 report,2 we recommended that DOD consider
requiring program offices to develop acquisition strategies that provide
for a future delivery of technical data should the need arise to select an
alternative source for logistics support or to offer the work out for
competition. DOD concurred with our recommendation.

This report responds to a provision in a House Report for the fiscal year
2006 Defense Authorization Bill3 that we follow up on our August 2004
report and review DOD's technical data policies affecting the sustainment
of fielded weapon systems, as well as other issues related to technical
data. In February 2006, we briefed your offices on our preliminary
observations (see app. I). This report updates and expands on the
information in that briefing and provides recommendations to the Secretary
of Defense. Specifically, our objectives were to (1) evaluate how Army and
Air Force sustainment plans for fielded weapon systems had been affected
by technical data rights and (2) examine requirements for obtaining
technical data rights under current DOD acquisition policies. The House
Report also asked us to review the military services' access to technical
data to support field maintenance of weapon systems and to examine the
costs for gaining such access. These issues are addressed in appendix I.

To conduct our review, we met with Army and Air Force acquisition and
logistics officials to identify sustainment plans for fielded weapon
systems that may have been affected by the technical data rights available
to the government. We discussed, and obtained supporting documentation on,
the circumstances surrounding these cases, the extent that a lack of
technical data rights for these systems was a factor, and the effect on
the systems' sustainment plans. We did not assess the rationale for the
decisions made on technical data rights during system acquisition, nor did
we determine the extent that program offices complied with acquisition
policies regarding technical data that existed at the time of the
acquisition. We analyzed current DOD acquisition policies and guidance,
interviewed DOD and service officials, and collected DOD correspondence
addressing our August 2004 recommendation. We met with Army and Air Force
logistics officials to obtain information on their efforts to review
acquisition policies and practices regarding technical data rights. We
determined that the data used were sufficiently reliable for our purposes.
We conducted our review from October 2005 through May 2006 in accordance
with generally accepted government auditing standards. The Scope and
Methodology section contains more detailed information about the work we
performed.

Results in Brief

The Army and the Air Force have encountered limitations in their
sustainment plans for some fielded weapon systems because they lacked
needed technical data rights. The lack of technical data rights has
limited the services' flexibility to make changes to sustainment plans
that are aimed at achieving cost savings and meeting legislative
requirements regarding depot maintenance capabilities. During our review
we identified seven Army and Air Force weapon system programs where these
military services encountered limitations in implementing revisions to
sustainment plans-C-17 aircraft, F-22 aircraft, C-130J aircraft,
Up-armored High-Mobility Multipurpose Wheeled Vehicle (HMMWV), Stryker
family of vehicles, Airborne Warning and Control System (AWACS) aircraft,
and M4 carbine. Although the circumstances surrounding each case were
unique, earlier decisions made on technical data rights during system
acquisition were cited as a primary reason for the limitations
subsequently encountered. As a result of the limitations encountered due
to the lack of technical data rights, the services had to alter their
plans for developing maintenance capability at public depots, new sources
of supply to increase production, or competitive offers for the
acquisition of spare parts and components to reduce sustainment costs. For
example, the Air Force identified a need to develop a capability to
perform maintenance on the C-17 at government depots but lacked the
requisite technical data rights. Consequently, the Air Force is seeking to
form partnerships with C-17 sub-vendors to develop its depot maintenance
capability. Its efforts to form these partnerships have had mixed results,
according to Air Force officials, because some sub-vendors have declined
to provide the needed technical data. Although we did not assess the
rationale for the decisions made on technical data rights during the
acquisition of these seven systems, there are several factors that may
complicate program managers' decisions regarding technical data rights.
These factors include the contractors' interests in protecting their
intellectual property rights, the extent the system being acquired
incorporates technology that was not developed with government funding,
the potential for changes in the technical data over the weapon system's
life cycle, the extent to which long-term sustainment strategies may
require rights to technical data versus access to the data, the numerous
funding and capability trade-offs program managers face during the
acquisition of a weapon system, the long life cycle of many weapon
systems, and changes in DOD policies regarding the acquisition of
technical data and the implementation of performance-based logistics.

Despite the challenges faced by program managers in determining long-term
needs for technical data rights and the implications of their decisions
for weapon system sustainment, current DOD acquisition policies do not
specifically address long-term technical data rights for weapon system
sustainment. For example, DOD's current acquisition policies do not
require program managers to assess long-term needs for technical data
rights to support weapon systems and, correspondingly, to develop
acquisition strategies that address those needs. DOD guidance and policy
changes, as part of the department's acquisition reforms and
performance-based strategies, have deemphasized the acquisition of
technical data rights. DOD also has not implemented our August 2004
recommendation for developing technical data acquisition strategies,
although it has recently reiterated its intent to do so. In the absence of
a DOD-wide policy on technical data rights, the Army and the Air Force are
working independently to develop structured approaches for assessing
technical data requirements and securing rights to these data. Their
efforts, as well as our prior and current work, show that it is during the
development of the solicitation and the subsequent negotiation of a
proposed contract that the government is in the best position to negotiate
and secure required technical data rights. In addition, the Air Force is
pursuing the use of priced options-negotiated in weapon system acquisition
contracts-to retain the option for acquiring technical data rights at some
point later in the weapon system's life cycle. Army and Air Force
logistics officials told us that their efforts would benefit from having a
DOD policy that specifically addresses long-term needs for technical data
rights supporting weapon system sustainment.

To ensure that DOD can support sustainment plans for weapon systems
throughout their life cycle, we are recommending improvements in DOD's
acquisition policies regarding the acquisition of technical data. In
commenting on a draft of this report, DOD concurred with our report and
recommendations. DOD's response is included in appendix II.

Background

In recent years, DOD has taken steps to improve its processes for
acquiring and sustaining weapon systems. As part of these improvements,
program managers are now responsible for the total life-cycle management
of a weapon system, to include the sustainment of the system. In addition,
DOD has directed weapon system program managers to develop acquisition
strategies that maximize competition, innovation, and interoperability and
the use of commercial, rather than military-unique,

items to reduce costs.4 Within the area of weapon system sustainment, DOD
is pursuing the use of performance-based logistics as the preferred
support strategy for its weapon systems. Performance-based logistics, a
variation on other contractor logistics support strategies calling for the
long-term support of weapon systems, involves defining a level of
performance that the weapon system is to achieve over a period of time at
a fixed cost to the government.

Technical data rights can affect DOD's plans to sustain weapon systems
throughout their life cycle. For example, DOD would need technical data
rights if it opts to reduce spare parts costs by developing new sources of
supply, to meet wartime surge requirements by contracting with additional
equipment suppliers, or to reduce system acquisition costs by recompeting
follow-on procurements of the equipment. In addition, DOD may need to
develop depot-level maintenance capabilities for its weapon systems at
government depots in order to meet legislative requirements. DOD is
required under 10 U.S.C. 2464 to identify and maintain within
government-owned and government-operated facilities a core logistics
capability, including the equipment, personnel, and technical competence
identified as necessary for national defense emergencies and
contingencies. Under 10 U.S.C. 2466, not more than 50 percent of the funds
made available in a fiscal year to a military department or defense agency
for depot-level repair and maintenance can be used to contract for
performance by nonfederal personnel. These provisions can limit the amount
of depot-level maintenance that can be performed by contractors. Finally,
DOD would also need technical data rights for a weapon system should a
contractor fail to perform, including a contractor working under a
performance-based logistics arrangement. DOD has referred to this
contingency as an "exit strategy."

Army and Air Force Encountered Limitations in Their Sustainment Plans for
Some Fielded Weapon Systems

The Army and the Air Force have encountered limitations in their
sustainment plans for some fielded weapon systems because they lacked
needed technical data rights. The lack of technical data rights has
limited the services' flexibility to make changes to sustainment plans
that are aimed at achieving cost savings and meeting legislative
requirements regarding depot maintenance capabilities. During our review
we identified seven weapon system programs where these military services
encountered limitations in their sustainment plans. Although the
circumstances surrounding each case were unique, earlier decisions made on
technical data rights during system acquisition were cited as a primary
reason for the limitations subsequently encountered. As a result, the
services had to alter their plans for developing maintenance capability at
public depots, new sources of supply to increase production, or
competitive offers for the acquisition of spare parts and components to
reduce sustainment costs. In at least three of the cases, the military
service made attempts to obtain needed technical data subsequent to the
system acquisition but found that the equipment manufacturer declined to
provide the data or that acquiring the data would be too expensive. We did
not assess the rationale for the decisions made on technical data rights
during the acquisition of these systems.

The seven weapon system programs we identified where a lack of technical
data rights affected the implementation of sustainment plans are
summarized below:

o C-17 aircraft: When the Air Force began acquisition of the C-17
aircraft, it did not acquire technical data rights needed to support
maintenance of the aircraft at public depots. According to a program
official, the Air Force did not consider the aircraft's depot maintenance
workload as necessary to support DOD's depot maintenance core capability.
Subsequently, however, the Air Force's 2001 depot maintenance core
assessment identified the C-17 aircraft workload as necessary to support
core capability. The Air Force determined that it did not have the
technical data rights needed to perform the required maintenance.
According to C-17 program officials, the C-17 prime contractor did not
acquire data rights for C-17 components provided by sub-vendors and
consequently was not able to provide the needed data rights to the Air
Force. The prime contractor has encouraged its sub-vendors to cooperate
with the Air Force in establishing partnerships to accomplish the needed
core depot maintenance. Under these partnerships, Air Force depots would
provide the facilities and labor needed to perform the core depot
maintenance work, and the sub-vendor would provide the required technical
data. According to Air Force officials, there are some instances where the
sub-vendor is unwilling to provide the needed technical data. For example,
in the case of the C-17's inertial navigation unit, the sub-vendor
maintains that the inertial navigation unit is a commercial derivative
item and the technical data needed to repair the item are proprietary. As
of April 18, 2006, the sub-vendor was declining to provide the technical
data needed to the Air Force. Without the rights to the technical data or
a partnership with the sub-vendor, the Air Force cannot develop a core
maintenance capability for this equipment item.

o F-22 aircraft: The acquisition of the Air Force's F-22 aircraft did not
include all of the technical data needed for establishing required core
capability workload at Air Force depots. Early in the F-22 aircraft's
acquisition, the Air Force planned to use contractors to provide needed
depot-level maintenance and therefore decided not to acquire some
technical data rights from sub-vendors in order to reduce the aircraft's
acquisition cost. Subsequently, however, the Air Force determined that
portions of the F-22 workload were needed to satisfy core depot
maintenance requirements. The Air Force is currently negotiating contracts
for the technical data rights needed to develop depot-level maintenance
capability. While the Air Force has negotiated contracts to acquire
technical data for four F-22 aircraft components, F-22 program officials
expressed concern that it may become difficult to successfully negotiate
rights to all components.

o C-130J aircraft: The Air Force purchased the C-130J aircraft as a
commercial item and, as such, did not obtain technical data rights needed
to competitively purchase C-130J-unique spare parts and components or to
perform depot-level maintenance core workload.5 The C-130J shares many
common components with earlier versions of the C-130 for which the
government has established DOD and contractor repair sources. In 2004, the
DOD Inspector General reported that the Air Force's use of a commercial
item acquisition strategy was unjustified to acquire the C-130J aircraft.6
In response to the Inspector General's findings and added congressional
interest, the Air Force is converting its C-130J acquisition to
traditional defense system acquisition and sustainment contracts. However,
because the Air Force did not acquire the necessary technical data during
the acquisition process, it has less leverage to negotiate rights to data.
In 2005, the Air Force approached the aircraft manufacturer to purchase
technical data rights for C-130J-unique components, but the aircraft
manufacturer declined to sell the data rights. Because of its lack of the
needed technical data, the Air Force is planning to establish partnerships
with C-130J sub-vendors that have technical data rights to components of
the C-130J. Under these partnerships, Air Force depots would provide the
facilities and labor needed to perform the core depot maintenance work,
and the sub-vendors would provide the required technical data. C-130J
program officials expressed concerns that in some instances sub-vendors
may not be willing to partner. The Air Force currently expects to develop
approximately 90 partnerships with as many different vendors on
approximately 300 C-130J core candidate components. Program officials
expressed concern about the proliferation of partnerships and said the Air
Force will incur additional costs to develop, manage, and monitor these
partnerships, but they had not determined what these costs will be.

o Up-armored High-Mobility Multipurpose Wheeled Vehicles: When the Army
first developed the up-armored HMMWV in 1993, it did not purchase the
technical data necessary to develop new sources of supply to increase
production. Army officials anticipated fielding these vehicles to a
limited number of Army units for reconnaissance and peacekeeping purposes.
At that time, the Army did not obtain technical data required for the
manufacture of up-armor HMMWVs. With the increasing threat of improvised
explosive devices during operations in Iraq, demand for up-armored HMMWVs
increased substantially, from 1,407 vehicles in August 2003 to 8,105
vehicles by September 2004. According to Army officials, the manufacturer
declined to sell the rights to the technical data package. Because of the
lack of technical data rights to produce up-armored HMMWVs, program
officials explained they were unable to rapidly contract with alternate
suppliers to meet the wartime surge requirement.

o Stryker family of vehicles: When acquiring the Stryker, the Army did not
obtain technical data rights needed to develop competitive offers for the
acquisition of spare parts and components. Following the initial
acquisition, the program office analyzed alternatives to the interim
contractor support strategy for the weapon system and attempted to acquire
rights to the manufacturer's technical data package. The technical data
package describes the parts and equipment in sufficient technical detail
to allow the Army to use competition to lower the cost of parts. The
contractor declined to sell the Stryker's technical data package to the
Army. Further, according to an Army Audit Agency report, the project
office stated that the cost of the technical data, even if available,
would most likely be prohibitively expensive at this point in the
Stryker's fielding and would likely offset any cost savings resulting from
competition.7

o Airborne Warning and Control System aircraft: The Air Force lacked
technical data for the AWACS needed to develop competitive offers for the
purchase of certain spare parts. When the Air Force recently purchased
cowlings (metal engine coverings) for the AWACS, it did so on a
noncompetitive, sole-source basis. The Defense Contract Management Agency
recommended that the cowlings be competed because the original equipment
manufacturer's proposed price was not fair and reasonable and because
another potential source for the part was available. Despite the
recommendation, however, the Air Force said it lacked the technical data
to compete the purchase. We noted that while the Air Force and the
original equipment supplier have a contract that could allow the Air Force
to order technical drawings for the purpose of purchasing replenishment
spare parts, the contractor had not always delivered such data based on
uncertainties concerning the Air Force's rights to the data.8

o M4 carbine: When the Army purchased its new M4 carbine, it did not
acquire the technical data rights necessary to recompete follow-on
purchases of the carbine. The M4 carbine is a derivative of the M16 rifle
and shares 80 percent of its parts with the M16. However, because the
remaining 20 percent of parts were funded by the developer, the Army did
not have all the rights needed to compete subsequent manufacture of the
M4. The Army estimated that the unit cost is about twice as much for the
M4 compared with the M16, despite increases in procurement quantities for
the M4 and the large commonality of parts. According to Army officials,
having the technical data rights for the M16 allowed the Army to recompete
the procurement of the rifle, resulting in a significantly decreased unit
procurement cost.

Although we did not assess the rationale for the decisions made on
technical data rights during the acquisition of these systems, several
factors may complicate program managers' decisions on long-term technical
data rights for weapon systems. These factors include the following:

o The contractor's interests in protecting its intellectual property
rights. Because contractors need to protect their intellectual property
from uncompensated use, they often resist including contract clauses that
provide technical data rights to the government.

o The extent to which the system being acquired incorporates technology
that was not developed with government funding. According to DOD's
acquisition guidance,9 the government's funding of weapon system
development determines the government's rights to technical data. Weapon
systems are frequently developed with some mix of contractor and
government funding, which may present challenges to DOD in negotiating
technical data rights with the contractor.

o The potential for changes in the technical data over the weapon system's
life cycle. The technical data for a weapon system may change over its
life cycle, first as the system's technology matures and later as the
system undergoes modifications and upgrades to incorporate new
technologies and capabilities. The potential for changes in technical data
present challenges concerning when the government should take delivery of
technical data, the format used to maintain technical data, and whether
the data should be retained in a government or contractor repository.

o The extent to which the long-term sustainment strategy may require
rights to technical data versus access to the data. According to Army
officials, access to contractor technical data is sometimes presented as
an alternative to the government taking delivery of the data. These
officials noted that while access to technical data may allow for
oversight of the contractor and may reduce the program manager's data
management costs, it may not provide the government with rights to use the
technical data should a change in the sustainment plan become necessary.

o The numerous funding and capability trade-offs program managers face
during the acquisition of a weapon system. Program managers are frequently
under pressure to spend limited acquisition dollars on increased weapon
system capability or increased numbers of systems, rather than pursuing
technical data rights.

o The long life cycle of many weapon systems. With weapon systems staying
in DOD's inventory for longer periods-up to 40 years, it may be difficult
for the program manager to plan for future contingencies such as
modifications and upgrades, spare parts obsolescence, diminishing
manufacturing support, and diminishing maintenance support.

DOD Acquisition Policies Do Not Specifically Address Long-term Needs for
Technical Data Rights

DOD's acquisition policies do not specifically address long-term needs for
technical data rights to sustain weapon systems over their life cycle, and
in the absence of a DOD-wide policy, the Army and the Air Force are
working independently to develop structured approaches for defining
technical data requirements and securing rights to those data. DOD's
current acquisition policies do not specifically require program managers
to assess long-term needs for technical data rights to support weapon
systems and, correspondingly, to develop acquisition strategies that
address those needs. DOD guidance and policy changes, as part of the
department's acquisition reforms and performance-based strategies, have
deemphasized the acquisition of technical data rights. DOD concurred with
but has not implemented our August 2004 recommendation for developing
technical data acquisition strategies, although it has recently reiterated
its intent to do so. Army and Air Force logistics officials are working
independently to develop structured approaches for determining technical
data rights requirements and securing long-term rights for use of those
data. Logistics officials told us that their efforts would benefit from
having a DOD policy that specifically addresses long-term technical data
needs for weapon system sustainment.

DOD Acquisition Policies Do Not Specifically Require Program Managers to
Assess Long-term Needs for Technical Data Rights or Develop Corresponding
Acquisition Strategies

Current DOD acquisition policies do not specifically require program
managers to assess long-term needs for technical data rights to sustain
weapon systems, and, correspondingly, to develop acquisition strategies
that address those needs. DOD Directive 5000.1, the agency's policy
underlying the defense acquisition framework, designates program managers
as the persons with responsibility and authority for accomplishing
acquisition program objectives for development, production, and
sustainment to meet the users' operational needs.10 The directive,
however, does not provide specific guidance as to what factors program
managers should consider in developing a strategy to sustain the weapon
system, including considerations regarding technical data. DOD Instruction
5000.2, the agency's policy for implementing DOD Directive 5000.1,
requires program managers to ensure the development of a flexible strategy
to sustain a program so that the strategy may evolve throughout the weapon
system's life cycle.11 In addition, DOD provides non-mandatory guidebooks
to assist program managers with acquisition and product support. However,
DOD acquisition policy does not specifically direct the program manager,
when acquiring a weapon system, to define the government's requirements
for technical data rights, an important aspect of a flexible sustainment
strategy.

DOD guidance and policy changes, as part of the department's acquisition
reforms and performance-based strategies, have deemphasized the
acquisition of technical data rights. For example, a 2001 memorandum
signed by DOD's senior acquisition official stated that the use of
performance-based acquisition strategies may obviate the need for data or
rights.12 Also in 2001, DOD issued guidance on negotiating intellectual
property rights and stated that program officials should seek to establish
performance-based requirements that enhance long-term competitive

interests, in lieu of acquiring detailed design data and data rights.13 In
a May 2003 revision of its acquisition policy, DOD eliminated a
requirement for program managers to provide for long-term access to
technical data and required them to develop performance-based logistics
strategies.14

Even prior to the May 2003 revision of DOD's acquisition policy, we had
raised concerns about whether DOD placed sufficient emphasis on obtaining
technical data during the acquisition process. We reported in 2002 that
DOD program offices had often failed to place adequate emphasis on
obtaining needed technical data during the acquisition process.15 We
recommended that DOD emphasize the importance of obtaining technical data
and consider including a priced option for the purchase of technical data
when considering proposals for new weapon systems or modifications to
existing systems. While DOD concurred with the recommendation, it
subsequently made revisions to its acquisition policies in May 2003, as
noted above, that eliminated the prior requirement for the program manager
to provide for long-term access to data.

DOD also has not implemented a prior recommendation we made for developing
technical data acquisition strategies, although it has recently reiterated
its intent to do so. In August 2004, we reported that adoption of
performance-based logistics at the weapon system platform level may be
influencing program managers to provide for access only to technical data
necessary to manage the performance-based contract during the acquisition
phase-and not to provide a strategy for the future delivery of technical
data in case the performance-based arrangement failed.16 We recommended
that DOD consider requiring program offices to develop acquisition
strategies that provide for a future delivery of sufficient technical data
should the need arise to select an alternative source or to offer the work
out for competition. In response to our recommendation, DOD concurred that
technical, product, and logistics data should be acquired by the program
manager to support the development, production, operation, sustainment,
improvement, demilitarization, and disposal of a weapon system.
Furthermore, the department recognized the need to take steps to stress
the importance of technical data by its stated intent to include a
requirement in DOD's acquisition policies (DOD Directive 5000.1 and DOD
Instruction 5000.2) for the program managers to establish a data
management strategy that requires access to the minimum data necessary to
sustain the fielded system; to recompete or reconstitute sustainment, if
necessary, to promote real time access to data; and to provide for the
availability of high-quality data at the point of need for the intended
user. In the case of performance-based arrangements, that would include
acquiring the appropriate technical data needed to support an exit
strategy should the arrangement fail or become too expensive. Despite
DOD's concurrence with our recommendation, however, efforts to implement
these changes have been delayed.

Army and Air Force Are Working to Develop Structured Approaches for
Assessing Technical Data Needs and Securing Long-term Rights to Those Data

Army and Air Force logistics officials are independently developing
structured approaches for determining when and how in the acquisition
process the service should assess its requirements for technical data and
secure its long-term rights for use of those data. The aim of these
efforts is to ensure future sustainment needs of weapon systems are
adequately considered and supported early during the acquisition process.
Logistics officials from each service told us that their efforts would
benefit from having a DOD policy that specifically addresses long-term
technical data needs for weapon system sustainment. In the absence of a
mandatory DOD requirement to address technical data, service officials
said, program managers may not fully consider and incorporate long-term
requirements for technical data rights during system acquisition.

According to Army and Air Force officials, their reviews of current
policies and practices indicate that it is during the development of the
solicitation and the subsequent negotiation of a proposed contract that
the government

is in the best position to secure required technical data rights.17 This
point in the acquisition process is likely to present the greatest degree
of competitive pressure, and the weapon system program office can consider
technical data as a criterion for evaluating proposals and selecting a
contractor. In addition, the Air Force is pursuing the use of priced
options negotiated in contracts for new weapon systems or modifications to
existing systems. A priced option retains the option for acquiring
technical data rights at some point later in the weapon system's life
cycle. According to Air Force officials, priced options for technical data
may ensure the government's rights to the data and control the cost of
technical data in the future. The Air Force is attempting to incorporate
priced options for technical data in two new weapon system acquisitions.
We have previously recommended that DOD require the military services to
consider the merits of including a priced option for the purchase of
technical data when proposals for new weapon systems or modifications to
existing systems are being considered.18

Army Technical Data Efforts

The Army established a working group in March 2005 to serve as a forum for
determining requirements for and resolving issues associated with the
management and use of technical data.19 One task of the working group is
to develop a structured process for determining what technical data are
needed for any given system. Another task is to clarify technical data
policy and reconcile the best practices of acquisition reform with the
need for technical data rights in support of weapon system acquisition and
sustainment. The group is also reviewing pertinent federal and DOD policy
and guidance, as well as instruction materials used by the Defense
Acquisition University for acquisition career training, with the aim of
identifying ambiguities or inconsistencies. This effort focuses on areas
of the acquisition process where technical data and acquisition intersect,
such as systems engineering, configuration management, data management,
contracting, logistics, and financial management. Some anticipated
products from the group include the following proposed items:

o changes to integrate and clarify policy on technical data and weapon
system acquisition policy,

o draft instruction material to better define and explain the value of
technical data rights and the uses of technical data throughout the weapon
system life cycle, and

o a comprehensive primer to provide the acquisition professional a guide
for ensuring that there is a contract link between weapon system
acquisition and sustainment strategies on the one hand and the technical
data strategy on the other.

According to members of the working group, if the government's rights have
not been protected in the contract, then it may be necessary to negotiate
the rights to use the data at a later date, which could be
cost-prohibitive. Army Materiel Command officials told us that having a
DOD policy on when and how in the acquisition process technical data
rights should be addressed would help them as they revise their policy and
guidance. The product data working group plans to complete its preliminary
work by the end of fiscal year 2006.

In January 2006, the U.S. Army's Tank-automotive and Armaments Command
completed a study evaluating the importance of technical data over the
life cycle of a weapon system, with particular emphasis on sustainment.
While the Army had not yet approved and released the final report, members
of the study team indicated the following:

o Previous DOD guidance on the data rights required for performance-based
logistics contracts has been ambiguous and open to misinterpretation. This
ambiguity has resulted in many programs' not acquiring rights to technical
data for long-term weapon system sustainment. Lack of technical data
rights leads to risks associated with the inability to broaden the
industrial base to support Global War on Terrorism surge requirements.

o The current process to identify the government's technical data rights
is ad hoc and unstructured.

o The government's rights to technical data are independent of the
logistics support strategy-whether government (organic) support,
traditional contract logistics support, or performance-based logistics.

According to team members, potential recommendations from the study are to
establish a new policy requiring the program manager to complete a
technical data rights decision matrix and to weigh the cost of acquiring
technical data against program risk. The technical data rights should be
negotiated as early as possible in the contracting process and ideally
should be used as a source selection factor. The study team further states
that the government should ensure that rights to use the data are secured
in the system development and demonstration contract.

Air Force Technical Data Efforts

Air Force officials are currently reviewing and developing proposed
changes to weapon system acquisition and support policies to require that
sustainment support and technical data rights decisions be made early in
weapon system acquisition. These efforts are part of the Air Force
Materiel Command's product support campaign, an effort to better integrate
the activities of the service's acquisition and logistics communities.20
Air Force officials involved with the campaign said their efforts could be
facilitated if DOD's acquisition policy were revised to more clearly
direct program managers when and how they are to define and secure the
government's data rights during weapon system acquisition. The campaign's
policy focus team is working on the efforts that would provide a more
structured approach to early determination of the government's technical
data rights:

o revised polices to require that sustainment support decisions be made
and technical data rights be defined during the technology phase of
acquisition but prior to system development and demonstration;

o a standard template for contract solicitations, to be used to guide the
acquisition workforce in securing technical data rights;

o contract language to include a priced option for the delivery of
technical data and rights for use of data, which would be negotiated and
included as part of the system development and demonstration solicitation;
and

o an independent logistics assessment process, to provide an objective
review of the acquisition program office's sustainment support plans
before major milestone decisions.

In May 2006, the Secretary of the Air Force directed that the acquisition
of technical data and associated rights be addressed specifically in all
acquisition strategy plans, reviews, and associated planning documents for
major weapon system programs and subsequent source selections. The
Secretary stated these actions are needed to address challenges in meeting
legislative requirements to maintain a core logistics capability and to
limit the percentage of depot maintenance funds expended for contractor
performance. The competitive source selection process, according to the
Secretary, provides the best opportunity to address technical data
requirements while at the same time brokering the best deal for the
government in regard to future weapon systems sustainment.

Conclusions

Under current DOD acquisition policies, the military services lack
assurance that they will have the technical data rights needed to sustain
weapon systems throughout their life cycle. We have previously made
recommendations that DOD enhance its policies regarding technical data.
DOD has concurred with these recommendations but has not implemented them.
In fact, DOD has de-emphasized the acquisition of technical data rights as
part of the department's acquisition reforms and performance-based
strategies. Our current work, however, shows that the services face
limitations in their sustainment plans for some fielded weapon systems due
to a lack of needed technical data rights. Furthermore, program managers
face numerous challenges in making decisions on technical data
rights-decisions that have long-term implications for the life-cycle
sustainment of weapon systems. Army and Air Force logistics officials have
recognized weaknesses in their approaches to assessing and securing
technical data rights, and each service has begun to address these
weaknesses by developing more structured approaches. However, current DOD
acquisition policies do not facilitate these efforts. Unless DOD assesses
and secures its rights for the use of technical data early in the weapon
system acquisition process when it has the greatest leverage to negotiate,
DOD may face later challenges in developing sustainment plans or changing
these plans as necessary over the life cycle of its weapon systems.
Delaying action in acquiring technical data rights can make these data
cost-prohibitive or difficult to obtain later in the weapon system life
cycle, and can impede DOD's ability to comply with legislative
requirements, such as core capability requirements.

Recommendations for Executive Action

To ensure that DOD can support sustainment plans for weapon systems
throughout their life cycle, we recommend that the Secretary of Defense
direct the Under Secretary of Defense (Acquisition, Technology, and
Logistics) to specifically require program managers to assess long-term
technical data needs and establish corresponding acquisition strategies
that provide for technical data rights needed to sustain weapon systems
over their life cycle. These assessments and corresponding acquisition
strategies should

o be developed prior to issuance of the contract solicitation;

o address the merits of including a priced contract option for the future
delivery of technical data;

o address the potential for changes in the sustainment plan over the
weapon system's life cycle, which may include the development of
maintenance capability at public depots, the development of new sources of
supply to increase production, or the solicitation of competitive offers
for the acquisition of spare parts and components; and

o apply to weapon systems that are to be supported by performance-based
logistics arrangements as well as to weapon systems that are to be
supported by other sustainment approaches.

We also recommend that the Secretary of Defense direct the Under Secretary
of Defense (Acquisition, Technology, and Logistics) to incorporate these
policy changes into DOD Directive 5000.1 and DOD Instruction 5000.2 when
they are next updated.

Agency Comments and Our Evaluation

In commenting on a draft of this report, DOD concurred with our report and
recommendations. DOD stated that the requirement for program managers to
assess long-term technical data needs and establish corresponding
strategies will be incorporated into DOD Instruction 5000.2 when it is
next updated. If DOD updates its acquisition policy as stated, we believe
this action will meet the intent of our recommendations. DOD's response is
included in appendix II.

Scope and Methodology

We conducted work at the Office of the Secretary of Defense, the Army, the
Navy, and the Air Force. The specific offices and commands we visited are
listed in the attached briefing slides contained in appendix I.

To identify sustainment plans for fielded weapon systems that may have
been affected by the technical data rights available to the government, we
met with Army and Air Force acquisition and logistics officials
responsible for 11 weapon systems. We did not identify technical data
issues affecting sustainment for three of these systems and excluded these
systems from our subsequent review. We also excluded a weapon system-the
Buffalo mine-protected route clearing equipment-that was acquired under
the Army's rapid fielding initiative to meet emergency needs. For the
other seven weapon system programs-the C-17 aircraft, F-22 aircraft,
C-130J aircraft, Up-armored High-Mobility Multipurpose Wheeled Vehicle,
Stryker family of vehicles, Airborne Warning and Control System aircraft,
and M4 carbine-we obtained information on the service's requirement for
rights to use the data, their success in obtaining data rights from the
manufacturer, and the effect that a lack of data rights had on system
sustainment plans. We did not assess the rationale for the decisions made
on technical data rights during system acquisition, nor did we determine
the extent that program offices complied with acquisition policies
regarding technical data that existed at the time of the acquisition.
However, we collected comments from acquisition and logistics personnel on
the factors that complicate program managers' decisions on long-term
technical data rights for weapon systems.

To examine the requirements for obtaining technical data rights under
current DOD acquisition policies, we analyzed current DOD acquisition
policies. Our review encompassed DOD-wide policies, including DOD
Directive 5000.1 and DOD Instruction 5000.2, as well as service-specific
policies. We discussed these policies with DOD and service officials
responsible for developing acquisition and logistics policies, preparing
system acquisition strategies, and implementing sustainment plans to
obtain their views on the importance of considering technical data
requirements during the acquisition process. To determine DOD's plans to
revise acquisition policy in response to a previous recommendation we made
on technical data, we reviewed DOD correspondence and met with officials
at the Office of the Under Secretary of Defense (Acquisition, Technology,
and Logistics).

We also met with Army and Air Force logistics officials to obtain
information on their efforts to assess acquisition policies and make
appropriate changes that would provide a structured process for assessing
and securing government rights to technical data early in weapon system
acquisition. We interviewed Army officials leading the Army Material
Command's Product Data Engineering Working Group and Air Force officials
addressing acquisition and logistics policies as part of the Air Force
Material Command's Product Support Campaign. We also reviewed available
documentation on the objectives and potential outcomes of these
initiatives.

We are sending copies of this report to the Secretary of Defense and to
the Secretaries of the military services. Copies of this report will be
made available to others upon request. In addition, the report will be
available at no charge on our Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact
me at (202) 512-5140 or [email protected]. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. GAO staff who made major contributions to this report are
listed in appendix III.

William M. Solis Director, Defense Capabilities and Management

GAO's Preliminary Observations on the Department of Defense's Acquisition
of Technical Data to Support Weapons SystemsAppendix I

Comments from the Department of DefenseAppendix II

GAO Contact and Staff AcknowledgmentsAppendix III

William M. Solis, (202) 512-5140 or [email protected]

In addition to the contact named above, Thomas Gosling, Assistant
Director; Larry Junek; Andrew Marek; John Strong; Cheryl Weissman; and
John Wren were major contributors to this report.

(350828)

www.gao.gov/cgi-bin/getrpt? GAO-06-839 .

To view the full product, including the scope

and methodology, click on the link above.

For more information, contact William M. Solis at (202) 512-5140 or
[email protected].

Highlights of GAO-06-839 , a report to congressional committees

July 2006

WEAPONS ACQUISITION

DOD Should Strengthen Policies for Assessing Technical Data Needs to
Support Weapon Systems

A critical element in the life cycle of a weapon system is the
availability of the item's technical data-recorded information used to
define a design and to produce, support, maintain, or operate the item.
Because a weapon system may remain in the defense inventory for decades
following initial acquisition, technical data decisions made during
acquisition can have far-reaching implications over its life cycle. In
August 2004, GAO recommended that the Department of Defense (DOD) consider
requiring program offices to develop acquisition strategies that provide
for future delivery of technical data should the need arise to select an
alternative source for logistics support or to offer the work out for
competition. For this review, GAO (1) evaluated how sustainment plans for
Army and Air Force weapon systems had been affected by technical data
rights and (2) examined requirements for obtaining technical data rights
under current DOD acquisition policies.

What GAO Recommends

To ensure that DOD can support sustainment plans for weapon systems
throughout their life cycle, including revisions to these plans aimed at
achieving cost savings and complying with legislative requirements, GAO
recommends improvements in DOD's acquisition policies regarding the
acquisition of technical data. DOD concurred with GAO's recommendations.

The Army and the Air Force have encountered limitations in their
sustainment plans for some fielded weapon systems because they lacked
needed technical data rights. The lack of technical data rights has
limited the services' flexibility to make changes to sustainment plans
that are aimed at achieving cost savings and meeting legislative
requirements regarding depot maintenance capabilities. GAO identified
seven weapon system programs that encountered such limitations-C-17, F-22,
and C-130J aircraft, Up-armored High-Mobility Multipurpose Wheeled
Vehicle, Stryker family of vehicles, Airborne Warning and Control System
aircraft, and M4 carbine. Although the circumstances surrounding each case
were unique, earlier decisions made on technical data rights during system
acquisition were cited as a primary reason for the limitations
subsequently encountered. As a result of the limitations encountered, the
services had to alter their plans for developing maintenance capability at
public depots, developing new sources of supply to increase production, or
soliciting competitive offers for the acquisition of spare parts and
components to reduce sustainment costs. For example, the Air Force
identified a need to develop a core maintenance capability for the C-17 at
government depots to ensure it had the ability to support national defense
emergencies, but it lacked the requisite technical data rights. To
mitigate this limitation, the Air Force is seeking to form partnerships
with C-17 sub-vendors. However, according to Air Force officials, some
sub-vendors have declined to provide the needed technical data needed to
develop core capability. Although GAO did not assess the rationale for the
decisions made on technical data rights during system acquisition, several
factors, such as the extent the system incorporates technology that was
not developed with government funding and the potential for changes in the
technical data over the weapon system's life cycle, may complicate program
managers' decisions.

Current DOD acquisition policies do not specifically address long-term
technical data rights for weapon system sustainment. For example, DOD's
policies do not require program managers to assess long-term needs for
technical data rights to support weapon systems and, correspondingly, to
develop acquisition strategies that address those needs. DOD, as part of
the department's acquisition reforms and performance-based strategies, has
deemphasized the acquisition of technical data rights. Although GAO has
recommended that DOD emphasize the need for technical data rights, DOD has
not implemented these recommendations. The Army and the Air Force have
recognized weaknesses in their approaches to assessing and securing
technical data rights and have begun to address these weaknesses by
developing more structured approaches. However, DOD acquisition policies
do not facilitate these efforts. Unless DOD assesses and secures its
rights for the use of technical data early in the weapon system
acquisition process when it has the greatest leverage to negotiate, DOD
may face later challenges in sustaining weapon systems over their life
cycle.
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