Defense Acquisitions:

2009 Is a Critical Juncture for the Army's Future Combat System

GAO-08-408: Published: Mar 7, 2008. Publicly Released: Mar 7, 2008.

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The Future Combat System (FCS) program--which comprises 14 integrated weapon systems and an advanced information network--is the centerpiece of the Army's effort to transition to a lighter, more agile, and more capable combat force. The substantial technical challenges, the Army's acquisition strategy, and the cost of the program are among the reasons why the program is recognized as needing special oversight and review. Section 211 of the National Defense Authorization Act for Fiscal Year 2006 requires GAO to report annually on the FCS program. This report includes an examination of (1) how the definition, development, and demonstration of FCS capabilities are proceeding, particularly in light of the go/no-go decision scheduled for 2009; (2) the Army's plans for making production commitments for FCS and any risks related to the completion of development; and (3) the estimated costs for developing and producing FCS.

The progress made during the year by the FCS program, in terms of knowledge gained, is commensurate with a program in early development. Yet, the knowledge demonstrated thus far is well short of a program halfway through its development schedule and its budget. This portends additional cost increases and delays as FCS begins what is traditionally the most expensive and problematic phase of development. Thus, FCS's demonstrated performance, as well as the reasonableness of its remaining resources, will be paramount at the 2009 milestone review for the FCS program. In the key areas of defining and developing FCS capabilities, requirements definition and preliminary designs are proceeding but not yet complete; critical technologies are immature; complementary programs are not yet synchronized; and the remaining acquisition strategy is very ambitious. Beginning in 2008, the Army plans to make a series of commitments to produce FCS-related systems in advance of the low-rate production decision for the FCS core program in 2013. In general, production commitments are planned before key information is available. In 2008 and 2009, the Army plans to begin funding production of the first of three planned spin outs of FCS technologies to current forces. However, its commitment to the first spin out may be made before testing is complete. Also starting in 2008, the Army intends to commit to production of early versions of the Non-Line-of-Sight Cannon. This commitment is being made to respond to congressional direction to field the cannon. FCS technologies, network, and designs are not yet mature enough for production, and thus the cannons produced will not be deployable without significant modifications. Advance procurement funding for the first full suite of FCS systems will begin in fiscal year 2011, the budget for which will be presented to Congress in February 2010--less than a year after the milestone review and before the stability of the FCS design is assessed at the critical design review. In addition, the Army plans to commit to using Boeing, its lead system integrator, for the early production of FCS systems through the initial production phase of the FCS system of systems. By the time of the production decision in 2013, $39 billion will have already been invested in FCS, with another $8 billion requested. Thus, while demonstration of the FCS's capability falls late in the schedule, commitments to production are likely to come early--an untenable situation for decision makers. The Army's $160.9 billion cost estimate for the FCS program is largely the same as last year's but yields less content as the number of FCS systems has since been reduced from 18 to 14. There is not a firm foundation of knowledge for a confident cost estimate. Also, two independent cost assessments are significantly higher than the Army's estimate. However, the Army maintains that it will further reduce FCS content to stay within its development cost ceiling. Should the higher cost estimates prove correct, it seems unlikely that the Army could reduce FCS content enough to stay within the current funding constraints while still delivering a capability that meets requirements.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To ensure that the 2009 FCS milestone review is positioned to be both well-informed and transparent, the Secretary of Defense should establish objective and quantitative criteria that the FCS program will have to meet in order to justify its continuation and gain approval for the remainder of its acquisition strategy. The criteria should be set by at least July 30, 2008, so as to be prescriptive, and should be consistent with DOD acquisition policy and best practices. At a minimum, the criteria should include the completion of the definition of all FCS requirements including those for the information network.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: DOD concurred with this recommendation and stated that expectations for the 2009 milestone review will be reviewed and finalized in late 2008. In its August 2008 Acquisition Decision Memorandum, criteria for the milestone review were detailed. However, those criteria did not include any on the completion of the definition of all FCS requirements.

    Recommendation: To ensure that the 2009 FCS milestone review is positioned to be both well-informed and transparent, the Secretary of Defense should establish objective and quantitative criteria that the FCS program will have to meet in order to justify its continuation and gain approval for the remainder of its acquisition strategy. The criteria should be set by at least July 30, 2008, so as to be prescriptive, and should be consistent with DOD acquisition policy and best practices. At a minimum, the criteria should include the demonstration that preliminary designs meet FCS requirements.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: DOD concurred with this recommendation and stated that expectations for the 2009 milestone review will be reviewed and finalized in late 2008. In its August 2008 Acquisition Decision Memorandum, criteria for the milestone review were detailed. However, those criteria did not include one related to the demonstration that preliminary designs meet FCS requirements.

    Recommendation: To ensure that the 2009 FCS milestone review is positioned to be both well-informed and transparent, the Secretary of Defense should establish objective and quantitative criteria that the FCS program will have to meet in order to justify its continuation and gain approval for the remainder of its acquisition strategy. The criteria should be set by at least July 30, 2008, so as to be prescriptive, and should be consistent with DOD acquisition policy and best practices. At a minimum, the criteria should include the maturation of all critical technologies.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD stated that expectations for the 2009 milestone review will be reviewed and finalized in late 2008. In its August 2008 Acquisition Decision Memorandum, criteria for the milestone review were detailed. Among them was a criteria that technology readiness level 6 be achieved for threshold critical technologies.

    Recommendation: To ensure that the 2009 FCS milestone review is positioned to be both well-informed and transparent, the Secretary of Defense should establish objective and quantitative criteria that the FCS program will have to meet in order to justify its continuation and gain approval for the remainder of its acquisition strategy. The criteria should be set by at least July 30, 2008, so as to be prescriptive, and should be consistent with DOD acquisition policy and best practices. At a minimum, the criteria should include the synchronization of FCS with all essential complementary programs.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD concurred with this recommendation and stated that expectations for the 2009 milestone review will be reviewed and finalized in late 2008. In its August 2008 Acquisition Decision Memorandum, criteria for the milestone review were detailed. One criteria was that the design, build, and test schedules for all platforms and networks be aligned and executable.

    Recommendation: To ensure that the 2009 FCS milestone review is positioned to be both well-informed and transparent, the Secretary of Defense should establish objective and quantitative criteria that the FCS program will have to meet in order to justify its continuation and gain approval for the remainder of its acquisition strategy. The criteria should be set by at least July 30, 2008, so as to be prescriptive, and should be consistent with DOD acquisition policy and best practices. At a minimum, the criteria should include a sound and executable acquisition strategy, including (1) the synchronization of the development and demonstration of the FCS information network with the development and demonstration of other FCS elements, (2) a realistic path forward to critical design review, (3) a thorough and robust test and evaluation plan, and (4) a realistic path forward to production process maturity before the start of production.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: DOD concurred with this recommendation and stated that expectations for the 2009 milestone review will be reviewed and finalized in late 2008. In its August 2008 Acquisition Decision Memorandum, criteria for the milestone review were detailed. However, the criteria did not include anything directly related to FCS' acquisition strategy going forward.

    Recommendation: To ensure that the 2009 FCS milestone review is positioned to be both well-informed and transparent, the Secretary of Defense should establish objective and quantitative criteria that the FCS program will have to meet in order to justify its continuation and gain approval for the remainder of its acquisition strategy. The criteria should be set by at least July 30, 2008, so as to be prescriptive, and should be consistent with DOD acquisition policy and best practices. At a minimum, the criteria should include development and production cost estimates that (1) have a specified confidence level and (2) are reconciled with independent estimates.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: DOD concurred with this recommendation and stated that expectations for the 2009 milestone review will be reviewed and finalized in late 2008. In its August 2008 Acquisition Decision Memorandum, criteria for the milestone review were detailed. However, those criteria did not include anything specific on a cost estimate or its confidence levels.

    Recommendation: To ensure that the 2009 FCS milestone review is positioned to be both well-informed and transparent, the Secretary of Defense should establish objective and quantitative criteria that the FCS program will have to meet in order to justify its continuation and gain approval for the remainder of its acquisition strategy. The criteria should be set by at least July 30, 2008, so as to be prescriptive, and should be consistent with DOD acquisition policy and best practices. At a minimum, the criteria should include assurance that the Army can properly fund, over the long term, the FCS program of record.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: DOD concurred with this recommendation and stated that expectations for the 2009 milestone review will be reviewed and finalized in late 2008. Although DOD expected the Army to present an assessment of FCS' long term affordability, it did not specify that the Army provide assurance that it could properly fund, over the long term, the FCS program of record.

    Recommendation: The Secretary of Defense should, in advance of the 2009 milestone review, identify viable alternatives to FCS as currently structured that can be considered in the event that FCS does not measure up to the criteria set for the review. As we have previously reported, an alternative need not be a rival to the FCS, but rather the next best solution that can be adopted if FCS is not able to deliver the needed capabilities. For example, an alternative need not represent a choice between FCS and the current force, but could include fielding a subset of FCS, such as a class of vehicles, if they perform as needed and provide a militarily worthwhile capability.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: While DOD concurred with this recommendation, it is not yet clear that DOD will formally conduct the 2009 FCS milestone review. Nevertheless, the Secretary of Defense's decision to terminate manned ground vehicle development was at least a partial "no-go" decision on the current FCS program. Also, the Secretary's decision to proceed with several followon programs to FCS was, in effect, a consideration of alternatives to the current FCS program of record.

    Recommendation: The Secretary of Defense should (1) closely examine the oversight implications of the Army's decision to contract with the lead system integrator (LSI) for early production of FCS spin outs, non-line-of-sight cannon (NLOS-C), and low-rate production for the core FCS program; (2) take steps to mitigate the risks of the Army's decisions, including the consideration of the full range of alternatives for contracting for production; and (3) evaluate alternatives to the LSI for long-term sustainment support of the FCS system of systems.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: Regarding the recommendations related to oversight, while DOD concurred with each, it was silent on the expansion of the LSI's role into core production and cites its reliance on Army analyses and risk assessments, rather than its own assessments, to inform its decisions. However, in its response to a related recommendation in GAO-09-288, DOD stated that in November 2008, the Under Secretary of Defense for Acquisition, Technology, and Logistics directed the Army to examine contracting alternatives for procurement of FCS capability. Also, in the June 2009 Acquisition Decision Memorandum, the Under Secretary specified that the Army present a plan for the transition away from industry-led integration efforts. The Army has presented and is implementing its plan to move away from industry-led integration over the next few years. That implementation is most evident in the Army's procurement contracting plans for subsequent lots of E-IBCT equipment, which are remnants from the FCS program.

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