Defense Acquisitions
Future Combat Systems Challenges and Prospects for Success Gao ID: GAO-05-442T March 15, 2005FCS is the core of Army efforts to create a lighter, more agile, capable force: a $108 billion investment to provide a new generation of 18 manned and unmanned ground vehicles, air vehicles, sensors, and munitions linked by an information network. Although system development and demonstration began in May 2003, the program was restructured in July 2004, including processes to make FCS capabilities available to current forces. GAO has been asked to assess (1) FCS technical and managerial challenges; (2) prospects for delivering FCS within cost and scheduled objectives; and (3) options for proceeding.
In its unprecedented complexity, FCS confronts the Army with significant technical and managerial challenges in its requirements, development, finance, and management. Technical challenges include the need for FCS vehicles to be smaller, weigh less, and be as lethal and survivable as current vehicles, which requires (1) a network to collect and deliver vast amounts of intelligence and communications information and (2) individual systems, such as manned ground vehicles, that are as complex as fighter aircraft. Its cost will be very high: its first increment--enough to equip about 1/3 of the force--will cost over $108 billion, with annual funding requests running from $3 billion to $9 billion per year. The program's pace and complexity also pose significant management challenges. The Army is using a Lead System Integrator to manage FCS and is using a contracting instrument--Other Transaction Agreement--that allows for more flexible negotiation of roles, responsibilities, and rights with the integrator. The FCS is at significant risk for not delivering required capability within budgeted resources. Currently, about 9 1/2 years is allowed from development start to production decision. DOD typically needs this period of time to develop a single advanced system, yet FCS is far greater in scope. The program's level of knowledge is far below that suggested by best practices or DOD policy: Nearly 2 years after program launch and with $4.6 billion invested, requirements are not firm and only 1 of over 50 technologies are mature. As planned, the program will attain the level of knowledge in 2008 that it should have had in 2003, but things are not going as planned. Progress in critical areas--such as the network, software, and requirements--has in fact been slower, and FCS is therefore likely to encounter problems late in development, when they are very costly to correct. Given the scope of the program, the impact of cost growth could be dire. To make FCS an effective acquisition program different approaches must be considered, including (1) setting the first stage of the program to demonstrate a worthwhile military capability, mature technology, and firm requirements; and (2) bundling its other capabilities into advanced technology demonstrators until they can be put in a future stage, which will provide guidance for decisions on requirements, lower the cost of development, and make for more reasonable cost and schedule estimates for future stages.
GAO-05-442T, Defense Acquisitions: Future Combat Systems Challenges and Prospects for Success
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Testimony:
Before the Subcommittee on Airland, Committee on Armed Services, U.S.
Senate
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 9:30 a.m. EST:
Wednesday, March 16, 2005:
Defense Acquisitions:
Future Combat Systems Challenges and Prospects for Success:
Statement of Paul L. Francis, Director:
Acquisition and Sourcing Management:
GAO-05-428T:
GAO Highlights:
Highlights of GAO-05-442T, a testimony before the Subcommittee on
Airland, Committee on Armed Services, U.S. Senate:
Why GAO Did This Study:
FCS is the core of Army efforts to create a lighter, more agile,
capable force: a $108 billion investment to provide a new generation of
18 manned and unmanned ground vehicles, air vehicles, sensors, and
munitions linked by an information network. Although system development
and demonstration began in May 2003, the program was restructured in
July 2004, including processes to make FCS capabilities available to
current forces.
GAO has been asked to assess (1) FCS technical and managerial
challenges; (2) prospects for delivering FCS within cost and scheduled
objectives; and (3) options for proceeding.
What GAO Found:
In its unprecedented complexity, FCS confronts the Army with
significant technical and managerial challenges in its requirements,
development, finance, and management. Technical challenges include the
need for FCS vehicles to be smaller, weigh less, and be as lethal and
survivable as current vehicles, which requires (1) a network to collect
and deliver vast amounts of intelligence and communications information
and (2) individual systems, such as manned ground vehicles, that are as
complex as fighter aircraft. Its cost will be very high: its first
increment”enough to equip about 1/3 of the force”will cost over $108
billion, with annual funding requests running from $3 billion to $9
billion per year. The program‘s pace and complexity also pose
significant management challenges. The Army is using a Lead System
Integrator to manage FCS and is using a contracting instrument”Other
Transaction Agreement”that allows for more flexible negotiation of
roles, responsibilities, and rights with the integrator.
The FCS is at significant risk for not delivering required capability
within budgeted resources. Currently, about 9½ years is allowed from
development start to production decision. DOD typically needs this
period of time to develop a single advanced system, yet FCS is far
greater in scope. The program‘s level of knowledge is far below that
suggested by best practices or DOD policy: Nearly 2 years after program
launch and with $4.6 billion invested, requirements are not firm and
only 1 of over 50 technologies are mature. As planned, the program will
attain the level of knowledge in 2008 that it should have had in 2003,
but things are not going as planned. Progress in critical areas”such as
the network, software, and requirements”has in fact been slower, and
FCS is therefore likely to encounter problems late in development, when
they are very costly to correct. Given the scope of the program, the
impact of cost growth could be dire.
To make FCS an effective acquisition program different approaches must
be considered, including (1) setting the first stage of the program to
demonstrate a worthwhile military capability, mature technology, and
firm requirements; and (2) bundling its other capabilities into
advanced technology demonstrators until they can be put in a future
stage, which will provide guidance for decisions on requirements, lower
the cost of development, and make for more reasonable cost and schedule
estimates for future stages.
Wwww.gao.gov/cgi-bin/getrpt?GAO-05-428T.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Paul Francis at (202) 512-
2811 or francisp@gao.gov.
[End of section]
GAO-05-428T:
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss the Department of the Army's
Future Combat Systems (FCS), a networked family of weapons and other
systems. FCS is the centerpiece of the Army's plan to transform to a
lighter, more agile, and more capable force. It consists of an
information network linking a new generation of 18 manned and unmanned
ground vehicles, air vehicles, sensors, and munitions. FCS began system
development and demonstration in May 2003. In July 2004, the Army
announced a major restructuring of the program, including plans for
transitioning FCS capabilities to current forces. Total costs of the
restructured program have not yet been estimated but will be at least
$108 billion, in fiscal year 2005 dollars. The fiscal year 2005 budget
provides $2.8 billion in research and development funds for FCS; the
fiscal year 2006 budget requests an increase to $3.4 billion.
Today, I would like to discuss (1) the technical and managerial
challenges of the FCS program; (2) the prospects for delivering FCS
capabilities within cost and scheduled objectives; and (3)
considerations on how to proceed.
Summary:
The FCS program faces significant challenges in setting requirements,
developing systems, financing development, and managing the effort. The
Army has set the bar for requirements very high. FCS vehicles are to be
a fraction of the weight of current vehicles, yet are to be as lethal
and survivable. Their light weight and small size are critical to
meeting the other Army goals: more mobile forces that are easier to
sustain in combat. For FCS-equipped units to see and hit the enemy
first, rather than to rely on heavy armor to survive, the Army must
develop (1) a network to collect, process, and deliver vast amounts of
intelligence and communications information and (2) individual systems,
such as manned ground vehicles, that have been likened in complexity to
fighter aircraft. FCS is a development of unprecedented complexity for
the Army. From a financial standpoint, the first increment of FCS--
enough to equip about 1/3 of the force--will cost at least $108
billion. Funding requests will run from over $3 billion per year to
about $9 billion per year at a time when the Army faces the competing
demands of sustaining current operations, recapitalizing the current
force, and paying for modularization. Finally, because of the
management challenge the program's pace and complexity pose, the Army
has turned to a Lead System Integrator to manage the entire effort and
is making use of a contracting instrument known as Other Transaction
Agreement, which allows the parties to negotiate contract terms based
on the program requirements and their needs.
As restructured, the FCS strategy includes 4 additional years to reduce
risk, increase the demonstration of FCS capabilities, and harvest
successes for the current force. Even with these improvements, the FCS
is still at significant risk for not delivering planned capability
within budgeted resources. This risk stems from the scope of the
program's technical challenges and the low level of knowledge
demonstrated at this point. The current schedule allows about 9½ years
from development start to the production decision. FCS is developing
multiple systems and a network within a period of time that DOD
typically needs to develop a single advanced system. The FCS has
demonstrated a level of knowledge far below that suggested by best
practices or DOD policy. Nearly 2 years after program launch and about
$4.6 billion invested to date, requirements are not firm and only 1 of
over 50 technologies are mature--activities that should have been done
before the start of system development and demonstration. If everything
goes as planned, the program will attain the level of knowledge in 2008
that it should have had before it started in 2003. But things are not
going as planned. Progress in critical areas, such as the network,
software, and requirements has been slower than planned. Proceeding
with such low levels of knowledge makes it likely that FCS will
encounter problems late in development, when they are costly to
correct. The relatively immature state of program knowledge at this
point provides an insufficient basis for making a good cost estimate.
Independent estimates should provide more information but are not yet
completed. If the cost estimate for FCS is no more accurate than
traditional estimates, the impact of cost growth could be substantial,
given the program's magnitude.
At this point, the FCS provides a concept that has been laid out in
some detail, an architecture or framework for integrating individual
capabilities, and an investment strategy for how to acquire those
capabilities. It is not yet a good fit as an acquisition program. If
FCS-like capabilities are to be made acquirable--for which the Army has
made a compelling case--then different approaches for FCS warrant
consideration because they offer building higher levels of knowledge
and thus lower risk. One approach, in keeping with DOD acquisition
policy and best practices, would be to set the first spiral as the
program of record for system development and demonstration. To make
such a spiral executable, it should meet the standards of providing a
worthwhile military capability, having mature technology, and having
firm requirements. Other capabilities currently in the FCS program
could be taken out of system development and demonstration and instead
be bundled into advanced technology demonstrations that could develop
and experiment with advanced technologies in the more conducive
environment of science and technology until they are ready to be put
into a future spiral. Advancing technologies in this way will enable
knowledge to guide decisions on requirements, lower the cost of
development, and make for more reasonable cost and schedule estimates
for future spirals.
Background:
Army Transformation and the FCS Concept:
A decade after the cold war ended, the Army recognized that its combat
force was not well suited to perform the operations it faces today and
is likely to face in the future. The Army's heavy forces had the
necessary firepower but required extensive support and too much time to
deploy. Its light forces could deploy rapidly but lacked firepower. To
address this mismatch, the Army decided to radically transform itself
into a new "Future Force."
The Army expects the Future Force to be organized, manned, equipped,
and trained for prompt and sustained land combat. This translates into
a force that is responsive, technologically advanced, and versatile.
These qualities are intended to ensure the Future Force's long-term
dominance over evolving, sophisticated threats. The Future Force is to
be offensively oriented and will employ revolutionary operational
concepts, enabled by new technology. This force is to fight very
differently than the Army has in the past, using easily transportable
lightweight vehicles, rather than traditional heavily armored vehicles.
The Army envisions a new way of fighting that depends on networking the
force, which involves linking people, platforms, weapons, and sensors
seamlessly together.
The Army has determined that it needs more agile forces. Agile forces
would possess the ability to seamlessly and quickly transition among
various types of operations from support operations to warfighting and
back again. They would adapt faster than the enemy thereby denying it
the initiative. Agile forces would allow commanders of small units the
authority and high quality information to act quickly to respond to
dynamic situations.
To be successful, therefore, the transformation must include more than
new weapons. It must be extensive, encompassing tactics and doctrine as
well as the very culture and organization of the Army.
The FCS Solution:
FCS will provide the majority of weapons and sensor platforms that
comprise the new brigade-like modular units of the Future Force known
as Units of Action. Each unit is to be a rapidly deployable fighting
organization about the size of a current Army brigade but with the
combat power and lethality of the current larger division. The Army
also expects FCS-equipped units of action to provide significant
warfighting capabilities to the overall joint force. The Army is
reorganizing its current forces into modular, brigade-based units akin
to units of action.
FCS is a family of 18 manned and unmanned ground vehicles, air
vehicles, sensors, and munitions that will be linked by an information
network. These include, among other things, eight new ground vehicles
to replace current vehicles such as tanks, infantry carriers and self-
propelled howitzers, four different unmanned aerial vehicles, several
unmanned ground vehicles, and attack missiles that can be positioned in
a box-like structure.
Figure 1: FCS Increment 1:
[See PDF for image]
[End of figure]
The manned ground vehicles are to be a fraction of the weight of
current weapons such as the Abrams tank and Bradley fighting vehicle,
yet are to be as lethal and survivable. At a fundamental level, the FCS
concept is replacing mass with superior information; that is, to see
and hit the enemy first, rather than to rely on heavy armor to
withstand a hit.
The essence of the FCS concept itself--to provide the lethality and
survivability of the current heavy force with the sustainability and
responsiveness of a force that weighs a fraction as much--has the
intrinsic attraction of doing more with less. The FCS concept has a
number of progressive features, which demonstrate the Army's desire to
be proactive in its approach to preparing for potential future
conflicts and its willingness to break with tradition in developing an
appropriate response to the changing scope of modern warfare. If
successful, the program will leverage individual capabilities of
weapons and platforms and will facilitate interoperability and open
system designs. This is a significant improvement over the traditional
approach of building superior individual weapons that must be netted
together after the fact. Also, the system-of-systems network and
weapons could give managers the flexibility to make best value
tradeoffs across traditional program lines. This transformation of the
Army, both in terms of operations and equipment, is underway with the
full cooperation of the Army warfighter community. In fact, the
development and acquisition of FCS is being accomplished using a
collaborative relationship between the developer (program manager), the
contractor, and the warfighter community.
FCS Program Has Been Restructured During the Last Year:
The FCS program was approved to start system development and
demonstration in May 2003. On July 21, 2004, the Army announced its
plans to restructure the program. The restructuring responded to
direction from the Army Chief of Staff and addresses risks and other
issues identified by external analyses. Its objectives include:
* Spinning off ripe FCS capabilities to current force units;
* Meeting Congressional language for fielding the Non-Line of Sight
Cannon;
* Retaining the system-of-systems focus and fielding all 18 systems;
* Increasing the overall schedule by 4 years; and:
* Developing a dedicated evaluation unit to demonstrate FCS
capabilities:
The program restructuring contained several features that reduce risk-
-adding four additional years to develop and mature the manned ground
vehicles; adding demonstrations and experimentation; and establishing
an evaluation unit to demonstrate FCS capabilities. The program
restructuring also adds scope to the program by reintroducing four
deferred systems, adding four discrete spirals of FCS capabilities to
the current force, and accelerating the development of the network.
About $6.1 billion was added to the system development and
demonstration contract and the Army has recently announced that the
detailed revision of the contract has been completed.
Objectives, Scope, and Methodology:
To develop the information on whether the FCS program was following a
knowledge-based acquisition strategy and the current status of that
strategy, we interviewed officials of the Office of the Under Secretary
of Defense (Acquisition, Technology, and Logistics); the Secretary of
Defense's Cost Analysis Improvement Group; the Assistant Secretary of
the Army (Acquisition, Logistics, and Technology); the Army's Training
and Doctrine Command; Surface Deployment and Distribution Command; the
Program Manager for the Unit of Action (previously known as Future
Combat Systems); the Future Combat Systems Lead Systems Integrator; and
LSI One Team contractors. We reviewed, among other documents, the
Future Combat Systems' Operational Requirements Document, the
Acquisition Strategy Report, the Baseline Cost Report, the Critical
Technology Assessment and Technology Risk Mitigation Plans, and the
Integrated Master Schedule. We attended the FCS Management Quarterly
Reviews, In-Process Reviews, and Board of Directors Reviews.
In our assessment of the FCS, we used the knowledge-based acquisition
practices drawn from our large body of past work as well as DOD's
acquisition policy and the experiences of other programs. We discussed
the issues presented in this statement with officials from the Army and
the Secretary of Defense, and made several changes as a result. We
performed our review from May 2004 to March 2005 in accordance with
generally accepted auditing standards.
The FCS Program Is An Unprecedented Challenge:
The FCS program faces significant challenges in setting requirements,
developing systems, financing development, and managing the effort. It
is the largest and most complex acquisition ever attempted by the Army.
The Requirements Challenge:
The Army wants the FCS-equipped unit of action to be as lethal and
survivable as the current heavy force, but to be significantly more
responsive and sustainable. For the unit of action to be lethal, it
must have the capability to address the combat situation, set
conditions, maneuver to positions of advantage, and to engage enemy
formations at longer ranges and with greater precision than the current
force. To provide this level of lethality and reduce the risk of
detection, FCS must provide high single-shot weapon effectiveness. To
be as survivable as the current heavy force, the unit of action must
find and kill the enemy before being seen and identified. The
individual FCS systems will also rely on a layered system of protection
involving several technologies that lowers the chances of a vehicle or
other system being seen and hit by the enemy. To be responsive, the
unit of action must be able to rapidly deploy anywhere in the world and
be rapidly transportable by various means--particularly by the C-130
aircraft--and ready to fight upon arrival. To facilitate rapid
transportability on the battlefield, FCS vehicles are to match the
weight and size constraints of the C-130 aircraft. The unit of action
is to be capable of sustaining itself for periods of 3 to 7 days
depending on the level of conflict--necessitating a small logistics
footprint. This requires subsystems with high reliability and low
maintenance, reduced demand for fuel and water, highly effective
weapons, and a fuel-efficient engine.
Meeting all these requirements is unprecedented not only because of the
difficulty each represents individually, but because the solution for
one requirement may work against another requirement. For example,
solutions for lethality could increase vehicle weight and size.
Solutions for survivability could increase complexity and lower
reliability. It is the performance of the information network that is
the linchpin for meeting the other requirements. It is the quality and
speed of the information that will enable the lethality and
survivability of smaller vehicles. It is smaller vehicles that enable
responsiveness and sustainability.
The Development Challenge:
In the Army's own words, the FCS is "the greatest technology and
integration challenge the Army has ever undertaken." It intends to
concurrently develop a complex, system-of-systems-an extensive
information network and 18 major weapon systems. The sheer scope of the
technological leap required for the FCS involves many elements. For
example:
* First-of-a-kind network will have to be developed that will entail
development of unprecedented capabilities--on-the-move communications,
high-speed data transmission, dramatically increased bandwidth, and
simultaneous voice, data and video;
* The design and integration of 18 major weapon systems or platforms
has to be done simultaneously and within strict size and weight
limitations;
* At least 53 technologies that are considered critical to achieving
FCS' critical performance capabilities will need to be matured and
integrated into the system-of-systems;
* Synchronizing the development, demonstration, and production of as
many as 157 complementary systems with the FCS content and schedule.
This will also involve developing about 100 network interfaces so the
FCS can be interoperable with other Army and joint forces; and:
* At least an estimated 34 million lines of software code will need to
be generated (about double that of the Joint Strike Fighter, which had
been the largest defense undertaking in terms of software to be
developed).
The Financial Challenge:
Based on the restructured program, the FCS program office initially
estimated that FCS will require $28.0 billion for research and
development and around $79.9 billion for the procurement of 15 units of
action. The total program cost is expected to be at least $107.9
billion. These are fiscal year 2005 dollars. Since this estimate, the
Army has released an updated research and development cost estimate of
$30.3 billion in then-year dollars. An updated procurement estimate is
not yet available. The Army is continuing to refine these cost
estimates. As estimated, the FCS will command a significant share of
the Army's acquisition budget, particularly that of ground combat
vehicles, for the foreseeable future. In fiscal year 2006, the FCS
budget request of $3.4 billion accounts for 65 percent of the Army's
proposed spending on programs in system development and demonstration
and 35 percent of that expected for all research, development, test and
evaluation activities.
As the FCS begins to command large budgets, it will compete with other
major financial demands. Current military operations, such as in
Afghanistan and Iraq, require continued funding. Since September 2001,
DOD has needed over $240 billion in supplemental appropriations to
support the global war on terrorism. Current operations are also
causing faster wear on existing weapons, which will need refurbishment
or replacement sooner than planned. The equipment used by the current
force, such as Abrams tanks and Bradley Fighting Vehicles, is expected
to remain in the active inventory until at least 2030. The cost to
upgrade and maintain this equipment over that length of time has not
been estimated but could be substantial. Also, the cost of converting
current forces to new modular, brigade-based units is expected to be at
least $48 billion. Further, FCS is part of a significant surge in the
demand for new weapons. Just 4 years ago, the top 5 weapon systems cost
about $280 billion; today, in the same base year dollars, the top 5
weapon systems cost about $521 billion. If megasystems like FCS are
estimated and managed with traditional margins of error, the financial
consequences are huge, especially in light of a constrained
discretionary budget.
The Management Challenge:
The Army has employed a management approach that centers on a Lead
System Integrator (LSI) and a non-standard contracting instrument,
known as an Other Transaction Agreement (OTA). The Army advised us that
it did not believe it had the resources or flexibility to use its
traditional acquisition process to field a program as complex as FCS
under the aggressive timeline established by the then-Army Chief of
Staff.
Although there is no complete consensus on the definition of LSI, those
we are aware of appear to be prime contractors with increased program
management responsibilities. These responsibilities have included
greater involvement in requirements development, design and source
selection of major system and subsystem subcontractors. The government
also has used the LSI approach on programs that require system-of-
systems integration.
The Army selected Boeing as the LSI for the FCS system development and
demonstration in May 2003. The Army and Boeing established a One-Team
management approach with several first tier subcontractors to execute
the program. According to the Army, Boeing has awarded 20 of 24 first
tier subcontracts, to 17 different subcontractors. The One-Team members
and their responsibilities are depicted in table 1.
Table 1: One-Team Members:
One-Team Member: Army;
Responsibility: Program Oversight and Insight.
One-Team Member: Boeing/SAIC;
Responsibility: Program Management (including source selection),
Development of System-of-Systems Common Operating Environment, System
Integration.
One-Team Member: General Dynamics Land Systems;
Responsibility: Manned Ground Vehicles.
One-Team Member: General Dynamics C4 Systems;
Responsibility: Planning and Preparation Services, Sensor Data
Management.
One-Team Member: General Dynamics Robotics Systems;
Responsibility: Autonomous Navigation System.
One-Team Member: General Dynamics Advanced Information Systems;
Responsibility: Integrated Computers.
One-Team Member: United Defense, LP;
Responsibility: Manned Ground Vehicles, Armed Robotic Vehicle.
One-Team Member: iRobot Corporation;
Responsibility: Small Unmanned Ground Vehicle.
One-Team Member: Lockheed Martin Missiles and Fire Control;
Responsibility: Multifunction Utility/Logistics and Equipment Vehicle.
One-Team Member: Lockheed Martin, Orincon;
Responsibility: Intelligence, Surveillance and Reconnaissance Sensor
Fusion.
One-Team Member: Austin Information Systems;
Responsibility: Situational Understanding.
One-Team Member: BAE Systems CNI;
Responsibility: Ground Platform Communication.
One-Team Member: BAE Systems IESI;
Responsibility: Air Platform Communication.
One-Team Member: Computer Sciences Corporation;
Responsibility: Training Support.
One-Team Member: Dynamics Research Corporation;
Responsibility: Training Support.
One-Team Member: Honeywell Defense and Space Electronic Systems;
Responsibility: Platform Soldier Mission Readiness System.
One-Team Member: Northrop Grumman;
Responsibility: Air Sensor Integrator, Class IV Unmanned Aerial
Vehicle, Logistics Decision Support Systems, Network Management,
Training Support.
One-Team Member: Raytheon Network Centric Systems;
Responsibility: Battle Command and Mission Execution, Ground Sensor
Integrator.
One-Team Member: Textron Systems;
Responsibility: Unattended Ground Sensors, Tactical and Urban Sensors.
Source: U.S. Army:
[End of table]
Boeing was awarded the LSI role under an OTA which is not subject to
the Federal Acquisition Regulation (FAR). Consequently, when using an
OTA, DOD contracting officials have considerable flexibility to
negotiate the agreement terms and conditions. This flexibility requires
DOD to use good business sense and to incorporate appropriate
safeguards to protect the government's interests. The OTA used for FCS
includes several FAR or Defense FAR Supplement clauses, many of which
flow down to subcontracts. The value of the agreement between the Army
and Boeing is approximately $21 billion. It is a cost reimbursement
contract.
Congress has incrementally expanded the use and scope of other
transaction authority since first authorizing its use more than a
decade ago. In 1989, Congress gave DOD, acting through the Defense
Advanced Research Projects Agency, authority to temporarily use other
transactions for basic, applied, and advanced research projects. In
1991, Congress made this authority permanent and extended it to the
military departments. In 1993, Congress enacted Section 845 of the
National Defense Authorization Act for Fiscal Year 1994, which provided
DARPA with authority to use, for a 3-year period, other transactions to
carry out prototype projects directly relevant to weapons or weapon
systems proposed to be acquired or developed by DOD. Subsequent
amendments have extended this authority to the military departments and
other defense agencies. Most recently, the National Defense
Authorization Act for Fiscal Year 2004 extended the prototype project
authority until 2008 and provided for a pilot program to transition
some other transaction prototype projects to follow-on production
contracting.
According to program officials, under the LSI and OTA arrangement on
FCS, the Army primarily participates in the program through Integrated
Product Teams that are used to make coordinated management decisions in
the program about issues related to requirements, design, horizontal
integration and source selection.
FCS Remains At Risk of Not Delivering Planned Capability Within
Estimated Resources:
During the past year, the FCS underwent a significant restructuring,
which added 4 years to the schedule for reducing risk, increasing the
demonstration of FCS capabilities, and harvesting successes for the
current force. Yet, even with these improvements, the FCS is still at
significant risk for not delivering planned capability within budgeted
resources. This risk stems from the scope of the program's technical
challenges and the low level of knowledge demonstrated thus far.
High Levels of Demonstrated Knowledge Are Key to Getting Desired
Outcomes:
Our previous work has shown that program managers can improve their
chances of successfully delivering a product if they employ a knowledge-
based decision-making process. We have found for a program to deliver a
successful product within available resources, managers should build
high levels of demonstrated knowledge before significant commitments
are made.[Footnote 1] In essence, knowledge supplants risk over time.
This building of knowledge can be described in three levels that should
be attained over the course of a program:
* First, at program start, the customer's needs should match the
developer's available resources--mature technologies, time, and
funding. An indication of this match is the demonstrated maturity of
the technologies needed to meet customer needs.[Footnote 2]
* Second, about midway through development, the product's design should
be stable and demonstrate that it is capable of meeting performance
requirements. The critical design review is the vehicle for making this
determination and generally signifies the point at which the program is
ready to start building production-representative prototypes.
* Third, by the time of the production decision, the product must be
shown to be producible within cost, schedule, and quality targets and
have demonstrated its reliability. It is also the point at which the
design must demonstrate that it performs as needed through realistic
system level testing.
The three levels of knowledge are related, in that a delay in attaining
one delays those that follow. Thus, if the technologies needed to meet
requirements are not mature, design and production maturity will be
delayed. On the successful commercial and defense programs we have
reviewed, managers were careful to conduct development of technology
separately from and ahead of the development of the product. For this
reason, the first knowledge level is the most important for improving
the chances of developing a weapon system within cost and schedule
estimates. DOD's acquisition policy has adopted the knowledge-based
approach to acquisitions. DOD policy requires program managers to
provide knowledge about key aspects of a system at key points in the
acquisition process. Program managers are also required to reduce
integration risk and demonstrate product design prior to the design
readiness review and to reduce manufacturing risk and demonstrate
producibility prior to full-rate production.
DOD programs that have not attained these levels of knowledge have
experienced cost increases and schedule delays. We have recently
reported on such experiences with the F/A-22, the Joint Strike Fighter,
the Airborne Laser, and the Space Based Infrared System High. For
example, the $245 billion Joint Strike Fighter's acquisition strategy
does not embrace evolutionary, knowledge-based techniques intended to
reduce risks. Key decisions, such as its planned 2007 production
decision, are expected to occur before critical knowledge is captured.
If time were taken now to gain knowledge it could avoid placing sizable
investments in production capabilities at risk of expensive changes.
FCS Strategy Will Not Demonstrate High Levels of Knowledge Consistent
With DOD Policy or Best Practices:
The FCS program has proceeded with low levels of knowledge. In fact,
most of the activities that have taken place during its first 2 years
should have been completed before starting system development and
demonstration. It may be several years before the program reaches the
level of knowledge it should have had at program start. Consequently,
the Army is depending on a strategy that must concurrently define
requirements, develop technology, design products, and test products.
Progress in executing the program thus far does not inspire confidence:
the requirements process is taking longer that planned, technology
maturity may actually have regressed, and a program that is critical
for the FCS network has recently run into problems and has been
delayed. Figure 2 depicts how the FCS strategy compares with the best
practices described above.
Figure 2: Comparison of FCS Strategy with Best Practices:
[See PDF for image]
[End of figure]
The white space in figure 2 suggests the knowledge between best
practices and the FCS program. Clearly, the program has a tremendous
amount of ground to cover to close its knowledge gaps to the point that
it can hold the design reviews as scheduled and make decisions on
building prototypes, testing, and beginning production with confidence.
Several other observations can be made from the figure:
* A match between mature technologies and firm requirements was not
made at program start.
* The preliminary design review, which ideally is conducted near the
program start decision to identify disconnects between the design and
the requirements, will be held 5 years into the program.
* The critical design review, normally held midway through development,
is scheduled to take place in the seventh year of a nine-year program.
* The first test of all FCS elements will take place after the
production decision.
Requirements and Resources Gap:
The FCS program entered system development and demonstration without
demonstrating a match between resources and requirements, and will not
be in a position to do so for a number of years. The Army now expects
to have a reasonably well defined set of requirements by the October
2006 interim preliminary design review. The Army has been working
diligently to define these requirements, but the task is very difficult
given that there are over 10,000 specific system-of-systems
requirements that must collectively deliver the needed lethality,
survivability, responsiveness, and sustainability. For example, the
Army is conducting at least 120 studies to identify the design
tradeoffs necessary before firming up requirements. As of December
2004, 69 remain to be completed. Those to be completed will guide key
decisions on the FCS, such as the weight and lethality required of the
manned ground vehicles.
On the resources side, last year we reported that 75 percent of FCS
technologies were immature when the program started in 2003; a
September 2004 independent assessment has since shown that only one of
the more than 50 FCS critical technologies is fully mature. The Army
employed lower standards than recommended by best practices or DOD
policy in determining technologies acceptable for the FCS
program[Footnote 3]. As a result, it will have to develop numerous
technologies on a tight schedule and in an environment that is designed
for product development. If all goes as planned, the Army estimates
that most of the critical technologies will reach a basic level of
maturity by the 2010 Critical Design Review and full maturity by the
production decision. This type of technical knowledge is critical to
the process of setting realistic requirements, which are needed now. In
addition, a program critical to the FCS network and a key element of
FCS' first spiral, the Joint Tactical Radio System, recently
encountered technical problems and may be delayed 2 years. We provide
more detail on this program later.
Late Demonstrations of FCS Performance Could Prove Costly:
The FCS strategy will result in much demonstration of actual
performance late in development and early in production, as
technologies mature, prototypes are tested, and the network and systems
are brought together as a system-of-systems. A good deal of the
demonstration of the FCS design will take place over a 3-year period,
starting with the critical design review in 2010 through the first
system level demonstration of all 18 FCS components and the network in
2013. This compression is due to the desired fielding date of 2014,
coupled with the late maturation of technologies and requirements
previously discussed.
Ideally, a critical design review should be held midway through
development--around 2008 for FCS--to confirm the design is stable
enough to build production representative prototypes for testing. DOD
policy refers to the work up to the critical design review as system
integration, during which individual components of a system are brought
together. The policy refers to the work after the critical design
review as system demonstration, during which the system as a whole
demonstrates its reliability as well as its ability to work in the
intended environment. The building of production representative
prototypes also provides the basis to confirm the maturity of the
production processes. For the FCS, the critical design review will be
held just 2 years before the production decision. The FCS program is
planning to have prototypes available for testing prior to production
but they will not be production-representative prototypes. The Army
does not expect to have even a preliminary demonstration of all
elements of the FCS system-of-systems until sometime in 2013, the year
after the production decision.
This makes the program susceptible to "late cycle churn," a condition
that we reported on in 2000[Footnote 4]. Late-cycle churn is a phrase
private industry has used to describe the efforts to fix a significant
problem that is discovered late in a product's development. Often, it
is a test that reveals the problem. The "churn" refers to the
additional--and unanticipated--time, money, and effort that must be
invested to overcome the problem. Problems are most serious when they
delay product delivery, increase product cost, or "escape" to the
customer. The discovery of problems in testing conducted late in
development is a fairly common occurrence on DOD programs, as is the
attendant late-cycle churn. Often, tests of a full system, such as
launching a missile or flying an aircraft, become the vehicles for
discovering problems that could have been found out earlier and
corrected less expensively. When significant problems are revealed late
in a weapon system's development, the reaction--or churn--can take
several forms: extending schedules to increase the investment in more
prototypes and testing, terminating the program, or redesigning and
modifying weapons that have already made it to the field. While DOD has
found it acceptable to accommodate such problems over the years, this
will be a difficult proposition for the FCS given the magnitude of its
cost in an increasingly competitive environment for investment funds.
The Army has made some concrete progress in building some of the
foundation of the program that will be essential to demonstrating
capabilities. For example, the System-of-Systems Integration Lab--where
the components and systems will be first tested--has been completed.
Initial versions of the System-of-Systems Common Operating Environment,
the middleware that will provide the operating system for FCS software,
have been released. Several demonstrations have taken place, including
the Precision Attack Munition, the Non-Line of Sight Cannon, and
several unmanned aerial vehicles.
The Army has embarked on an impressive plan to mitigate risk using
modeling, simulation, emulation, hardware in the loop, and system
integration laboratories throughout FCS development. This is a credible
approach designed to reduce the dependence on late testing to gain
valuable information about design progress. However, on a first-of-a-
kind system like the FCS that represents a radical departure from
current systems, actual testing of all the components integrated
together is the final proof that the system works both as predicted and
as needed.
Examples of Execution Challenges for Two Key FCS Elements:
The risks the FCS program faces in executing the acquisition strategy
can be seen in the information network and the manned ground vehicles.
These two elements perhaps represent the long poles in the program and
upon which the program's success depends.
Network:
The Joint Tactical Radio System (JTRS) and Warfighter Information
Network-Tactical (WIN-T) are central pillars of the FCS network. If
they do not work as intended, battlefield information will not be
sufficient for the Future Force to operate effectively. They are
separate programs from the FCS, and their costs are not included in the
costs of the FCS. Both JTRS and WIN-T face significant technical
challenges and aggressive schedules, which threaten the schedule for
fielding Future Force capabilities and make their ultimate ability to
perform uncertain.
JTRS is a family of radios that is to provide the high capacity, high-
speed information link to vehicles, weapons, aircraft, and soldiers.
Because they are software-based, they can also be reprogrammed to
communicate with the variety of radios currently in use. JTRS is to
provide the warfighter with the capability to access maps and other
visual data, communicate on-the-move via voice and video with other
units and levels of command, and obtain information directly from
battlefield sensors. JTRS can be thought of as the information link or
network to support FCS units of action and the combat units on the
scene that are engaged directly in an operation. In particular, its
wideband networking waveform provides the "pipe" that will enable the
FCS vehicles to see and strike first and avoid being hit. The WIN-T
program is to provide the information network for higher military
echelons. WIN-T will consist of ground, airborne, and space-based
assets within a theater of operations for Army, joint, and allied
commanders and provide those commanders with access to intelligence,
logistics, and other data critical to making battlefield decisions and
supporting battlefield operations. This is information the combat units
can access through WIN-T developed equipment and JTRS.
The JTRS program to develop radios for ground vehicles and helicopters-
-referred to as Cluster 1--began system development in June 2002 with
an aggressive schedule, immature technologies, and lack of clearly
defined and stable requirements. These factors have contributed to
significant cost, schedule, and performance problems from which the
program has not yet recovered. The Army has not been able to mature the
technologies needed to provide radios that both generate sufficient
power as well as meeting platform size and weight constraints. Changes
in the design are expected to continue after the critical design
review, and unit costs may make the radios unaffordable in the
quantities desired. Given these challenges, the Army has proposed
delaying the program 24 months and adding $458 million to the
development effort. However, before approving the restructure, the
Office of the Secretary of Defense directed a partial work stoppage,
and the program is now focusing its efforts on a scheduled operational
assessment of the radio's functionality to determine the future of the
program. Consequently, the radio is not likely to be available for the
first spiral of the FCS network, slated for fiscal year 2008, and
surrogate radios may be needed to fill the gap.
A second JTRS program, to develop small radios including those that
soldiers will carry (referred to as Cluster 5), also entered system
development with immature technologies, lack of well-defined
requirements, and faces even greater technical challenges due to the
smaller size, weight, power, and large data processing requirements for
the radios. For example, the Cluster 5 program has a requirement for a
wideband networking waveform despite its demanding size and power
constraints. In addition, the program was delayed in starting system
development last year because of a contract bid protest. Consequently,
the Cluster 5 radios are not likely to be available for the first FCS
spiral either. The Army has acknowledged that surrogate radios and
waveforms may be needed for the first spiral of FCS.
The WIN-T program also began with an aggressive acquisition schedule
and immature technologies that are not scheduled to mature until after
production begins. Backup technologies have been identified, but they
offer less capability and most are immature as well. In addition, the
schedule leaves little room for error correction and rework that may
hinder successful cost, schedule and performance outcomes. More
recently, the program strategy was altered to identify a single
architecture as soon as possible and to deliver networking and
communications capabilities sooner to meet near term warfighting needs.
Specifically, the Army dropped its competitive strategy and is now
having the two contractors work together to develop the initial network
architecture. A plan for how to develop and field capabilities sooner
is still to be determined.
Manned Ground Vehicles:
FCS includes eight manned ground vehicles, which require critical
individual and common technologies to meet required capabilities. For
example, the Mounted Combat System will require, among other new
technologies, a newly developed lightweight weapon for lethality; a
hybrid electric drive system and a high-density engine for mobility;
advanced armors, an active protection system, and advanced signature
management systems for survivability; a Joint Tactical Radio System
with the wideband waveform for communications and network connection; a
computer-generated force system for training; and a water generation
system for sustainability. At the same time, concepts for the manned
ground vehicles have not been decided and are awaiting the results of
trade studies that will decide critical design points such as weight
and the type of drive system to be used. Under other circumstances,
each of the eight manned ground systems would be a major defense
acquisition program on par with the Army's past major ground systems
such as the Abrams tank, the Bradley Fighting Vehicle, and the Crusader
Artillery System. As such, each requires a major effort to develop,
design, and demonstrate the individual vehicles.
Developing these technologies and integrating them into vehicles is
made vastly more difficult by the Army's requirement that the vehicles
be transportable by the C-130 cargo aircraft. However, the C-130 can
carry the FCS vehicles' projected weight of 19 tons only 5 percent of
the time. In 2004, GAO reported a similar situation with the Stryker
vehicles. The 19-ton weight of these vehicles significantly limits the
C-130's range and the size of the force that can be deployed[Footnote
5]. Currently, FCS vehicle designs are estimated at over 25 tons. To
meet even this weight, the advanced technologies required put the
sophistication of the vehicles on a par with fighter aircraft,
according to some Army officials. This is proving an extremely
difficult requirement to meet without sacrificing lethality,
survivability, and sustainability. Currently, program officials are
considering other ways to meet the C-130 weight requirement, such as
transporting the vehicles with minimal armor and with only a minimal
amount of ammunition. As a result, vehicles would have to be armored
and loaded upon arrival to be combat ready.
FCS Cost and Affordability Still to Be Determined:
The low levels of knowledge in the FCS program provide an insufficient
basis for making cost estimates. The program's immaturity at the time
system development and demonstration began resulted in a relatively low-
fidelity cost estimate and open questions about the program's long-term
affordability. Although the program restructuring provides more time to
resolve risk and to demonstrate progress, the knowledge base for making
a confident estimate is still low. If the FCS cost estimate is not
better than past estimates, the likelihood for cost growth will be high
while the prospects for finding more money for the program will be dim.
The estimates for the original FCS program and the restructured program
are shown in table 2 below.
Table 2: Increased Cost from Original to Restructured FCS Program:
2005 BY$ (millions): Original;
Research and Development: $18,574;
Procurement: $60,647;
Total: $79,836[A].
2005 BY$ (millions): Restructured;
Research and Development: $28,007[B];
Procurement: $79,960;
Total: $107,967.
2005 BY$ (millions): Dollar increase;
Research and Development: $9,433;
Procurement: $19,313;
Total: $28,131.
2005 BY$ (millions): Percent increase;
Research and Development: 50.79%;
Procurement: 31.84%;
Total: 35.24%.
Sources: GAO.
[A] Both the original and the restructured figures are for about 15
Units of Action (i.e., 1/3 of the current active force).
[B] Includes four originally deferred systems, a lengthened schedule,
additional tests, and the addition of the four spirals.
[End of table]
At this point, the FCS cost estimate represents the position of the
program office. The Army and the Office of the Secretary of Defense's
Cost Analysis Improvement Group will provide their independent
estimates for the May 2005 Milestone B update review. It is important
to keep in mind that the FCS program cost estimate does not reflect all
of the costs needed to field FCS capabilities. The costs of the
complementary programs are separate and will be substantial. For
example, the research and development and procurement costs for the
JTRS (Clusters 1 and 5) and the WIN-T programs are expected to be about
$34.6 billion (fiscal year 2005 dollars).
In addition, by April 2005, the Army has been tasked to provide an
analysis of FCS affordability considering other Army resource
priorities, such as modularity. This will be an important analysis
given that estimates of modularity costs have been put at about $48
billion, and costs of current operations and recapitalizing current
equipment have been covered by supplemental funding.
As can be seen in table 3, substantial investments will be made before
key knowledge is gained on how well the system can perform. For
example, by the time of the critical design review in 2010, over $20
billion of research and development funds will have been spent.
Table 3: Annual and Cumulative FCS Funding and Planned Events and
Achievements ($ millions):
Fiscal year: 2003;
Annual Research and Development Funding: $158.9;
Cumulative Research and Development Funding: $158.9;
Planned Events/Achievements: Systems development and demonstration
Start.
Fiscal year: 2004;
Annual Research and Development Funding: $1,637.3;
Cumulative Research and Development Funding: $1,796.2;
Planned Events/Achievements: Program restructured.
Fiscal year: 2005;
Annual Research and Development Funding: $2,800.8;
Cumulative Research and Development Funding: $4,597.0;
Planned Events/Achievements: Contract redefinitized;
Milestone B Update;
Updated cost estimate.
Fiscal year: 2006;
Annual Research and Development Funding: $3,404.8;
Cumulative Research and Development Funding: $8,001.8;
Planned Events/Achievements: Requirements firmed up;
Interim preliminary design review.
Fiscal year: 2007;
Annual Research and Development Funding: $3,742.0;
Cumulative Research and Development Funding: $11,743.8;
Planned Events/Achievements: [Empty].
Fiscal year: 2008;
Annual Research and Development Funding: $3,682.3;
Cumulative Research and Development Funding: $15,426.1;
Planned Events/Achievements: System preliminary design review;
Interim critical design review.
Fiscal year: 2009;
Annual Research and Development Funding: $3,460.0;
Cumulative Research and Development Funding: $18,886.1.
Fiscal year: 2010;
Annual Research and Development Funding: $3,181.5;
Cumulative Research and Development Funding: $22,067.6;
Planned Events/Achievements: Technologies reach basic maturity;
system critical design review.
Fiscal year: 2011;
Annual Research and Development Funding: $2,690.7;
Cumulative Research and Development Funding: $24,758.3;
Planned Events/Achievements: Design readiness review.
Fiscal year: 2012;
Annual Research and Development Funding: $1,949.6;
Cumulative Research and Development Funding: $26,707.9;
Planned Events/Achievements: Technologies reach full maturity;
Production decision.
Fiscal year: 2013;
Annual Research and Development Funding: $1,412.0;
Cumulative Research and Development Funding: $28,119.9;
Planned Events/Achievements: Initial System-of-Systems demonstration.
Fiscal year: 2014;
Annual Research and Development Funding: $1,169.0;
Cumulative Research and Development Funding: $29,288.9;
Planned Events/Achievements: Initial Operational Capability.
Fiscal year: 2015;
Annual Research and Development Funding: $901.0;
Cumulative Research and Development Funding: $30,189.9.
Fiscal year: 2016;
Annual Research and Development Funding: $111.0;
Cumulative Research and Development Funding: $30,300.9;
Planned Events/Achievements: Full Operational Capability.
Source: U.S. Army.
[End of table]
The consequences of even modest cost increases and schedule delays for
the FCS would be dramatic. For example, a one-year delay late in FCS
development, not an uncommon occurrence for other DOD programs, could
cost over $3 billion. Given the size of the program, financial
consequences of following historical patterns of cost and schedule
growth could be dire.
Alternatives to Current FCS Acquisition Strategy Still Warrant
Consideration:
For any acquisition program, two basic questions can be asked. First,
is it worth doing? Second, is it being done the right way? On the first
question, the Army makes a compelling case that something must be done
to equip its future forces and that such equipment should be more
responsive but as effective as current equipment. The answer to the
second question is problematic. At this point, the FCS presents a
concept that has been laid out in some detail, an architecture or
framework for integrating individual capabilities, and an investment
strategy for how to acquire those capabilities. There is not enough
knowledge to say whether the FCS is doable, much less doable within a
predictable frame of time and money. Yet making confident predictions
is a reasonable standard for a major acquisition program given the
resource commitments and opportunity costs they entail. Against this
standard, the FCS is not yet a good fit as an acquisition program.
That having been said, another important question that needs to be
answered is: if the Army needs FCS-like capabilities, what is the best
way to advance them to the point to which they can be acquired? Efforts
that fall in this area--the transition between the laboratory and the
acquisition program--do not yet have a place that has right
organizations, resources, and responsibilities to advance them
properly.
At this point alternatives to the current FCS strategy warrant
consideration. For example, one possible alternative for advancing the
maturity of FCS capabilities could entail setting the first spiral or
block as the program of record for system development and
demonstration. Such a spiral should meet the standards of providing a
worthwhile military capability, having mature technology, and having
firm requirements. Other capabilities currently in the FCS program
could be moved out of system development and demonstration and instead
be bundled into advanced technology demonstrations that could develop
and experiment with advanced technologies in the more conducive
environment of "pre-acquisition" until they are ready to be put into a
future spiral. Advancing technologies in this way will enable knowledge
to guide decisions on requirements, lower the cost of development, and
make for more reasonable cost and schedule estimates for future
spirals.
Mr. Chairman, this concludes my prepared statement. I would be happy to
answer any questions that you or members of the subcommittee may have.
Contacts and Staff Acknowledgements:
For future questions about this statement, please contact me at (202)
512-4841. Individuals making key contributions to this statement
include Lily J. Chin, Marcus C. Ferguson, Lawrence D. Gaston, Jr.,
William R. Graveline, John P. Swain, Robert S. Swierczek, and Carrie R.
Wilson.
FOOTNOTES
[1] GAO, Best Practices: Capturing Design and Manufacturing Knowledge
Early Improves Acquisition Outcomes. GAO-02-701. (Washington, D.C.:
July 15, 2002); Best Practices: Better Management of Technology
Development Can Improve Weapon System Outcomes. GAO/NSIAD-99-162.
(Washington, D.C.: July 30, 1999); Best Practices: Successful
Application to Weapon Acquisition Requires Changes in DOD's
Environment. GAO/NSIAD-98-56. (Washington, D.C.: February 24, 1998).
[2] Technology readiness levels are a way to measure the maturity of
technology. According to best practices, technology is considered
sufficiently mature to start a program when it reaches a readiness
level of 7. This involves a system or prototype demonstration in an
operational environment. The prototype is near or at the planned
operational system.
[3] To achieve full maturity at TRL 7, the technology should be in the
form, fit, and function needed for the intended product and should be
demonstrated in a realistic environment. For a basic level of maturity
at TRL 6, the technology is not necessarily in the form, fit, and
function for the intended product.
[4] GAO, Best Practices: A More Constructive Approach is Key to Better
Weapon System Outcomes, GAO/NSIAD-00-199 (Washington, D.C., July 31,
2000).
[5] GAO, Military Transformation: Fielding of Army's Stryker Vehicles
Is Well Under Way, but Expectations for Their Transportability by C-130
Aircraft Need to Be Clarified, GAO-04-925 (Washington, D.C., August 12,
2004).
