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Definition of Unit Flyaway Cost Used by DOD

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B-280126
Hawks and two DarkStars had been completed. One DarkStar was
destroyed in a crash during its second flight.
Definition of Unit Flyaway
The standard definition of aircraft unit flyaway cost is found in the DOD
Financial Management Regulations.5 Standard unit flyaway cost elements
Cost Used by DOD
include the costs of procuring airframes; engines; avionics; armaments;
engineering change orders; nonrecurring costs including production
tooling, software, and other costs (if funded from aircraft procurement
appropriations); divided by the procurement quantity. Flyaway cost does
not include research and development, support equipment, training
equipment, technical data, or spares.
DARPA,
in its HAE agreements, incorporated a definition of unit flyaway
price that included some, but not all, of the standard elements described
above plus the contractors' fees. (See tables 1 and 2.) DARPA officials did so
because they assumed the future production units would be identical to
the prototype units being built in the demonstration phase. The cost
categories they did not include are associated with system modifications,
which they reasoned would not be incurred if the vehicles were the same.
Cost categories not included in the HAE agreements that are otherwise
typically included are costs such as engineering change orders, software
changes, system test, and nonrecurring costs, including tooling costs.
Because projections of what these other costs might be were not
calculated by DARPA when it developed the original estimates for average
unit flyaway price, the updated estimates shown in tables 1 and 2 also do
not include these other cost categories. The Air Force program office, in
order to have a realistic assessment of this newly transitioned program, is
developing total program production cost estimates that include these
costs. The addition of these cost categories will increase the unit flyaway
price for the Global Hawk and Dark Star above the DARPA updated
estimates of $14.8 million and $13.7 million, respectively.
In commenting on a draft of this report, DOD concurred with our findings.
Agency Comments
Technical comments have been incorporated as appropriate. DOD's
comments are reprinted in appendix I.
5
Volume 2B, Chapter 4 - Procurement Appropriations, Exhibit P-5 - Cost Analysis.
Page 4
GAO/NSIAD-99-29 Unmanned Aerial Vehicles

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