Defense Acquisitions
Issues to be Considered for Army's Modernization of Combat Systems Gao ID: GAO-09-793T June 16, 2009Future Combat System (FCS) has been at the center of the Army's efforts to become a lighter, more agile, and more capable combat force by replacing existing combat systems with a family of manned and unmanned vehicles and systems, linked by an advanced information network. To meet the challenges of FCS's scope and schedule, the Army contracted with Boeing to be lead systems integrator (LSI), to help define, develop, and integrate FCS systems. Earlier this year, the Secretary of Defense proposed restructuring FCS to lower risk and address more near-term needs, shortly before FCS was to undergo a congressionally-mandated review to determine its future. The Department of Defense (DOD) and the Army have already begun to make programmatic and budgetary adjustments to FCS. This statement reviews aspects of FCS that should be considered for inclusion in future efforts, aspects that were problematic and need re-examination, and considerations for shaping future Army ground force modernization. The testimony is drawn from GAO's body of work on FCS management and acquisition strategy, including knowledge gaps, cost, affordability, oversight, and the Army/LSI relationship. GAO has made numerous recommendations aimed at managing FCS risks, but it is not making any new recommendations in this testimony.
FCS has many good features that should be considered in future efforts, including a holistic vision of the future force, government insight into subcontractor selection and management, a focus on leveraging capabilities through an information network, and establishment of organizations to train with and evaluate technologies to be spun out to current forces. Other more difficult lessons from FCS must be also be used to put future modernization efforts on the soundest footing possible. FCS was not executable within reasonable bounds of technical, engineering, time, or financial resources. From the start, the program was immature and unable to meet DOD's own standards for technology and design. Although adjustments were made, including adding time and trading off requirements, vehicle weights and software code grew, key network systems were delayed, and technologies took longer to mature. By 2009, it was still not known that the FCS concept would work. Oversight has been extremely challenging, given the program's vast scope and the innovative, but close, partner-like relationship between the Army and the LSI. Oversight by the Office of the Secretary of Defense did not compensate for these risks early in the program. Oversight was further challenged by the fact that the planned schedule for making decisions outpaced demonstrated knowledge--major production commitments were to be made before basic designs were demonstrated. As the Army proceeds with a different approach to modernization, there will be a number of important factors to consider. Rather than a single FCS program going forward, several programs with more targeted objectives may emerge. These programs need to be based on principles such as knowledge-based acquisition, sound cost estimating, and transparency and accountability for oversight. Beyond these principles, the Army will have to tailor its approaches to the needs of the individual programs. For example, the acquisition approach for spinning out mature technologies to current forces would differ from the approach needed to develop an information network. Several issues with transitioning from FCS will have to be addressed, including: closing out or restructuring current contractual arrangements; transferring FCS knowledge to emergent programs; transitioning the FCS information network to current Army forces; placing early emphasis on key design considerations such as sustainability; and balancing investments between future capabilities and keeping fielded systems capable. The Army's experience with FCS has been productive. The key in going forward will be to take the best from both positive and negative lessons learned and apply them to the ground force modernization efforts that will succeed FCS. The Army and DOD should continue to be innovative as to concepts and approaches, but anchored in knowledge-based strategies when it comes to proposing a specific system development effort.
GAO-09-793T, Defense Acquisitions: Issues to be Considered for Army's Modernization of Combat Systems
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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 2:30 p.m. EDT:
Tuesday, June 16, 2009:
Defense Acquisitions:
Issues to be Considered for Army's Modernization of Combat Systems:
Statement of Paul L. Francis, Managing Director:
Acquisition and Sourcing Management:
GAO-09-793T:
GAO Highlights:
Highlights of GAO-09-793T, a report to Subcommittee on Airland,
Committee on Armed Services, U.S. Senate.
Why GAO Did This Study:
Future Combat System (FCS) has been at the center of the Army‘s efforts
to become a lighter, more agile, and more capable combat force by
replacing existing combat systems with a family of manned and unmanned
vehicles and systems, linked by an advanced information network. To
meet the challenges of FCS‘s scope and schedule, the Army contracted
with Boeing to be lead systems integrator (LSI), to help define,
develop, and integrate FCS systems.
Earlier this year, the Secretary of Defense proposed restructuring FCS
to lower risk and address more near-term needs, shortly before FCS was
to undergo a congressionally-mandated review to determine its future.
The Department of Defense (DOD) and the Army have already begun to make
programmatic and budgetary adjustments to FCS. This statement reviews
aspects of FCS that should be considered for inclusion in future
efforts, aspects that were problematic and need re-examination, and
considerations for shaping future Army ground force modernization.
The testimony is drawn from GAO‘s body of work on FCS management and
acquisition strategy, including knowledge gaps, cost, affordability,
oversight, and the Army/LSI relationship. GAO has made numerous
recommendations aimed at managing FCS risks, but it is not making any
new recommendations in this testimony.
What GAO Found:
FCS has many good features that should be considered in future efforts,
including a holistic vision of the future force, government insight
into subcontractor selection and management, a focus on leveraging
capabilities through an information network, and establishment of
organizations to train with and evaluate technologies to be spun out to
current forces.
Other more difficult lessons from FCS must also be used to put future
modernization efforts on the soundest footing possible. FCS was not
executable within reasonable bounds of technical, engineering, time, or
financial resources. From the start, the program was immature and
unable to meet DOD‘s own standards for technology and design. Although
adjustments were made, including adding time and trading off
requirements, vehicle weights and software code grew, key network
systems were delayed, and technologies took longer to mature. By 2009,
it was still not known that the FCS concept would work. Oversight has
been extremely challenging, given the program‘s vast scope and the
innovative, but close, partner-like relationship between the Army and
the LSI. Oversight by the Office of the Secretary of Defense did not
compensate for these risks early in the program. Oversight was further
challenged by the fact that the planned schedule for making decisions
outpaced demonstrated knowledge”major production commitments were to be
made before basic designs were demonstrated.
As the Army proceeds with a different approach to modernization, there
will be a number of important factors to consider. Rather than a single
FCS program going forward, several programs with more targeted
objectives may emerge. These programs need to be based on principles
such as knowledge-based acquisition, sound cost estimating, and
transparency and accountability for oversight. Beyond these principles,
the Army will have to tailor its approaches to the needs of the
individual programs. For example, the acquisition approach for spinning
out mature technologies to current forces would differ from the
approach needed to develop an information network. Several issues with
transitioning from FCS will have to be addressed, including: closing
out or restructuring current contractual arrangements; transferring FCS
knowledge to emergent programs; transitioning the FCS information
network to current Army forces; placing early emphasis on key design
considerations such as sustainability; and balancing investments
between future capabilities and keeping fielded systems capable.
The Army‘s experience with FCS has been productive. The key in going
forward will be to take the best from both positive and negative
lessons learned and apply them to the ground force modernization
efforts that will succeed FCS. The Army and DOD should continue to be
innovative as to concepts and approaches, but anchored in knowledge-
based strategies when it comes to proposing a specific system
development effort.
View [hyperlink, http://www.gao.gov/products/GAO-09-793T] or key
components. For more information, contact Paul Francis at (202) 512-
4841 or francisp@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss the Department of the Army's
modernization efforts to transform into a lighter, more agile, and more
capable combat force using a new concept of operations, technologies,
and information network. For the past 6 years, the Future Combat System
(FCS), a revolutionary and expansive program, formed the core of Army
modernization. Earlier this year, the Secretary of Defense recommended
restructuring the FCS program to lower risk and to address more near
term needs. His recommendation came a few months before the FCS program
was scheduled to undergo a congressionally-mandated go/no-go review to
determine the program's future. Although the Army has not yet
officially implemented the Secretary's recommendation, the Department
of Defense (DOD) and the Army have begun to make conforming
programmatic and budgetary adjustments to FCS.
My statement today is based on the work we conducted over the last
several years in response to the National Defense Authorization Act for
Fiscal Year 2006, which requires GAO to report annually on the FCS
program.[Footnote 1] As Congress will be asked to make significant
funding commitments for Army ground force modernization over the next
several years, this statement will review: (1) aspects of FCS that
should be preserved in future efforts, (2) aspects of FCS that were
problematic and need re-examination, and (3) considerations for shaping
future Army ground force modernization.
Background:
With FCS, the Army embraced a new warfighting concept designed to
replace most of its existing combat systems with a family of manned and
unmanned vehicles and systems linked by an advanced information
network. According to the Army, FCS represented the greatest technology
and integration challenge it had ever undertaken--an FCS-equipped force
was to be as lethal and survivable as today's force, but significantly
lighter and thus easier to both move and sustain. The Army determined
it could not meet the challenges of the FCS scope and schedule with its
workforce alone and with traditional management approaches. In 2003,
the Army contracted with the Boeing Company as the lead systems
integrator (LSI) to assist in defining, developing, and integrating FCS
systems. Boeing subcontracted with Science Applications International
Corporation (SAIC) to assist in performing the LSI functions. Over the
past several years, Congress, GAO, and other organizations have
expressed numerous concerns about the management and acquisition
strategy for the FCS program, including significant knowledge gaps,
questionable costs and affordability, the relationship between the Army
and the LSI, and the lack of oversight by the Office of the Secretary
of Defense (OSD).
This committee has been influential in overseeing the FCS program and
protecting the government's interests therein. In particular, the
committee advocated changes to the original contract structure and type
to incorporate more Federal Acquisition Regulation provisions,
including those related to the Truth-in-Negotiations Act and the
Procurement Integrity Act.
This statement is based on work we conducted over the last several
years in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Aspects of FCS that Should Be Considered for Inclusion in Future
Efforts:
There is no question the Army needs to ensure its forces are well-
equipped. The Army has vigorously pursued FCS as the solution, a
concept and an approach that is unconventional, yet with many good
features that should be considered in future efforts. These features
include a holistic, system-of-systems architectural vision, government
insight into subcontractor selection and management, a focus on
leveraging capabilities through an information network, and
establishing organizations to train with and evaluate FCS-related spin-
out technologies being provided to current forces.
FCS resulted from Army leadership's vision of how land forces should be
organized, equipped, and trained to fight in the future. The decisions
to pursue FCS, along with modular combat units, became the centerpiece
for realizing this vision. To the Army's credit, these decisions were
harder than just replacing current combat systems, like the Abrams tank
and Bradley fighting vehicle, with new versions. Rather, Army
leadership saw FCS as breaking with tradition. It was to be a system of
systems--an overall architecture through which the collective
capabilities of individual systems, both manned and unmanned, would be
multiplied because of the synergistic effect of being linked by an
advanced information network. Individual systems were to be designed to
work within the architecture and the network--an improvement over a
traditional, system-centric design approach that would integrate the
systems after the fact. Army leadership also chose to cross its own
stove-piped combat lines, such as infantry, armor, and fire support.
The resultant scope of the FCS program was overly broad for a single
acquisition program. Nonetheless, such a holistic view, anchored in a
vision of how the land force of the future needs to fight, should
continue to guide the modernization investments the Army makes. A
context, it should be noted, does not necessarily equate to a program
or programs.
While we have reported a number of risks associated with the LSI
arrangement on FCS (which are discussed later), the insights the Army
gained into subcontractors was beneficial. Army leadership set up the
FCS program and LSI contract in such a way that it would create more
competition and have more influence over the selection of
subcontractors below the LSI. Traditionally, once the Army contracted
with a prime contractor, that contractor would bring its own supplier
chains, and the Army was not very involved in the choice of the
subcontractors. In FCS, the Army called for the LSI to hold a
competition for the next tier of contractors. The Army had veto power
over these selections. The Army also directed that the LSI contract
with integrators at lower levels in the program, and the Army was
involved with these selections. These integrators held competitions to
select suppliers for those systems. This strategy kept the first tier
of subcontractors from bringing their own supplier chains, and the
approach promoted competition and pushed Army visibility down lower
into the supplier chain. It was also a means for the Army to ensure
commonality of key subsystems across FCS platforms. Enhanced visibility
into the selection and design decisions of subcontractors appears to
have benefited the FCS program and warrants consideration in future
efforts.
The Army envisioned an unprecedented information network as the
backbone of FCS. Inventing such a network while concurrently designing
vehicles and other systems dependent on it was too grand an approach.
However, the recognition that an integrated combat network should be
deliberately designed versus derived or cobbled together from other
systems was discerning. Since FCS began, the Army has achieved an
understanding of what the information network needs to be, what may be
technically feasible, how to build it, and how to demonstrate it. It
has also consciously endeavored to develop the FCS network and software
over time in a series of pre-planned blocks. Although work on such a
network needs to be properly situated within the acquisition process
and guided by requirements that are technically realistic, the
deliberate development of an integrated network seems a sound approach.
The Army initiated spin-out development in 2004, when it embarked on an
effort to bring selected FCS capabilities, such as the unattended
ground sensors and the non-line-of-sight launch system, to current
forces while core FCS development continued. In 2006, the Army
established the Army Evaluation Task Force to use, evaluate, and train
with the spin-out capabilities, and the Task Force began its testing of
the first FCS equipment in early 2008. As noted by both Army and DOD
officials, the Task Force has proven quite useful in identifying system
issues and suggesting design changes. Accordingly, the Army should
continue utilizing the Task Force to better understand and improve its
systems, spin out and otherwise.
Aspects of FCS that were Problematic and Need Re-Examination:
In our work, we found the greatest obstacle to the Army's realizing its
vision for FCS to be that the program was not executable within
reasonable bounds of technical, engineering, time, or financial
resources. The program was very immature when it began, never measuring
up to DOD's own standards for technology and design. Over time,
adjustments were made such as adding development time and trading off
requirements, but nonetheless, vehicle weights and software code grew
substantially, key network systems were delayed, and technologies took
longer to mature than planned. By 2009, whether FCS would work as
planned remained undemonstrated. As we have reported, these
difficulties do not necessarily represent problems that could have been
avoided; rather, they reflect the actual immaturity of the program.
Yet, to a large extent, these difficulties are foreseeable at the start
of programs that do not apply the standards embodied in DOD's own
acquisition policies.
Oversight of FCS was extremely challenging given the program's vast
scope and the innovative, but close, partner-like relationship between
the Army and the LSI. OSD did not play an active oversight role, such
as stringently applying its own acquisition policies, until about the
past 2 years of the program. Congress intervened by mandating a go/no-
go milestone decision to occur in late 2009. Oversight was further
challenged by the pace of the program; the schedule for making
decisions outpaced demonstrated knowledge to the extent that major
production commitments were to be made before basic designs were to be
demonstrated. Lessons from this experience should be applied to put
future modernization efforts on the soundest footing possible for
execution.
Strategy to Acquire FCS Was Not Executable Within Projected Resources:
Originally, the Army intended to define thousands of requirements;
mature critical technologies; and develop the network, manned and
unmanned vehicles, and other systems within about 5 1/2 years from
development start--much faster than a single system typically takes.
When FCS entered development in 2003, the Army had not yet established
firm requirements that were matched with mature technologies and
preliminary designs. Although the Army lengthened the development
schedule to 10 years, it did not plan to demonstrate the level of
knowledge needed at development start until 2009.
In 2003, only 40 percent of the FCS critical technologies were nearing
maturity, although DOD's acquisition policy called for all critical
technologies to be mature at development start. Originally, the Army
officials believed it could mature the remaining technologies in just 3
years. While the Army has made significant progress, today it is still
conducting evaluations to demonstrate minimum maturity levels for
several critical technologies. Also, the Army needed capabilities being
developed by programs outside of FCS to meet network and other
requirements. However, these programs were immature as well, and
synchronizing them with FCS proved elusive. In particular, the Joint
Tactical Radio System and Warfighter Information Network-Tactical
programs, the primary enablers of the network, experienced
developmental delays that adversely affected the FCS schedule. As
technologies, designs, and requirements evolved, key tradeoffs became
necessary. For example, the weight of the manned ground vehicles grew
from 19 tons to 29 tons, and the use of the C-130 as the main transport
aircraft had to be abandoned.
The Army set forth an ambitious schedule for software development and
the program as a whole. Originally, the Army anticipated 33 million
lines of software code for FCS--which at the time made the program the
largest software-intensive acquisition program in DOD history. That
estimate has now grown to over 114 million lines of software code. The
Army approach to managing the software effort has employed disciplined
management practices, but these have been impaired by late and changing
requirements. With such a schedule in mind, the Army allowed the
program to proceed through developmental and test events without
sufficient knowledge. Similarly, the Army was poised to begin early
production without having adequately tested production-representative
articles.
In light of these and other risks, the John Warner National Defense
Authorization Act for Fiscal Year 2007 mandated that the Secretary of
Defense carry out a Defense Acquisition Board milestone review of FCS
not later than 120 days after the system-of-systems preliminary design
review, which occurred in May 2009.[Footnote 2] According to the law,
the milestone review should include an assessment of:
1. whether the warfighter's needs are valid and can be best met with
the concept of the program;
2. whether the concept of the program can be developed and produced
within existing resources; and:
3. whether the program should:
a. continue as currently structured;
b. continue in restructured form; or:
c. be terminated.
In our March 2009 report on FCS, we concluded that the Army would be
challenged to convincingly demonstrate the level of knowledge needed to
warrant an unqualified commitment to the FCS program at the milestone
review.[Footnote 3] We identified a number of knowledge gaps that have
persisted throughout the development program. Specifically, the FCS
program has yet to show that critical technologies are mature, design
issues have been resolved, requirements and resources are matched,
performance has been demonstrated versus simulated, and costs are
affordable. Also, network performance is largely unproven. In summary,
we determined that the FCS program was not executable within Army cost
and schedule projections.
The pace of the program called for key commitments in advance of needed
information. For example, the Army had scheduled only 2 years between
the critical design review and the production decision in 2013, leaving
little time to gain knowledge between the two events. As a result, FCS
was planning to rely on immature prototypes for making the decision to
proceed into production. Also, by 2009, the Army had already spent
about 60 percent of its planned development funds and schedule but had
only proceeded to the preliminary design stage. That would have left
only 40 percent of its financial and schedule resources left to
complete what is typically the most challenging and expensive
development work ahead. The timing of planned commitments to production
funding put decision makers in the difficult position of making
production commitments without knowing if FCS would work as intended.
Facilitization costs were planned to begin in fiscal year 2011, the
budget for which would have been presented to Congress in February
2010, several months prior to the planned FCS critical design review.
Further, in February 2011, when Congress would have been asked to
approve funding for initial low-rate production of core FCS systems,
the Army would not yet have proven that the FCS network and the program
concept worked.
Oversight Challenges Were Too Great:
The relationship between the Army and the LSI was shaped by the
ambitious scope of the FCS program and limitations in the Army's
ability to manage it. The relationship is complex; on one hand, the LSI
has played the traditional contractor role of developing a product for
the Army. On the other hand, the LSI has also acted like a partner to
the Army, ensuring the design, development, and prototype
implementation of the FCS network and systems. The Army believed this
relationship would offer more real-time, better informed decisions;
reduce rework; and provide increased flexibility to adjust to new
demands. While a close partner-like relationship offers benefits, such
as the government and the contractor working together on a continual
basis to decide what work is to be done, the partner-like relationship
between the Army and the LSI broke new ground. As such, it posed
oversight risks such as the government becoming increasingly vested in
the results of shared decisions and being less able to provide
oversight, especially when the government is disadvantaged in terms of
workforce and skills. The Institute for Defense Analysis has also
reported on the risks of the Army and LSI relationship, noting that the
government cannot expect contractors to act in the best interest of the
government as that could potentially conflict with their corporate
financial interests. The Institute recommended that the Army take steps
to ensure that it has, and continually uses, a competent internal
capability to develop a corporate Army position on key FCS issues such
as measuring program status and trends as well as independent
operational testing.
Part of the Army's original rationale for using an LSI was to keep the
contractor's efforts focused on development, rather than on production.
Early on in the FCS program, steps were taken to reinforce this focus,
such as strengthening organizational conflict of interest provisions.
While the original Other Transactions Agreement for FCS development and
demonstration contained an organizational conflict of interest clause
that required certain safeguards be put into place if and when Boeing
and SAIC competed for FCS subcontracts, the 2006 Federal Acquisition
Regulation-based contract precluded the Boeing/SAIC team from competing
for any FCS subcontract awards. By this time, Boeing already had prime
responsibility for two critical software efforts. As the program
evolved however, the LSI's role in production grew. In 2007, the Army
decided that the LSI should be the prime contractor for the first spin
outs as well as low-rate production of FCS core systems. This was a
significant change from the early steps taken to keep the LSI's focus
on development.
The Army structured the FCS contract consistent with its desire to
incentivize development efforts and make it financially rewarding for
the LSI to make such efforts. In general, contracts are limited in that
they cannot guarantee a successful outcome. As with many cost-
reimbursable research and development contracts, the LSI was
responsible to put forth its best effort on the development of the FCS
capability. If, given that effort, the FCS capability falls short of
needs, the LSI would not be responsible, would still be entitled to
have its costs reimbursed, and may earn its full fee. Specific aspects
of the contract could make it even more difficult to tie the LSI's
performance to the actual outcomes of the development effort. Under the
terms of the FCS contract, the LSI could earn over 80 percent of its
$2.3 billion fee by the time the program's critical design review is
completed in 2011, and the Army would have paid out roughly 80 percent
of contract costs by that point. Yet the actual demonstration of
individual FCS prototypes and the system-of-systems would have taken
place after the design review. Our work on past weapon system programs
shows that most cost growth--symptomatic of problems--occurs after the
critical design review. The Army shared responsibility with the LSI for
making some key FCS decisions and to some extent the Army's performance
could thus affect the performance of the LSI.
OSD's oversight did not compensate for these risks early in the
program. OSD has largely accepted the program and its changes as
defined by the Army, even though it is at wide variance from the best
practices embodied in OSD's own acquisition policies. Until recently,
OSD had passed on opportunities to hold the FCS program accountable to
more knowledge-based acquisition principles. Despite the fact that the
program did not meet the requisite criteria for starting an acquisition
program, OSD approved the program's entrance into system development
and demonstration in 2003. OSD later reevaluated the decision and
decided to hold a follow-on review with a list of action items the
program had to complete in order to continue. However, this review
never occurred and the FCS program continued as originally planned.
Furthermore, OSD did not plan to conduct another review and decision
point until the 2013 production decision, when it would be too late to
have a material effect on the course of the program. In addition, OSD
has allowed the Army to use its own cost estimates rather than
independent--and often higher--cost estimates when submitting annual
budget requests.
Over the last couple years, the Under Secretary of Defense for
Acquisition, Technology, and Logistics has taken steps to improve
oversight on the FCS program. For instance, in 2007, the Under
Secretary deemed the Non-Line-of-Sight Cannon program as being in need
of special attention, so he designated the program as special interest
and declared that his office would be the decision authority on
production. Also, in 2008, the Under Secretary issued a directive to
pursue alternate arrangements for any future FCS contracts. The Under
Secretary found that the fixed fee was too high and the fee structure
allows industry to receive most of the incentive fee dollars prior to
demonstrating integrated FCS system-of-systems capability. The Under
Secretary also directed that the Army conduct a risk-based assessment
to examine contracting alternatives for FCS capability. This assessment
is to evaluate opportunities for procurement breakout of the individual
platforms and systems that comprise FCS and how the government's
interests are served by contracting with the LSI as compared to
contracting directly with the manufacturers of the items.
Considerations for Shaping Future Army Ground Force Modernization
Efforts:
In April, the Secretary of Defense announced plans to cancel the FCS
manned ground vehicle and non-line-of-sight cannon development and
initiate a new ground combat vehicle program that leverages successful
outcomes from FCS investments and incorporates lessons learned from
current combat operations. Explaining the rationale for his decision,
the Secretary noted that FCS vehicle designs did not reflect lessons
learned from combat in Iraq and Afghanistan and that the contract fee
structure provided little leverage to promote cost efficiency.
As the Army proceeds to modernize and ensure its ground forces are well
equipped for current and future operations, there are several important
factors to consider, and some questions to answer. While the Army and
DOD are in the early stages of deciding how to proceed with
modernization, it appears likely that rather than a single program like
FCS going forward, several programs with more targeted objectives will
emerge. For example, the spin-out program may continue in an
accelerated form and a program to develop a new family of manned ground
vehicles will likely be pursued per the Secretary of Defense's
direction. It is also conceivable that a program focused on developing
an information network would also be considered.
Regardless of how the Army's ground force modernization program is
structured or managed, some key principles will have to be embodied.
These include:
* Knowledge-based acquisition: any emergent modernization programs
should be put on the soundest footing possible for success, by
following DOD's latest acquisition policy that spans the initial
decision to pursue a material solution, analysis of alternatives,
concept formulation, technology maturation, requirements definition,
incremental system design and development, production, and fielding.
Sound systems engineering practices should be the guide throughout
these phases.
* Sound cost estimating: Any emergent program following a knowledge-
based approach should be well understood and defined sufficiently to
facilitate realistic cost estimates with reasonable levels of
confidence. In order to ensure the accuracy, completeness, and
reliability of these estimates, independent cost estimates should be
completed and assessed before approval into the product development
phases.
* Transparency and accountability for oversight: The emerging programs
need to include sufficiently detailed and transparent reporting
approaches to facilitate oversight. Those should include an acquisition
strategy that features demonstrations of knowledge before planned
commitments to future phases and additional funding; a contracting
strategy that features as much competition as possible and protections
for the government's interests; complete justification materials to
support budget requests; and a clear and understandable framework for
selected acquisition and earned value management reporting.
Beyond these principles, the Army will have to tailor its approaches to
the needs of the individual programs that emerge, allowing for the
different challenges they represent. For example, the current spin-out
program is in the late stages of development, approaching production.
The Army now plans to field at least some FCS equipment and some
portion of the FCS network to its current 73 Brigade Combat Teams. We
have reported that the pace of the spin-out program has been hurried,
not allowing enough time to test and evaluate production-representative
prototypes before beginning production. Specifically, it is unclear
whether the Army will be testing with the specific equipment it plans
to produce and use. To date, that has not been the case. Testing thus
far has employed spin-out systems that are surrogate and non-production
representative, and are thus not in the form that will be fielded.
Using such systems is problematic because it does not conclusively show
how well the actual systems perform. Additionally, we do not know how
the Army plans to determine the content and schedule of future FCS spin-
out phases.
Notional plans for the new ground combat vehicle program include a goal
of fielding the new vehicles within 5-7 years, with concept development
efforts underway. This program will likely revert back to a pre-
acquisition phase. This effort will involve different organizations,
such as those involved with science and technology, different
strategies, and different contracting approaches than the spin-out
program. The risks for the ground combat vehicle program will be
different and will have to be addressed differently. For example, under
FCS, vehicles were being designed as network-dependent, a risky
approach as the network has not yet been developed. In addition to the
Secretary of Defense's direction that the new program incorporate
lessons learned from current operations, the Army may have to consider
whether the vehicle designs should be network-enhanced versus network-
dependent. An incremental approach would allow the vehicle designs to
incorporate increasing network capabilities as they became available.
While we do not know at this point how the Army plans to approach the
development of an information network, its acquisition approach may
also have to retrench to a pre-acquisition phase to reconsider how best
to proceed to manage risks in line with DOD acquisition policy and to
meet the direction of the Secretary of Defense. While some elements of
the network may be further advanced than some of the vehicle work, the
concept itself and how to test and evaluate its performance in large
scale may present greater challenges than the vehicle program. Again,
the network may need a different acquisition and contracting approach,
as well as involvement from different organizations, than either the
spin out or manned ground vehicle program.
In proceeding forward with a different modernization approach, there
are several questions or issues that will have to be addressed. These
include:
* Closing out or restructuring current contractual arrangements:
Depending on what the Army decides to do with the new ground vehicle
program, it will have to restructure or possibly terminate the existing
FCS contract. To help in that process, it would be useful for the Army
to have a more detailed understanding about the factors that influenced
the Secretary of Defense's recommendation to cancel the current FCS
vehicle development effort. Whereas the Secretary's decision could be
interpreted as a determination that the FCS concept would not meet
current needs, it is not clear at this point what is required to
satisfy current military needs.
* Transferring knowledge from current FCS efforts to emergent programs:
The Army should carry forward knowledge already gained from the
significant investments in FCS systems development. While the Army
plans to capture and use what has been learned, doing so depends in
large part on whether that knowledge can be transferred to a follow-on
program. For example, the Army and LSI have been jointly managing the
development of FCS software centrally. That effort included software
for the information network, manned ground vehicles, and other
individual FCS systems. As the Army proceeds to structure the multiple
programs, it will need to coordinate what may be multiple separate
software development and demonstration efforts.
* Transition of FCS information network to current Army forces:
Depending on how the Army proceeds with an information network, there
are questions as to how it can be transferred to the current forces.
None of the existing equipment in the current forces has been developed
with such a network in mind. As part of the spin-out evaluation
process, the Army encountered difficulties last year in trying to
integrate even a small portion of the FCS network. Furthermore, the
Abrams and Bradley vehicles have space, weight, and power constraints
that may limit their ability to be integrated with an FCS-like network.
Additionally, it is not clear whether the Army will be developing and
fielding vehicles like the proposed FCS command and control vehicle and
reconnaissance and surveillance vehicle, which were to be key
components of the FCS network.
* Early emphasis on key development and design considerations:
Previously, we have commended the Army's efforts to break from
traditional thinking with its early emphasis on key development and
design considerations. Specifically, the Army defined the larger
context within which it wanted its new assets and capabilities to work,
emphasizing open system designs and interoperability early in
development, rather than as an afterthought. Further, we have noted the
productive nature of the Army's early consideration and focus on
challenging issues like sustainability. As the Army ground force
modernization effort goes forward, the Army will need to find ways to
retain this broader focus across multiple programs.
* Moving from a single program structure to multiple programs: The
Army's preliminary plans for the FCS restructuring call for several
separate programs, including those for the new ground combat vehicles,
the information network, and the FCS spin-out effort. As it shaped the
original FCS program, the Army made a concerted effort to reduce the
influence of the various "stovepipes" within its user organization and
set up a unitary management structure. Separate programs may differ
greatly from the centralized structure of the FCS program to date and
would have consequences that need to be considered. On the one hand,
separate structures might lend themselves more readily to better
oversight within each area. On the other hand, multiple programs may
require more staffing and might introduce various and competing
objectives rather than maintain singular focus on interoperability and
other key objectives.
* Balancing investments between future capabilities and keeping fielded
systems as capable as possible: The Army will have to strike a balance
between near-term and long-term needs, realistic funding expectations,
and a sound execution plan as it moves on the new FCS path forward. The
Army's FCS budget material for Fiscal Year 2010, which includes the new
ground combat vehicle program, provides little detail and no long-term
perspective. DOD, Army, and Congress will eventually have to agree on
the magnitude of funds that can be devoted to ground force
modernization and how that money should be allocated among near-, mid-,
and long-term needs.
Concluding Remarks:
The Army's experience with FCS has been productive. Its vision,
holistic context, recognition of network potential, and penchant for
innovative managerial and experimentation techniques, are worthy of
emulation. On the other hand, the difficulties in executing and
overseeing the program were apparent at the outset of the program--they
were not unexpected discoveries made along the way. The key in going
forward is to take the best from both kinds of lessons and applying
them, in a tailored way, to the different modernization efforts that
will succeed FCS. The Army and DOD should continue to be innovative as
to concepts and approaches, but anchored in knowledge-based strategies
when it comes to proposing a specific system development effort.
Differences in the task at hand should warrant different approaches. At
one end of the spectrum, spin outs are in late development, where the
focus should be on testing and production preparations. At the other
end of the spectrum are efforts to develop a new family of manned
ground vehicles and an information network. These would be in early
stages of development, in which informed decisions on technologies and
requirements will be key. Even within these two developmental efforts,
different technical and managerial approaches may be necessary, for
more is known about developing and projecting the performance of
vehicles than is known about a network.
Mr. Chairman, that concludes my prepared statement. I will be happy to
answer any of your questions.
Contacts and Staff Acknowledgements:
For future questions about this statement, please contact me on (202)
512-4841 or francisp@gao.gov. Individuals making key contributions to
this statement include William R. Graveline, Assistant Director; Marcus
C. Ferguson; William C. Allbritton; Noah B. Bleicher; Helena Brink; and
Tana M. Davis.
[End of section]
Footnotes:
[1] Pub. L. No. 109-163, §211.
[2] Pub. L. No. 109-364, § 214 (2006).
[3] GAO, Defense Acquisitions: Decisions Needed to Shape Army's Combat
Systems for the Future, [hyperlink,
http://www.gao.gov/products/GAO-09-288] (Washington, D.C.: Mar. 12,
2009).
[End of section]
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