Increased technical risk and performance shortfalls. Systemic underestimation leads to rushed development efforts, often creat- ing an environment where unethical compromises are more likely as con- tractors struggle to meet unrealistic schedules. This haste can result in significant technical challenges, per- formance shortfalls discovered dur- ing test and evaluation, or even worse, latent defects that emerge during operational use. Such outcomes can compromise mission effectiveness, increase sustainment costs, and pose risks to Warfighter safety. Capability gaps. Unrealistic sys- tem deployment timelines create dangerous gaps in military capabil- ity. Legacy systems are often retired or become increasingly difficult and expensive to sustain before viable replacements are ready, leaving the United States vulnerable during this transition. Escalating risks of legacy sys- tems. These delays in fielding new systems force the military to rely on aging platforms far beyond their planned service life. This escalates maintenance costs, increases opera- tional risks due to aging technology and parts obsolescence, and dimin- ishes capabilities compared to adver- saries fielding newer systems. Budgetary strain. Acquisition cost overruns, schedule slips, and the es- calating costs of sustaining legacy systems due to new system delays strain defense budgets and may po- tentially divert resources from other critical areas and programs. Erosion of trust. Continual under- estimation, performance shortfalls, and late delivery of capabilities erode trust among Congress, the public, acquisition leadership, military com- mands, and industry—jeopardizing support for defense spending and modernization efforts. Recommendations To address this systemic issue within DoD, the following changes are recommended:
ties within tight budget and schedule constraints, creating incentives for overly optimistic projections that can help secure funding and dem- onstrate progress. This pressure contributes to a systemic optimism bias that can distort program assess- ments and lead to unrealistic expec- tations about costs, timelines, and technological challenges. Misaligned incentives and un- derbidding. The competitive nature of defense contracting can create incentives for companies to under- estimate costs at the bid stage. This underbidding behavior stems from a desire to secure the contract initially, knowing that adjustments and cost overruns often can be negotiated later in the program’s life cycle when the DoD is more invested in the outcome. However, this approach ultimately can prove more costly, as technical issues that are not addressed early often lead to rework and redesign that can be orders of magnitude more expen- sive later in the life cycle. Obstacles to effective oversight. Even when programs possess ade- quate systems engineering expertise, they often face significant obstacles in exercising it effectively. Contractual limitations, pressure to adhere to un- realistic schedules, and a culture that prioritizes program milestones over technical risk mitigation can hinder engineers’ thorough oversight of sys- tem developers. This can result in crit- ical technical risks being overlooked or downplayed, ultimately leading to cost overruns, schedule delays, and compromised system performance. A Cascade of Consequences The ramifications of underesti- mation include increased technical risk and performance shortfalls for systems in development but also extend far beyond individual acqui- sition programs, ultimately resulting in capability gaps, escalating risks of legacy systems, budgetary strain, and the erosion of trust between the DoD, Congress, and the public.
pushes the boundaries of engineering, manufacturing, and software devel- opment. While accurately predicting timelines and costs for such projects is challenging at best, the DoD rou- tinely underestimates these factors. From components to systems. Developing modern weapon sys- tems requires not only overcoming significant technical hurdles for each individual component and subsys- tem but also the immense challenge of orchestrating their seamless inte- gration into a fully functional, high- performing, producible, reliable, and maintainable end system. This intri- cate interplay of parallel development efforts and the reliance on emergent system-level behaviors makes accu- rate cost and schedule estimations exceedingly difficult. Pressure for results and optimism bias. Program managers face im- mense pressure to deliver capabili- Two MH-139A Grey Wolf helicopters assigned to the 550th Helicopter Squadron perform an Initial Operational Test and Evaluation (IOT&E) mission over Malmstrom Air Force Base, Mont., Jan. 28, 2025. IOT&E is a critical phase in the development and fielding of new military systems. It’s a rigorous testing and evaluation process that assesses the system’s operational effectiveness, suitability, and survivability in a realistic and operational environ- ment. Source: U.S. Air Force photo by Senior Airman Mary Bowers
July-August 2025 | DEFENSE ACQUISITION | 37
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