Defense Acquisitions
Opportunities and Challenges for Army Ground Force Modernization Efforts Gao ID: GAO-10-603T April 15, 2010Since 2003, the Future Combat System (FCS) program has been the centerpiece of the Army's efforts to transition to a lighter, more agile, and more capable combat force. In 2009, however, concerns over the program's performance led to the Secretary of Defense's decision to significantly restructure and ultimately cancel the acquisition program. As a result, the Army is outlining a new approach to ground force modernization. This statement outlines the Army's preliminary post-FCS actions and identifies the challenges the Department of Defense (DOD) and the Army must address as they proceed. This testimony is based on GAO's report on the Army's Ground Force Modernization effort released on March 15, 2010. It emphasizes the December 2009 decision to begin low-rate initial production for Increment 1 of the Brigade Combat Team Modernization.
The Army is implementing DOD direction and redefining its overall modernization strategy as a result of the Secretary of Defense's decision to significantly restructure the FCS program. It is transitioning from the FCS long-term acquisition orientation to a shorter-term approach that biennially develops and fields new increments of capability within capability packages. It now has an approved acquisition program that will produce and field the initial increment of the FCS spinout equipment, which includes unmanned aerial and ground vehicles as well as unattended sensors and munitions. It has preliminary plans for two other major defense acquisition programs to (1) define and develop follow-on increments and (2) develop a new ground combat vehicle (GCV). The individual systems within Increments 1 and 2 are to be integrated with a preliminary version of an information network. Currently, the Army is continuing selected development work--primarily that related to Increments 1 and 2 and the information network--under the existing FCS development contract. The Army has recently released a request for proposals for the technology development phase of the proposed GCV development effort. The Army's projected investment in Increments 1 and 2 and GCV is estimated to be over $24 billion through fiscal year 2015. With these modernization efforts at an early stage, DOD and the Army face the immediate challenge of setting them on the best possible footing by buying the right capabilities at the best value. DOD and the Army have an opportunity to better position these efforts by utilizing an enhanced body of acquisition legislation and DOD policy reforms--which now incorporate many of the knowledge-based practices that GAO has previously identified--as well as lessons learned from the FCS program. Preliminary plans suggest that the Army and DOD are strongly considering lessons learned. However, DOD recently approved the first of several planned low-rate initial production lots of Increment 1 despite having acknowledged that the systems and network were immature, unreliable, and not performing as required. That decision reflects DOD's emphasis on quickly providing new capabilities to combat units. This decision did not follow knowledge-based acquisition practices and runs the risk of delivering unacceptable equipment to the warfighter and trading off acquisition principles whose validity has been so recently underscored. The Army needs to seize the opportunity of integrating acquisition reforms, knowledge-based acquisition practices, and lessons learned from FCS into future modernization efforts to increase the likelihood of successful outcomes.
GAO-10-603T, Defense Acquisitions: Opportunities and Challenges for Army Ground Force Modernization Efforts
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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 2:00 p.m. EDT:
Thursday, April 15, 2010:
Defense Acquisitions:
Opportunities and Challenges for Army Ground Force Modernization
Efforts:
Statement of Michael J. Sullivan, Director:
Acquisition and Sourcing Management:
GAO-10-603T:
GAO Highlights:
Highlights of GAO-10-603T, a testimony before the Subcommittee on
Airland, Committee on Armed Services, U.S. Senate.
Why GAO Did This Study:
Since 2003, the Future Combat System (FCS) program has been the
centerpiece of the Army‘s efforts to transition to a lighter, more
agile, and more capable combat force. In 2009, however, concerns over
the program‘s performance led to the Secretary of Defense‘s decision
to significantly restructure and ultimately cancel the acquisition
program. As a result, the Army is outlining a new approach to ground
force modernization. This statement outlines the Army‘s preliminary
post-FCS actions and identifies the challenges the Department of
Defense (DOD) and the Army must address as they proceed. This
testimony is based on GAO‘s report on the Army‘s Ground Force
Modernization effort released on March 15, 2010. It emphasizes the
December 2009 decision to begin low-rate initial production for
Increment 1 of the Brigade Combat Team Modernization.
What GAO Found:
The Army is implementing DOD direction and redefining its overall
modernization strategy as a result of the Secretary of Defense‘s
decision to significantly restructure the FCS program. It is
transitioning from the FCS long-term acquisition orientation to a
shorter-term approach that biennially develops and fields new
increments of capability within capability packages. It now has an
approved acquisition program that will produce and field the initial
increment of the FCS spinout equipment, which includes unmanned aerial
and ground vehicles as well as unattended sensors and munitions. It
has preliminary plans for two other major defense acquisition programs
to (1) define and develop follow-on increments and (2) develop a new
ground combat vehicle (GCV). The individual systems within Increments
1 and 2 are to be integrated with a preliminary version of an
information network. Currently, the Army is continuing selected
development work”primarily that related to Increments 1 and 2 and the
information network”under the existing FCS development contract. The
Army has recently released a request for proposals for the technology
development phase of the proposed GCV development effort. The Army‘s
projected investment in Increments 1 and 2 and GCV is estimated to be
over $24 billion through fiscal year 2015.
With these modernization efforts at an early stage, DOD and the Army
face the immediate challenge of setting them on the best possible
footing by buying the right capabilities at the best value. DOD and
the Army have an opportunity to better position these efforts by
utilizing an enhanced body of acquisition legislation and DOD policy
reforms”which now incorporate many of the knowledge-based practices
that GAO has previously identified”as well as lessons learned from the
FCS program. Preliminary plans suggest that the Army and DOD are
strongly considering lessons learned. However, DOD recently approved
the first of several planned low-rate initial production lots of
Increment 1 despite having acknowledged that the systems and network
were immature, unreliable, and not performing as required. That
decision reflects DOD‘s emphasis on quickly providing new capabilities
to combat units. This decision did not follow knowledge-based
acquisition practices and runs the risk of delivering unacceptable
equipment to the warfighter and trading off acquisition principles
whose validity has been so recently underscored.
The Army needs to seize the opportunity of integrating acquisition
reforms, knowledge-based acquisition practices, and lessons learned
from FCS into future modernization efforts to increase the likelihood
of successful outcomes.
What GAO Recommends:
In its March report, GAO recommended that the Secretary of Defense
instruct the Army to correct the identified maturity and reliability
issues prior to either fielding equipment or approving additional
system procurement. GAO also recommended that the Secretary direct the
Army to submit a comprehensive report to the Congress on its
modernization investment, contracting, and management strategies. DOD
concurred with GAO‘s recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-10-603T] or key
components. For more information, contact Michael J. Sullivan at (202)
512-4841 or sullivanm@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss some of the Department of the
Army's ground force modernization efforts as it moves away from the
now-canceled Future Combat System (FCS) program. My statement today is
based on the work we conducted over the last year in response to a
request from the Subcommittee on Air and Land Forces, House Committee
on Armed Services. This statement focuses on the Army's post-FCS
acquisition plans. In particular, it emphasizes the December 2009
decision to begin low-rate initial production for Increment 1 of the
Brigade Combat Team Modernization. Our recent report on the Army's
ground force modernization efforts provides additional information on
the Army's efforts.[Footnote 1]
This statement is based on work we conducted from March 2009 through
March 2010 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 that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
Background:
Since it started development in 2003, FCS has been at the center of
the Army's efforts to modernize into a lighter, more agile, and more
capable combat force. The FCS concept involved replacing existing
combat systems with a family of manned and unmanned vehicles and
systems linked by an advanced information network. The Army
anticipated that the FCS systems, along with the soldier and enabling
complementary systems, would work together in a system of systems
wherein the whole provided greater capability than the sum of the
individual parts. The Army expected to develop this equipment in 10
years, procure it over 13 years, and field it to 15 FCS-unique
brigades--about one-third of the active force at that time. The Army
also had planned to spin out selected FCS technologies and systems to
current Army forces throughout the system development and
demonstration phase.
As we reported in 2009,[Footnote 2] the FCS program was immature and
unable to meet the Department of Defense's (DOD) own standards for
technology and design from the start. Although adjustments were made,
such as adding time and reducing requirements, vehicle weights and
software code grew, key network systems were delayed, and technologies
took longer to mature than anticipated (see figure 1). By 2009, after
an investment of 6 years and an estimated $18 billion, the viability
of the FCS concept was still unknown. As such, we concluded that the
maturity of the development efforts was insufficient and the program
could not be developed and produced within existing resources.
Figure 1: FCS Acquisition Program (2003 vs. 2009):
[Refer to PDF for image: illustrated table]
Cost estimate (Fiscal year 2009 billions of dollars):
2003: Research and development: $20.9;
2009: Research and development: $29.0;
$8.1 billion increase.
2003: Procurement: $68.2;
2009: Procurement: $129.3;
$61.1 billion increase.
2003: Total: $89.8;
2009: Total: $159.3;
$69.5 billion increase.
Schedule (Development start to initial operational capability):
2003: 7 years, 6 months;
2009: 12 years, 3 months;
Over 4 1/2 years added.
Requirements:
2003: Undefined;
2009: System-level requirements not matched with emerging designs;
Persistent gaps.
Software lines of code:
2003: 34 million;
2009: 114 million+;
Triple in size.
Projected maturity date of critical technologies[A]:
2003: 2006;
2009: 2009;
3 years added.
Sources: DOD (data); GAO (analysis and presentation).
[A] For FCS, the Army projected maturity based on a Technology
Readiness Level 6, which is a representative model or prototype that
has been tested in a relevant environment, but requires additional
work for the appropriate form, fit, and function. Based on our best
practices work, technologies that have reached a Technology Readiness
Level 7, a prototype demonstrated in a realistic environment, are
mature.
[End of figure]
In April 2009, the Secretary of Defense proposed a significant
restructuring of the FCS program to lower risk and address more near-
term combat needs. The Secretary noted significant concerns that the
FCS program's vehicle designs--where greater information awareness was
expected to compensate for less armor, resulting in lower weight and
higher fuel efficiency--did not adequately reflect the lessons of
counterinsurgency and close-quarters combat operations in Iraq and
Afghanistan. As such, the Secretary recommended:
* accelerating fielding of ready-to-go systems and capabilities to all
combat brigades;
* canceling the vehicle component of the FCS program, reevaluating the
requirements, technology, and approach, and relaunching the Army's
vehicle modernization program; and:
* addressing fee structure and other concerns with current FCS
contracting arrangements.
In June 2009, the Under Secretary of Defense for Acquisition,
Technology and Logistics issued an acquisition decision memorandum
that canceled the FCS acquisition program, terminated manned ground
vehicle development efforts, and laid out plans for follow-on Army
Brigade Combat Team Modernization efforts. DOD directed the Army to
transition to an Army-wide modernization plan consisting of a number
of integrated acquisition programs, including one to develop ground
combat vehicles (GCV).
Subsequently, the Army has been defining its ground force
modernization efforts per the Secretary's decisions and the June 2009
acquisition decision memorandum. Although the details are not yet
complete, the Army took several actions through the end of calendar
year 2009. It stopped all development work on the FCS manned ground
vehicles--including the non-line-of-sight cannon--in the summer of
2009 and recently terminated development of the Class IV unmanned
aerial vehicle and the countermine and transport variants of the
Multifunction Utility/Logistics and Equipment unmanned ground vehicle.
For the time being, the Army is continuing selected development work
under the existing FCS development contract, primarily residual FCS
system and network development. In October 2009, the Army negotiated a
modification to the existing contract that clarified the development
work needed for the brigade modernization efforts.
The Army Has Started a Series of Development and Fielding Efforts:
The Army is implementing DOD direction and redefining its overall
modernization strategy as a result of the Secretary of Defense's
decisions to significantly restructure the FCS program. It is
transitioning from the FCS long-term acquisition orientation to a
shorter-term approach that biennially develops and fields new
increments of capability within capability packages. It now has an
approved acquisition program that will produce and field the initial
increment of the FCS spinout equipment, which includes unmanned aerial
and ground vehicles as well as unattended sensors and munitions, and
preliminary plans for two other major defense acquisition programs to
define and develop follow-on increments and develop a new GCV. The
Army also plans to integrate network capabilities across its brigade
structure and to develop and field upgrades to other existing ground
force equipment.
* The first program, Increment 1, is a continuation of previous FCS-
related efforts to spin out emerging capabilities and technologies to
current forces. Of the Army's post-FCS modernization initiatives,
Increment 1, which includes such FCS remnants as unmanned air and
ground systems, unattended ground sensors, the non-line-of-sight
launch system, and a network integration kit, is the furthest along in
the acquisition development cycle (see figure 2). The network
integration kit includes, among other things, the integrated computer
system, an initial version of the system-of-systems common operating
environment, early models of the Joint Tactical Radio System, and a
range extension relay[Footnote 3]. In December 2009, the Army
requested and DOD approved, with a number of restrictions, the low-
rate initial production of Increment 1 systems that are expected to be
fielded in the fiscal year 2011-12 capability package.[Footnote 4] The
Army will be continuing Increment 1 development over the next 2 years
while low-rate initial production proceeds. The projected development
and production cost to equip nine brigades with the Increment 1
network and systems, supported by an independent cost estimate, would
be about $3.5 billion.
Figure 2: Increment 1 Systems:
[Refer to PDF for image: illustrated list]
Small unmanned ground vehicle Block 1:
Provides enhanced situational awareness and force protection through
reduced exposure to hazards during soldier-intensive and/or high-risk
functions.
Network integration kit:
Provides enhanced communications and situational awareness through
radios with multiple software waveforms, connections to unattended
sensors, and links to existing networking capabilities.
Urban unattended ground sensor:
Provides force protection in an urban setting through a leave-behind,
network-enabled reporting system of movement and/or activity in
cleared areas.
Class 1 unmanned aerial vehicle Block 0:
Provides independent, soldier-level aerial reconnaissance,
surveillance, and target acquisition capability.
Non-line-of-sight launch system
Provides the ability to precisely attack armored, lightly armored, and
stationary or moving targets at extended ranges despite
weather/environmental conditions and/or presence of countermeasures.
Tactical unattended ground sensor:
Provides enhanced situational awareness, force protection, and early
warnings in a tactical setting through cross-cues to sensors and
weapon systems.
Sources: Army (data and photos); GAO (analysis and presentation).
[End of figure]
* For the second acquisition program, Increment 2 of brigade
modernization, the Army has preliminary plans to mature Increment 1
capabilities--potentially demonstrating full FCS threshold
requirements--as well as contributing further developments of the
system-of-systems common operating environment and battle command
software, and demonstrating and fielding additional capabilities. For
example, these may include the Armed Robotic Vehicle Assault (Light)--
an unmanned ground vehicle configured for security and assault support
missions--and the Common Controller, which will provide the dismounted
soldier a handheld device capable of controlling, connecting, and
providing data transfer from unmanned vehicles and ground sensors.
Army officials indicated that they are currently working to define the
content, cost, and schedule for Increment 2 with a low-rate initial
production decision planned for fiscal year 2013 and a Defense
Acquisition Board review expected later in fiscal year 2010.
* The third acquisition program would develop a new GCV. The Army
reviewed current fighting vehicles across the force structure to
determine whether to sustain, improve, divest, or pursue new vehicles
based on operational value, capability shortfalls, and resource
availability. Per DOD direction, the Army also collaborated with the
Marine Corps to identify capability gaps related to fighting vehicles.
For development of a new GCV, the Army's preliminary plans indicate
the use of an open architecture design to enable incremental
improvements in modular armor; network architecture; and subcomponent
size, weight, power, and cooling. DOD and the Army met in February
2010 to make a materiel development decision on the GCV, and the Army
was subsequently authorized to release a request for proposals for GCV
technology development.[Footnote 5] Over the next several months, the
Army will be conducting an analysis of alternatives to assess
potential materiel solutions for the GCV. The Army expects to follow
the analysis with a Milestone A decision review on whether to begin
technology development in September 2010.[Footnote 6] After Milestone
A, Army officials are proposing the use of competitive prototyping
with multiple contractors--the number of which will depend on
available funding--during the technology development phase, which will
feature the use of mature technologies and the fabrication and testing
of prototype subsystems. In the technology development phase, the
contractors will be expected to fabricate and evaluate several
subsystem prototypes, including an automotive test rig and a mine
blast test asset. The contractors will also be expected to develop a
near-critical design review level design for their integrated vehicle
and, in the process, inform the GCV concept development document. That
document is expected to be finalized at the Milestone A decision
point. Competitive prototypes will be fabricated and tested during the
engineering and manufacturing development phase. A preliminary design
review would be used to validate contractor readiness to enter
detailed design at Milestone B in fiscal year 2013. The Army's
preliminary plans indicate that the first production vehicles could be
delivered in late fiscal year 2017, about 7 years from Milestone A.
* The Army is planning to incrementally develop and field an
information network to all of its brigades in a decentralized fashion,
that is, not as a separate acquisition program. The Army has defined a
preliminary network strategy and is in the process of defining what
the end state of the network will need to be, as well as how it may
build up that network over an undefined period of time. In the near
term, the Army is working to establish a common network foundation to
build on and to define a common network architecture based on what is
currently available and expected to become available in the near
future. Current communications, command and control, and networking
acquisition programs will continue and will be expected to build upon
the current network foundation and architecture over time. Networking
capabilities will be expected to meet specific standards and interface
requirements. According to Army officials, the ongoing incremental
network and software development activities and requirements will be
dispersed to these acquisition programs, where they will be considered
for further development and possible fielding. The only original FCS
network development activities that the Army plans to continue under
the FCS development contract are those supporting the network
integration kit for Increment 1 and whatever additional networking
capabilities may be needed for Increment 2. DOD expects the Army to
present its network development plans later in 2010. (See table 1.)
Table 1: Army Budget Requests for Fiscal Year 2011 and Fiscal Years
2012-2015 for Increments 1 and 2 and GCV (Dollars in millions):
Research and Development: Increments 1and 2;
Fiscal year 2011: $1,568.0;
Fiscal years 2012-2015: $4,126.0.
Research and Development: GCV;
Fiscal year 2011: 934.4;
Fiscal years 2012-2015: 6,245.4.
Research and Development: Subtotal;
Fiscal year 2011: $2,502.4;
Fiscal years 2012-2015: $10,371.4.
Procurement: Increments 1and 2;
Fiscal year 2011: $682.6;
Fiscal years 2012-2015: $9,840.5.
Procurement: GCV;
Fiscal year 2011: 0;
Fiscal years 2012-2015: $876.2.
Procurement: Subtotal;
Fiscal year 2011: $682.6;
Fiscal years 2012-2015: $10,716.7.
Total:
Fiscal year 2011: $3,185.0;
Fiscal years 2012-2015: $21,088.1.
Source: Fiscal Year 2011 President's Budget.
[End of table]
As shown in table 1, the Army is proposing to make substantial
investments in its post-FCS acquisition initiatives. For fiscal year
2011, the Army is proposing research and development funding of about
$2.5 billion and procurement funding of about $683 million. For the
following 4 years (fiscal years 2012-2015), the Army plans additional
research and development investments of about $10.4 billion and
procurement investments of about $10.7 billion.
Recent Army Contract Actions Related to Its Post-FCS Efforts:
For the time being, the Army is continuing selected development work--
primarily that related to Increment 1, Increment 2, and network
development--under the existing FCS development contract. In October
2009, the Army negotiated a modification to the existing contract that
clarified the development work needed for the brigade modernization
efforts. The Army previously awarded a contract for long lead item
procurement for Increment 1. A modification to that contract was
recently issued to begin low-rate initial production of the Increment
1 systems. The Army has also recently released a request for proposals
for the technology development phase of the proposed GCV development
effort.
Contractor proposals for GCV are expected to include plans, solutions,
or both for, among other things, survivability (hit avoidance system,
armor, and vehicle layout) and mobility (propulsion and power
generation and cooling). According to the request for proposals, the
proposals can utilize prior Army investment in armor recipes, but the
contractors will not get an inherent advantage for doing so. Each
solution will be based on its own merits. Contractor proposals are to
be submitted in April 2010 and contract awards, for cost-plus type
contracts, are to be awarded after the Milestone A decision in
September 2010.
Acquisition Direction and FCS Lessons Learned Offer Opportunities to
Promote Successful Outcomes, but Decision to Proceed with Initial
Production Is Premature:
The challenge facing both DOD and the Army is to set these ground
force modernization efforts on the best footing possible by buying the
right capabilities at the best value. In many ways, DOD and the Army
have set modernization efforts on a positive course, and they have an
opportunity to reduce risks by adhering to the body of acquisition
legislation and policy reforms--which incorporate knowledge-based best
practices we identified in our previous work--that have been
introduced since FCS started in 2003. The new legislation and policy
reforms emphasize a knowledge-based acquisition approach, a cumulative
process in which certain knowledge is acquired by key decision points
before proceeding. In essence, knowledge supplants risk over time.
Additionally, DOD and the Army can further reduce risks by considering
lessons learned from problems that emerged during the FCS development
effort. Initial indications are that the Army is moving in that
direction. However, in the first major acquisition decision for the
Army's post-FCS initiatives, DOD and the Army--because they want to
support the warfighter quickly--are proceeding with low-rate initial
production of one brigade set of Increment 1 systems despite having
acknowledged that the systems are immature and unreliable and cannot
perform as required.
New Acquisition Reforms Point Way to Lower Risk:
The body of acquisition legislation and DOD policy reforms introduced
since FCS started in 2003 incorporates nearly all of the knowledge-
based practices we identified in our previous work (see table 2). For
example, DOD acquisition policy includes controls to ensure that
programs have demonstrated a certain level of technology maturity,
design stability, and production maturity before proceeding into the
next phase of the acquisition process. As such, if the Army proceeds
with preliminary plans for new acquisition programs, then adherence to
the acquisition direction in each of its new acquisition efforts
provides an opportunity to improve the odds for successful outcomes,
reduce risks for follow-on Army ground force modernization efforts,
and deliver needed equipment more quickly and at lower costs.
Conversely, acquisition efforts that proceed with less technology,
design, and manufacturing knowledge than best practices suggest face a
higher risk of cost increases and schedule delays.
Table 2: Comparison of Controls Used in Best Practices Model and DOD
Policy:
Knowledge point 1: Occurs as programs begin the engineering and
manufacturing development phase (Milestone B). Match exists between
requirements and resources. Technologies needed to meet essential
product requirements have been demonstrated to work in their intended
environments and the producer has completed a preliminary design of
the product.
Commercial best practices model: Demonstrate high technology readiness
levels;
May 2003 DOD policy: [Check];
December 2008 DOD policy: [Check].
Commercial best practices model: Ensure product requirements are
informed by the systems engineering process;
May 2003 DOD policy: [Check];
December 2008 DOD policy: [Check].
Commercial best practices model: Establish cost and schedule estimates
for product based on knowledge from preliminary design using systems
engineering tools;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [Check].
Commercial best practices model: Conduct decision review for program
launch;
May 2003 DOD policy: [Check];
December 2008 DOD policy: [Check].
Knowledge point 2: Occurs at the critical design review between
integration and demonstration. Design is stable and has been
demonstrated through prototype testing. Ninety percent of engineering
drawings are releasable to manufacturing organizations.
Commercial best practices model: Complete 90 percent of design
drawings;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [A].
Commercial best practices model: Complete subsystem and system design
reviews;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [Check].
Commercial best practices model: Demonstrate with prototype that
design meets requirements;
May 2003 DOD policy: [Check];
December 2008 DOD policy: [Check].
Commercial best practices model: Obtain stakeholder concurrence that
drawings are complete and producible;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [B].
Commercial best practices model: Complete failure modes and effects
analysis;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [Check].
Commercial best practices model: Identify key system characteristics;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [Check].
Commercial best practices model: Identify critical manufacturing
processes;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [Check].
Commercial best practices model: Establish reliability targets and
growth plan based on demonstrated reliability rates of components and
subsystems;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [Check].
Commercial best practices model: Conduct design review to enter system
demonstration;
May 2003 DOD policy: [Check];
December 2008 DOD policy: [Check].
Knowledge point 3: Occurs at low-rate initial production commitment.
Product is ready to be manufactured within cost, schedule, and quality
targets. All key manufacturing processes are under statistical control
and product reliability has been demonstrated.
Commercial best practices model: Demonstrate manufacturing processes;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [Check].
Commercial best practices model: Build production-representatives
prototypes;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [Check].
Commercial best practices model: Test production-representative
prototypes to achieve reliability goal;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [C].
Commercial best practices model: Test production-representative
prototypes to demonstrate the product in a realistic environment;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [Check].
Commercial best practices model: Collect statistical process control
data;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [Check].
Commercial best practices model: Demonstrate that critical processes
are capable and under statistical control;
May 2003 DOD policy: [Empty];
December 2008 DOD policy: [Check].
Commercial best practices model: Conduct decision review to begin
production;
May 2003 DOD policy: [Check];
December 2008 DOD policy: [Check].
Sources: DOD (data); GAO (analysis and presentation).
[A] DOD criteria do not specify the percentage of drawings to be
completed at the critical design review.
[B] DOD's revised policy includes the post-critical design review
assessment, which is the Milestone Decision Authority's assessment of
the program manager's critical design review. However, we could not
determine whether stakeholder concurrence was necessary to proceed.
[C] DOD criteria establish reliability goals, but do not specify
testing on production-representative prototypes.
[End of table]
As shown in table 2, the cumulative building of knowledge consists of
information that should be gathered at three critical points over the
course of a program:
Knowledge point 1 (at the program launch or Milestone B decision):
Establishing a business case that balances requirements with
resources. At this point, a match must be made between the customer's
needs and the developer's available resources--technology,
engineering, knowledge, time, and funding. A high level of technology
maturity, demonstrated via a prototype in its intended environment,
indicates whether resources and requirements match. Also, the
developer completes a preliminary design of the product that shows
that the design is feasible and that requirements are predictable and
doable.
Knowledge point 2 (at the critical design review between design
integration and demonstration): Gaining design knowledge and reducing
integration risk. At this point, the product design is stable because
it has been demonstrated to meet the customer's requirements as well
as cost, schedule, and reliability targets. The best practice is to
achieve design stability at the system-level critical design review,
usually held midway through system development. Completion of at least
90 percent of engineering drawings at this point provides tangible
evidence that the product's design is stable, and a prototype
demonstration shows that the design is capable of meeting performance
requirements.
Knowledge point 3 (at production commitment or the Milestone C
decision): Achieving predictable production. This point is achieved
when it has been demonstrated that the developer can manufacture the
product within cost, schedule, and quality targets. The best practice
is to ensure that all critical manufacturing processes are in
statistical control--that is, they are repeatable, sustainable, and
capable of consistently producing parts within the product's quality
tolerances and standards--at the start of production.
The Army did not position the FCS program for success because it did
not establish a knowledge-based acquisition approach--a strategy
consistent with DOD policy and best acquisition practices--to develop
FCS. The Army started the FCS program in 2003 before defining what the
systems were going to be required to do and how they were going to
interact. It moved ahead without determining whether the FCS concept
could be developed in accordance with a sound business case.
Specifically, at the FCS program's start, the Army had not established
firm requirements, mature technologies, a realistic cost estimate, or
an acquisition strategy wherein knowledge drives schedule. By 2009,
the Army still had not shown that emerging FCS system designs could
meet requirements, that critical technologies were at minimally
acceptable maturity levels, and that the acquisition strategy was
executable within estimated resources.
With one notable exception, there are initial indications that DOD and
the Army are moving forward to implement the acquisition policy
reforms as they proceed with ground force modernization, including the
Secretary of Defense's statement about the ground vehicle
modernization program--to "get the acquisition right, even at the cost
of delay." In addition, DOD anticipates that the GCV program will
comply with DOD acquisition policy in terms of utilizing competitive
system or subsystem prototypes. According to a DOD official, a meeting
was recently held to consider a materiel development decision for the
GCV, and the Army is proposing to conduct a preliminary design review
on GCV before its planned Milestone B decision point. Additionally, a
configuration steering board is planned for later in 2010 to address
reliability and military utility of infantry brigade systems.
Army's Decision to Proceed with Low-Rate Initial Production for
Increment 1 Increases Risk:
In the first major acquisition decision for the Army's post-FCS
initiatives, DOD and the Army--because they want to support the
warfighter quickly--are proceeding with low-rate initial production of
Increment 1 systems despite having acknowledged that systems are
immature, are unreliable, and cannot perform as required. In December
2009, the Under Secretary of Defense for Acquisition, Technology and
Logistics approved low-rate initial production of Increment 1
equipment for one infantry brigade but noted that there is an
aggressive risk reduction plan to grow and demonstrate the network
maturity and reliability to support continued Increment 1 production
and fielding. In the associated acquisition decision memorandum, the
Under Secretary acknowledged the risks of pursuing Increment 1
production, including early network immaturity; lack of a clear
operational perspective of the early network's value; and large
reliability shortfalls of the network, systems, and sensors. The Under
Secretary also said that he was aware of the importance of fielding
systems to the current warfighter and that the flexibility to deploy
components as available would allow DOD to "best support" the
Secretary of Defense's direction to "win the wars we are in." Because
of that, the Under Secretary specified that a number of actions be
taken over the next year or more and directed the Army to work toward
having all components for the program fielded as soon as possible and
to deploy components of the program as they are ready. However, the
Under Secretary did not specify the improvements that the Army needed
to make or that those improvements are a prerequisite for the Under
Secretary approving additional production lots of Increment 1.
The approval for low-rate initial production is at variance with DOD
policy and Army expectations. DOD's current acquisition policy
requires that systems be demonstrated in their intended environments
using the selected production-representative articles before the
production decision occurs. However, the testing that formed the basis
for the Increment 1 production decision included surrogates and non-
production-representative systems, including the communications
radios. As we have previously noted,[Footnote 7] testing with
surrogates and non-production-representative systems is problematic
because it does not conclusively show how well the systems can address
current force capability gaps. Furthermore, Increment 1 systems--which
are slated for a fiscal year 2011-12 fielding--do not yet meet the
Army's expectations that new capabilities would be tested and their
performance validated before being deployed in a capability package.
As noted in 2009 test results, system performance and reliability
during testing was marginal at best. For example, the demonstrated
reliability of the Class I unmanned aerial vehicle was about 5 hours
between failure, compared to a requirement for 23 hours between
failure. The Army asserts that Increment 1 systems' maturity will
improve rapidly but admits that it will be a "steep climb" and not a
low-risk effort.
While the Under Secretary took current warfighter needs into account
in his decision to approve Increment 1 low-rate initial production, it
is questionable whether the equipment can meet one of the main
principles underpinning knowledge-based acquisition--whether the
warfighter needs can best be met with the chosen concept. Test reports
from late 2009 showed conclusively that the systems had limited
performance, and that this reduced the test unit's ability to assess
and refine tactics, techniques, and procedures associated with
employment of the equipment. The Director, Operational Test and
Evaluation recently reported that none of the Increment 1 systems have
demonstrated an adequate level of performance to be fielded to units
and employed in combat. Specifically, the report noted that
reliability is poor and falls short of the level expected of an
acquisition system at this stage of development. Shortfalls in meeting
reliability requirements may adversely affect Increment 1's overall
operational effectiveness and suitability and may increase life-cycle
costs. In addition, in its 2009 assessment of the increment's limited
user test--the last test before the production decision was made--the
Army's Test and Evaluation Command indicated that the Increment 1
systems would be challenged to meet warfighter needs. It concluded
that, with the exception of the non-line-of-sight launch system, which
had not yet undergone flight testing, all the systems were considered
operationally effective and survivable, but with limitations, because
they were immature and had entered the test as pre-production-
representative systems, pre-engineering design models, or both.
Additionally, the command noted that these same systems were not
operationally suitable because they did not meet required reliability
expectations.
In recent testimony before a House subcommittee, the Director,
Operational Test and Evaluation stated that flight testing of the non-
line-of-sight launch system was conducted in January and February
2010. In that testing, two of six missiles fired achieved target hits
and four missed their targets. The Army informed the Director that
Failure Review Board investigations of the flight failures are under
way.
Concluding Remarks:
Army and DOD officials made a very difficult decision when they
canceled what was the centerpiece of Army modernization--the FCS
program. As they transition away from the FCS concept, both the Army
and DOD have an opportunity to improve the likely outcomes for the
Army's ground force modernization initiatives by adhering closely to
recently enacted acquisition reforms and by seeking to avoid the
numerous acquisition pitfalls that plagued FCS. As DOD and the Army
proceed with these significant financial investments, they should keep
in mind the Secretary of Defense's admonition about the new ground
vehicle modernization program: "get the acquisition right, even at the
cost of delay." Based on the preliminary plans, we see a number of
good features, such as the Army's decision to pursue an incremental
acquisition approach for its post-FCS efforts. However, it is vitally
important that each of those incremental efforts adheres to knowledge-
based acquisition principles and strikes a balance between what is
needed, how fast it can be fielded, and how much it will cost.
Moreover, the acquisition community needs to be held accountable for
expected results, and DOD and the Army must not be willing to accept
whatever results are delivered regardless of military utility.
We are concerned that in their desire for speedy delivery of emerging
equipment to our warfighters in the field, DOD and the Army did not
strike the right balance in prematurely approving low-rate initial
production of Increment 1 of brigade modernization. Although the Army
argues that it needs to field these capabilities as soon as possible,
none of these systems have been designated as urgent and it is not
helpful to provide early capability to the warfighter if those
capabilities are not technically mature and reliable. If the Army
moves forward too fast with immature Increment 1 designs, then that
could cause additional delays as the Army and its contractors
concurrently address technology, design, and production issues.
Production and fielding is not the appropriate phase of acquisition to
be working on such basic design issues.
In our recent report, we made recommendations intended to reduce the
risk of proceeding into production with immature technologies.
[Footnote 8] In that regard, we recommended that the Secretary of
Defense mandate that the Army correct the identified maturity and
reliability issues with the Increment 1 network and systems prior to
approving any additional lots of the Increment 1 network and systems
for production. Specifically, the Army should ensure that the network
and the individual systems have been independently assessed as fully
mature, meet reliability goals, and have been demonstrated to perform
as expected using production-representative prototypes. We also
recommended that the Secretary of the Army should not allow fielding
of the Increment 1 network or any of the Increment 1 systems until the
identified maturity and reliability issues have been corrected.
In response, DOD concurred with our recommendations and stated that
the need to correct those issues has been communicated to the Army.
DOD also asserted that Increment 1 systems will be tested in their
production configuration, and performance will be independently
assessed against capability requirements prior to DOD approving
production of any additional lots of Increment 1 systems. The Army has
many Increment 1 development and testing activities planned for the
coming months and we intend to monitor their progress closely. DOD
also stated that Increment 1 systems would not be fielded until
performance is sufficient to satisfy the warfighter's capability
requirements. It is essential that (1) Increment 1 network and systems
clearly demonstrate their ability to fully satisfy the needs of the
warfighter and (2) DOD and the Army not be willing to accept whatever
acquisition results are delivered regardless of their military
utility. Again, we intend to follow the Army and DOD's activities and
actions in the coming months.
Mr. Chairman, this concludes my prepared statement. I would be happy
to answer any questions you or members of the subcommittee may have.
Contacts and Acknowledgments:
For future questions about this statement, please contact Michael J.
Sullivan at (202) 512-4841 or sullivanm@gao.gov. Contacts for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this testimony. Individuals making key contributions
to this statement include William R. Graveline, Assistant Director;
William C. Allbritton; Andrea M. Bivens; Noah B. Bleicher; Tana M.
Davis; Marcus C. Ferguson; and Robert S. Swierczek.
[End of section]
Footnotes:
[1] GAO, Defense Acquisitions: Opportunities Exist to Position Army's
Ground Force Modernization Efforts for Success, [hyperlink,
http://www.gao.gov/products/GAO-10-406] (Washington, D.C.: Mar. 15,
2010).
[2] 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).
[3] The system-of-systems common operating environment is the
operating environment that serves as middleware between operating
systems and software applications.
[4] The Army had developed a concept of continual modernization of
ready-to-go capabilities through biennial deliveries of what are
called capability packages.
[5] A materiel development decision is a review that is the formal
entry point into the acquisition process and is mandatory for all
programs. After the materiel development decision, the Milestone
Decision Authority may approve entry into the acquisition management
system at any point consistent with phase-specific entrance criteria
and statutory requirements.
[6] Milestone A is the point at which a program enters the technology
development phase; Milestone B is entry into the engineering and
manufacturing development phase; and Milestone C is entry into the
production and deployment phase.
[7] [hyperlink, http://www.gao.gov/products/GAO-09-288].
[8] [hyperlink, http://www.gao.gov/products/GAO-10-406].
[End of section]
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