Today, we will hear from the Government Accountability Office that the Department of Defense paid contractors more than $8 billion in award fees over a four-year period without regard to the quality of the contractors' performance. According to GAO, DOD's practices with regard to award fees "undermine the effectiveness of fees as a motivational tool and marginalize their use in holding contractors accountable for acquisition outcomes. They also serve to waste taxpayer funds."

Mr. Chairman, you and I requested this review two years ago. We were concerned about DOD's use of award fees because of reports that both the Air Force and the Navy had paid out huge award fees on major acquisition programs that were running far behind schedule and over budget. At that time, the Air Force acquisition executive stated that the failure to properly link award fees to contractor performance was "ridiculous" and estimated that the Air Force could save more than a billion dollars a year by restructuring its award fee program.

The testimony we will hear today shows that he may have been right. No fewer than 24 of DOD's major weapon systems have experienced a cost growth of 50 percent or more over original estimates. Some have seen cost growth of 100 percent, 200 percent, or more. Yet, we continue to pay contractors huge award fees for their performance on these systems.

I hope that we will be able to work with the Department of Defense to restructure contractor incentives and ensure that contractors are paid award fees only if they earn these fees through superior performance.

Again, I thank the Chairman for holding this hearing and I look forward to hearing the testimony of our witnesses.