Defense's forecast of 2000 repairs spending is increasing, report says

The Defense Department continues to push upward its cost estimate for preparing systems
for 2000.

In its most recent report to the Office of Management and Budget, DOD added about $600
million to its estimate, bringing the total to more than $2.5 billion. In the fall, DOD
had estimated it would spend about $1.9 billion on date code fixes.

The Air Force is responsible for the biggest chunk of the increase. The service
reported that its 2000 cost estimate would balloon from about $600 million to $1.1
billion. The Navy’s estimate rose $26 million to $470 million.

“Cost estimates have increased as problems come to light during the validation and
verification phase,” DOD noted in the report. “Some increased expenses have
occurred when organizations realize that replacement systems will not be implemented in
time, necessitating the remediation of legacy systems.”

But DOD also said that its total number of mission-critical systems declined, from
3,135 in August to 2,642 systems. The number of ready mission-critical systems increased
from 682 to 774; systems still needing repairs decreased from 2,075 to 1,592.

“The fluctuation in the total number of mission-critical systems is due to two
efforts: the examination of functions that are mission-critical and then the critical
examination of the systems that support these functions to determine those that are
critical to the operational capabilities of that function,” DOD’s report said.

A reduction in the number of mission-critical systems, however, did not translate into
lower costs.

The number of Army mission-critical systems decreased from 528 to 442 while the
service’s total cost estimate increased from $316 million to $386 million since the
last quarterly report.


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