Expeditionary Fighting Vehicle (EFV) Program Faces Cost, Schedule and Performance Risks
Gao ID: GAO-10-758R July 2, 2010This letter formally transmits the briefing in response to a congressional request on May 4, 2009, that we review the EFV program. We provided congressional staff a draft copy of this briefing in meeting with them on June 9, 2010. We provided the same draft to the Department of Defense (DOD) for comments. A summary of DOD's comments with our evaluation are also attached, as well as a reprinted copy of DOD's written comments.
GAO-10-758R, Expeditionary Fighting Vehicle (EFV) Program Faces Cost, Schedule and Performance Risks
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GAO-10-758R:
United States Government Accountability Office:
Washington, DC 20548:
July 2, 2010:
The Honorable Norman D. Dicks:
Chairman:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
Subject: Expeditionary Fighting Vehicle (EFV) Program Faces Cost,
Schedule, and Performance Risks:
This letter formally transmits the attached briefing (see enclosure I)
in response to your May 4, 2009, request that we review the EFV
program. We provided your staff a draft copy of this briefing in
meeting with them on June 9, 2010. We provided the same draft to the
Department of Defense (DOD) for comments. A summary of DOD's comments
with our evaluation are also attached (see enclosure II), as well as a
reprinted copy of DOD's written comments (see enclosure III).
We are sending copies of this report to the appropriate congressional
committees. We are also sending copies to the Secretary of Defense;
the Under Secretary of Defense for Acquisition, Technology and
Logistics; the Secretary of the Navy; and the Commandant of the Marine
Corps. This report will also be available at no charge on the GAO Web
site at [hyperlink, http://www.gao.gov].
Should you or your staff have any questions concerning this report,
please contact me at (202) 512-4841 or sullivanm@gao.gov. Contact
points for our Offices of Congressional Relations and Public Affairs
may be found on the last page of this report.
Key contributors to this report include Bruce Thomas, Assistant
Director; Jerry Clark, Analyst-in-Charge; Nicholas Alexander; Jenny
Hwang; and Robert Swierczek.
Signed by:
Michael J. Sullivan:
Director Acquisition and Sourcing Management:
Enclosures:
[End of section]
Enclosure I: Briefing Slides:
Expeditionary Fighting Vehicle (EFV) Program Faces Cost, Schedule, and
Performance Risks:
Briefing for the Subcommittee on Defense, Committee on Appropriations,
House of Representatives:
Contents:
* Introduction and Objectives;
* Background;
* Summary;
* Objective 1: Performance Risks;
* Objective 2: Schedule Risks;
* Objective 3: Cost Risks;
* The EFV Program Recognizes Continued Risks;
* Conclusions;
* Recommendations for Executive Action;
* Scope and Methodology.
Figure 1: Expeditionary Fighting Vehicle:
[Refer to DF for image: 4 photographs]
Source: EFV Program Office.
Introduction and Objectives:
Given the Expeditionary Fighting Vehicle (EFV) development's cost,
schedule, and less-than-expected performance during its initial
operational assessment and other issues, we were asked to review the
EFV program.
This briefing provides the results of our review. It examines
performance, schedule, and cost risks facing the program following the
program's 2007 Nunn-McCurdy breach and restructuring.[Footnote 1]
In conducting our review, we reviewed a range of program and other
Department of Defense (DOD) documents and data, interviewed program
and other officials, and observed EFV testing. More details on our
approach can be found on slides 23 and 24. We conducted our work from
June 2009 to July 2010 in accordance with generally accepted
government auditing standards.
Background:
The EFV is the successor to the Marine Corps' existing amphibious
assault vehicle (AAV), and is intended to transport troops from ships
offshore to their inland destinations at higher speeds and from
farther distances than the legacy AAV.
* Desire for ability to launch from farther offshore is driven by the
growing range of shore-to-ship threats.
Two variants are being developed: A troop carrier for 17 combat-
equipped Marines and a crew of three, and a command vehicle to manage
combat operations in the field.
The system has a reliability Key Performance Parameter requirement of
43.5 hours Mean Time Between Operational Mission Failure (MTBOMF).
Prior GAO Review:
In 2006 we reviewed the EFV program to determine how it was performing
against its business case and reported that the program faced
significant risks including that two key performance parameters”
reliability and interoperability”were not scheduled to be
demonstrated until Initial Operational Test and Evaluation (IOT&E) in
fiscal year 2010-4 years after low-rate initial production (LRIP) was
to have begun.[Footnote 2]
We recommended that the Secretary of Defense ensure that:
* EFV design, production, and mature software development capabilities
are demonstrated before the Milestone C decision to enter LRIP;
* adequate resources were available to cover such demonstration and
provide for risks; and;
* the business case for EFV still warrants continued investment.
DOD concurred with our recommendations.
Our body of work on best practices has shown that an executable
business case is one that provides demonstrated evidence that (1) the
warfighter's needs are valid and can best be met with the chosen
concept; and (2) the chosen concept can be developed and produced
within existing resources”that is, proven technologies, design
knowledge, adequate funding, people (including an adequate technical,
management, and acquisition workforce), and sufficient time to deliver
the product.
In 2006 and 2007, the EFV business case broke down.
* In 2006, the first operational assessment of the EFV (OA-1)
demonstrated significant reliability problems; in February 2007, the
EFV program reported a critical Nunn-McCurdy (10 U.S.C. § 2433) unit
cost breach.
The program was restructured in June 2007.
* System development was extended with a second System Development and
Demonstration (SDD) effort (SDD-2) to redesign the system to address
reliability problems identified in OA-1.
Summary:
Findings:
* Reliability growth approach and other performance issues present
significant challenges and risks.
* Current nature of development, test, and procurement schedules add
unnecessary risk to program.
* Costs could increase due to concurrency, redesign effort, and final
procurement quantity.
Conclusions: Program's history of cost growth, schedule slips and
performance failures and the current challenges (including changing
threats) raise the question of whether the business case for the EFV
program (in terms of cost, schedule, and performance) is still sound.
Recommendations:
* A reevaluation be performed to confirm the EFV remains a required
asset and the preferred approach.
If the EFV business case is confirmed,
* ensure that certain knowledge is gained prior to the start of OA-2,
and;
* add another OA to verify progress along an acceptable reliability
growth curve.
To ensure a more informed production decision and minimize investment
risk,
* delay the production decision until the added OA and a design
projected to provide the required reliability are completed, and;
* reduce LRIP quantities to the minimum necessary and document the
rationale for the quantity if it is in excess of 10 percent of the
total planned buy.
Objective 1: Performance Risks:
Reliability Is an Area of Significant Program Risk:
* Failed to achieve reliability goal during first operational
assessment (OA-1) in 2006.
- Anticipated 17 hours of MTBOMF reliability, but by Marine Corps Test
and Evaluation Agency's (MCOTEA) measure achieved 4.5 hours.
* Program initiated investment to address reliability problem.
- As part of the 2007 restructure the program hired engineers,
enlisted experts from the Army Materiel Systems Analysis Activity
(AMSAA), and set up a restructured development effort based on testing
redesigned components on existing prototypes while building seven new
prototypes for 2nd OA and future reliability growth efforts.
Post OA-1 Testing Has Demonstrated Improved Performance, but Issues
Remain:
* Limited operational tests in 2007 and 2008 using first SDD phase
prototypes demonstrated some improved performance, but also identified
continued performance issues and need for further redesigns.
- Efforts to address significant high-speed water steering issues
resulted in revised design that improved steering in single vehicle
testing. Further refinement needed to allow multi-vehicle formations.
- Significant ice buildup during cold weather testing interfered with
communication systems and severely limited visibility.
- Cold water testing did not demonstrate needed cold start
capabilities-”EFVs started in a heated (60 degree) building.
EFV May Not Be on a Growth Curve That Will Result in Its Achieving the
Required Reliability by IOT&E:
The program may be proceeding under an assumed reliability growth
curve that overestimates the rate with which increases in design
reliability will be realized.
* The complexity of EFV is now seen by program management, AMSAA, and
an Independent Expert Review Team as more analogous to helicopters
rather than legacy AAV or other ground systems on which the current
EFV projected reliability growth rate is based.
- AMSAA concedes that neither of the Army systems nor the AAV that
have been used as comparables involve the same level of complexity as
the EFV and its high-speed amphibian requirements.
The actual nature of the reliability growth rate may not become fully
apparent until IOT&E.
* Prior to IOT&E, program has only one OA (OA-2) scheduled for SDD-2
effort to demonstrate EFV is on reliability growth curve.
- Historically, demonstrated reliability in operational testing tends
to be lower than predicted based on developmental testing. As such,
the actual reliability growth curve can be better determined with more
than one OA.
Other Risks Might Prevent the Program from Achieving Required
Reliability by IOT&E:
The program may not be able to complete all required test hours on
schedule and under operational conditions.
* Results of OA-2 tests will impact nature and magnitude of subsequent
test events.
- Current estimates of test hours required are uncertain, and range
from 5,500 to 11,500 test hours.
Risk exists that the EFV program has not identified all reliability
degraders.
* Program assessed the gun system the main concern for low reliability
based on OA-1; however, the Command Variant (which does not have the
gun system) experienced low reliability also.
* Independent Navy review identified the hydraulic systems as a
significant contributor to reliability problems.
* DOT&E is concerned that lack of test time during OA-1 caused by the
frequent breakdowns means unknown vehicle deficiencies are likely to
remain.
The EFV program Has Worked to Provide Improved Protection Against
Improvised Explosive Devices (IED) and Other Threats, but Risks Remain:
Current design is projected to have a level of protection generally
comparable to the AAV with its armor appliqué.
New aluminum alloys and welding processes introduced on production
vehicles are expected to provide additional protection.
Some design changes to improve protection have been considered but
found not practical as they would impact the ability to perform as
required (e.g. use of a V-shaped hull).
One design change, adding underbody aluminum appliqué, is being
developed that could be added to the system when operating ashore”
however, it would impact amphibious capability while applied.
Other threats that the EFV might encounter on the battlefield will
require additional postproduction modifications.
Space and Weight Challenges:
* The EFV can carry 17 troops with 1 day's supply of provisions.
However, 3 days of provisions are considered standard load-out.
* Due to its internal configuration (large engine in middle of troop
compartment and gun turret), the EFV will have less logistics capacity
than legacy AAVs.
- Options considered that would address this loss in logistics
capability include a mixed fleet of EFVs and the legacy AAVs or the
Marine's Light Armor Vehicle (LAV).
* Difficulties meeting vehicle weight requirement resulted in:
- reduction in high-speed transit sea state capability from 3 ft to 2
ft significant wave height;
- proposed removal of integrated Nuclear, Biological, and Chemical
protection; and;
- reduction in required vehicle land range following amphibious
landing.
* Desire for ability to launch from farther offshore driven by range,
accuracy and proliferation of shore-to-ship threats.
- The range, accuracy, and proliferation of those threats have
continued to grow.
[End of Objective 1]
Objective 2: Schedule Risks:
The EFV Program's Schedule Involves Significant Overlap of Development
and Production Efforts:
* Program would make the decision to enter LRIP (4 lots planned to
acquire 96 vehicles at a cost of approximately $1.8 billion) based on
OA-2 test with requirement to demonstrate at least 50 percent of
required reliability.
* Program has maintained scheduled December 2011 production decision
(Milestone C) even though the actual start of production has slipped
by one year due to OSD delay of funding.
* Slipped production to start about five months before program
schedule indicates achievement of a design projected to meet threshold
reliability.
* Concurrency of development and production and plan to maintain
production decision date despite one year slip in production start
represent lost opportunities to learn more from tests and better
influence LRIP design prior to production and make more informed
production decision.
Figure: Illustration of Schedule Risks:
[Refer to PDF for image: illustration]
Source: GAO analysis of EFV Program Office date.
[End of figure]
Concurrent Schedule Risk Exacerbated by High Number of LRIP Vehicles
to Be Acquired:
* DOD Instruction 5000.02 states that LRIP quantities should be
minimized and requires documentation of a rationale for quantities
exceeding 10 percent of the total production planned at the start of
development.
* Planned LRIP quantity of 101 vehicles was just under 10 percent of
total planned production at the start of development in 2001, but
planned LRIP of 96 vehicles is now 17 percent of total planned
production of 574 vehicles.
* According to program officials, 59 LRIP vehicles are needed for
LFT&E, IOT&E, and to provide defined Initial Operating Capability.
* The acquisition of a large number of LRIP vehicles prior to
completion of IOT&E and the validation of reliability risks a
significant investment in the acquisition of vehicles that may prove
to be unsatisfactory and may require costly retrofits.
Development Delays Have Compressed Test Schedules and Increased
Program Risk:
To assure success in OA-2 AMSAA recommended that:
* sufficient amounts of test time need to be scheduled to surface
failure modes associated with quality and integration issues of the
new prototypes prior to OA-2, and;
* adequate calendar time be allowed so that corrective actions with
early failure may be physically implemented on the vehicles prior to
OA-2.
Developmental tests and operational assessments using limited upgrades
to SDD-1 prototypes have slipped due to late delivery of modified SDD-
1 vehicles.
* Testing of modified SDD-1 prototypes was to demonstrate
approximately 40 modifications addressing performance and reliability
shortfalls prior to OA-2.
Delivery of SDD-2 prototypes has slipped due to delays in redesign and
production efforts.
* SDD-2 prototypes will enter OA-2 (unless it is slipped) without
conducting all planned tests and with compressed development test time.
- Program management has stated that the delayed tests do not impact
the readiness of the EFV for OA-2.
A MCOTEA official recommended delaying OA-2 to:
* allow for further design maturation,
* address schedule compression from ongoing design and vehicle
delivery delays, and,
* allow time to conduct training for Marines involved in OA-2.
Upgrades Being Made to Current AAVs Could Reduce the Risks of Further
Delays in Fielding EFVs :
* Marine Corps plans to call for the AAV to continue to serve as its
primary platform until at least 2015 and remain in service until 2025.
* The 1,063 AAVs have been "Rebuilt to Standard" to improve
reliability, availability, and maintainability.
* New upgrade programs for AAVs are being considered to integrate
improvements in the areas of Survivability, C4I, and
Environment/Habitability, and improvements in its weapons system.
[End of Objective 2]
Objective 3: Cost Risks:
While the EFV program has experienced substantial historical cost
growth, the vast majority of this growth occurred prior to the
program's 2007 Nunn-McCurdy (10 U.S.C. § 2433) breach.
Table 1: EFV Cost and Quantity Changes:
Cost estimates (fiscal year 2011 dollars in millions):
Development:
December 2000 (Development start): $1,625.2;
President's Budget 2011: $3,781.4;
Percent Change: 132.7%.
Procurement:
December 2000 (Development start): $7,299.8;
President's Budget 2011: $10,549.4;
Percent Change: 44.5%.
Total program acquisition:
December 2000 (Development start): $9,018.7;
President's Budget 2011: $14,429.4;
Percent Change: 60.0%.
Unit cost estimates (fiscal year 2011 dollars in millions):
Program unit cost:
December 2000 (Development start): $8.8;
President's Budget 2011: $24.3;
Percent Change: 176.5%.
Overage procurement:
December 2000 (Development start): $7.2;
President's Budget 2011: $18.4;
Percent Change: 155.1%.
Quantities:
Development quantity:
December 2000 (Development start): 12;
President's Budget 2011: 19.
Procurement quantity:
December 2000 (Development start): 1,013;
President's Budget 2011: 574.
Planned annual full rate production rate:
December 2000 (Development start): 200;
President's Budget 2011: 55.
[End of table]
While Development and Procurement Costs Have Risen Only 2.5% and 3.5%
Respectively Since The Program Was Restructured in 2007, Risks Exist
That Could Drive Those Costs Higher:
* Increased funding is needed for material and labor to build SDD-2
prototypes and address significant software defect identified during
90 mile break-in run.
* Future tests will likely identify additional deficiencies that need
to be addressed.
* The current EFV acquisition strategy reflects increased procurement
risk as it calls for LRIP lots to be structured as cost plus incentive
fee/award fee procurements due to uncertainties inherent in the
concurrent testing and production programs--a change from the initial
fixed priced incentive strategy.
* Already identified needed design changes and additional design
changes that may be identified throughout the remainder of the SDD-2
effort could drive costs higher.
* In February 2010, the EFV program manager anticipated a reduction of
106 EFVs based on the elimination of Navy Marine Preposition Ships,
which was addressed in the QDR report.
- While the program manager feels this is now less likely, if such a
reduction occurs it would result in an acquisition program baseline
(APB) breach for program acquisition unit cost (PAUC) and could
potentially breach average unit procurement cost (APUC).
The EFV Program Recognizes Continued Risks:
Figure: matrix of likelihood versus consequence:
[Refer to PDF for image: illustration]
Performance:
* Risk: EFV LRIP design will not meet its weight requirement.
* Driver: Reliability growth initiatives will increase weight beyond
threshold requirement. Potential redefinition of Infantry load
requirements by MCCDC will increase embarked weight.
* Mitigation: Aggressive weight management throughout SDD-2 and LRIP.
PM working with MCCDC on load requirements.
Schedule:
* Risk: Schedule to MS C will not be maintained.
* Driver: Potential I&A and Acceptance testing delays along with a
tight Developmental Test III schedule may delay start of OA-2.
* Mitigation: Providing additional resources to vehicle build and
software development to recover schedule. Reviewing developmental test
plans to optimize vehicle usage.
Performance:
* Risk: Reliability KPP will not be met at IOT&E.
* Driver: Lower than expected reliability during previous OA. Design
changes flowing from Design For Reliability will not be significant
enough to provide needed improvement in reliability growth potential.
* Mitigation: Achieve KP-2 using SDD-2 vehicles.
Cost:
* Risk: Redesign of the EFV will result in increased unit costs and
increased O&S costs.
* Driver: Extension of development for redesign effort. Design For
Reliability effort may generate cost growth over that planned.
* Mitigation: Challenge contractor to meet specific development cost
targets through contract incentive fee provisions (no fee if
government projects APBA cost deviation).
Source: EFV Program Office.
[End of figure]
[End of Objective 3]
Conclusions:
The EFV program was restructured around a new business case in 2007
that included significant cost increases, cuts in quantities, and a
schedule delayed by several years, to address significant performance
problems”particularly regarding reliability”discovered during testing.
While cost growth since then has not been material, the EFV faces
risks that could reopen questions about its business case. Reliability
and other performance issues have not been resolved. The schedules for
completing development and testing are compressed and overlap with
production. Resolving known design problems, coupled with the
potential for discovering new ones in testing that overlaps
production, puts the current schedule for delivering EFVs at risk.
At the same time, substantial investments have been made to improve
and extend the life of the existing amphibious assault vehicle. In
light of these developments, this is the time to revisit the EFV
business case to see if it is likely to yield the result the Marine
Corps needs and can afford.
Recommendations for Executive Action:
In light of the current EFV schedule and reliability concerns,
changing threats, and developments in other capabilities, we recommend
that prior to the start of procurement the Secretary of Defense
reevaluate the EFV business case and confirm that the EFV remains a
required asset and is the preferred approach to providing the desired
amphibious assault capabilities.
If it is determined that the program should continue, we recommend
that the Secretary of Defense direct the Marine Corps to:
* Ensure that knowledge is gained from the following prior to the
start of OA-2:
- delivery and testing of Mod 100 prototype vehicles;
- delivery and developmental testing of SDD-2 prototypes and training
of OA-2 operational crews;
- completion of qualification testing and modifications of SDD-2
prototypes; and;
- availability of armor appliqué for OA-2 testing.
* Add another operational assessment to better verify that the EFV
effort is in fact progressing along a reliability growth curve that
should result in the EFV's demonstrating required reliability during
its initial operational test and evaluation.
* Delay the EFV production decision (Milestone C) until the
recommended additional operational assessment and a design projected
to provide the minimum required reliability are completed.
* Reduce LRIP quantities to the minimum necessary and if in excess of
10 percent of the current total planned buy have the acquisition
executive approve the rationale for the higher LRIP quantity.
Scope and Methodology:
To conduct our work, we:
* Reviewed laws, regulations, and relevant external reports (e.g.,
GAO's prior report on the EFV program).
* Reviewed EFV program documents including the program acquisition
strategy, program schedules, and test plans.
* Determined the current status of the legacy AAV by interviewing
program officials.
* Analyzed EFV survivability assessments and how EFV survivability
compares to the legacy AAV, the Mine Resistant Ambush Protected
(MRAP), and other vehicles against the evolving shore-to-ship missile
and IED threats, and actions being taken to improve EFV survivability
against these threats.
* Obtained and analyzed past, present, and projected data on original
baseline estimates and current forecast data from the program office
and independent defense entities and met with key stakeholders of the
EFV program to obtain information on contingency plans and their
impact on the program's cost, schedule, and performance.
* Observed live fire tests and analyzed reports of these events to
quantify the EFV's current protection from IEDs and understand its
potential survivability and performance.
* Visited the EFV production facility in Lima, Ohio.
* Met with program officials, the Program Executive Officer for Land
Systems, and officials of the Marine Corps Combat Development Command
(MCCDC) and from other defense organizations”the Marine Corps
Operational Test and Evaluation Agency (MCOTEA), the office of the
Department of Defense (DOD) Director for Operational Test and
Evaluation (DOT&E), and the U.S. Army Materiel Systems Analysis
Activity (AMSAA).
* For each of our objectives, we assessed the reliability of the data
we analyzed by reviewing existing documentation related to the data
sources and interviewing knowledgeable agency officials about the data
that we used. We found the data sufficiently reliable for the purposes
of this review.
* We conducted this performance audit from June 2009 to May 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.
[End of section]
Enclosure II: Agency Comments and Our Evaluation:
DOD provided us with written comments on a draft of this report. The
comments appear in enclosure III.
DOD concurred with our recommendation for a reevaluation of the EFV
business case prior to the start of procurement to confirm that the
EFV remains a required asset and the EFV acquisition is the preferred
approach to providing the desired amphibious assault capabilities.
They also concurred with our recommendation to ensure that certain
knowledge is gained prior to the start of the next operational
assessment, OA-2.
DOD partially concurred with our recommendation to add an additional
operational assessment after OA-2, if needed, stating that it was
premature at this time to direct an additional operational assessment.
Rather, it stated that results from near term tests including the
reliability testing to the operational mission profile and the OA-2
will be used to assess whether an additional operational test will be
needed. If needed, it stated that the current program schedule has two
limited post OA-2 operational events, the scope of one or both of
which can be modified to examine any significant areas of concern from
the OA-2.
DOD substantially agreed with our recommendations concerning delaying
the EFV Milestone C (MS C) production decision and reducing the
quantity of low-rate initial production (LRIP) vehicles to match the
current procurement total. DOD stated that it plans to better align
the MS C decision with the new production funding profile in which
Long Lead LRIP funding was delayed due to fiscal considerations as
part of the 2011 President's budget decision. We note that, based on
their position, the Milestone C decision should be delayed until at
least the beginning of fiscal 2013 to be consistent with the
production profile that existed prior to the Long Lead LRIP delay.
However, a delay of an additional few months would result in that
decision being made after program's defined knowledge point five --the
point when the program expects to project whether the minimum
reliability metric will be met during the initial operational test and
evaluation of the system.
In partially concurring with our recommendation to reduce the low-rate
initial production (LRIP) quantity, DOD stated it would evaluate the
LRIP quantities in support of the decision to enter LRIP and that any
changes would be based on quantities required to support testing and
to ramp up for full-rate production. We note however, that the LRIP
quantity is not consistent with lower full-rate annual production rate
that is currently planned. When the total production quantity for the
program was reduced from 1013 to 574 vehicles, the annual full-rate
production rate was reduced from 120 to 55 vehicles per year. However,
while the total acquisition and annual full rate productions
quantities were reduced, the LRIP quantity was not. Keeping the LRIP
quantity at almost 100 vehicles is not consistent with the lower
annual production rate now planned. Furthermore, lowering LRIP would
also avoid the risk of having to retrofit a larger number of
production articles later in order to make them work properly, should
that be needed.
[End of section]
Enclosure III: Agency Comments:
Office Of The Under Secretary Of Defense:
Acquisition, Technology And Logistics:
3000 Defense Pentagon
Washington, DC 20301-3000:
July 1, 2010:
Mr. Michael J. Sullivan:
Director, Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Sullivan:
This is the Department of Defense (DoD) response to the GAO Draft
Report, GAO-10-758R, "Defense Acquisitions: Expeditionary Fighting
Vehicle (EFV) Program Faces Cost, Schedule, and Performance Risks,"
dated May 27, 2010 (GAO Code 120842).
The report recommends the Secretary of Defense reevaluate the EFV
business case and confirm the EFV remains a required asset prior to
the start of procurement. The department concurs with this
recommendation. The decision to procure the EFV will be informed by an
assessment of the EFV acquisition strategy (business case) as well as
a review of the EFV capability to confirm that the EFV remains a
required asset and the EFV acquisition is the preferred approach to
providing the desired amphibious assault capabilities.
The Department concurs with the recommendation to ensure knowledge is
gained from the following, prior to the start of the next operational
assessment (OA-2): delivery and testing of Mod 100 prototype vehicles,
delivery and developmental testing of SDD-2 prototypes and training of
OA-2 operational crews, completion of qualification testing
and modifications of SDD-2 prototypes; and availability of armor
applique for OA-2 testing. The report also recommends adding an
additional operational assessment and recommends delaying the EFV
production decision (Milestone C) until that assessment and a design
projected to provide the minimum required reliability are completed.
The Department partially concurs with those recommendations. We
support delaying the Milestone C decision not in order to do an
additional Operational Assessment, but to better align the program
schedule with the program's new production funding profile.
The Department partially concurs with the final recommendation to
reduce the Low-Rate Initial Production (LRIP) quantities to the
minimum necessary. Any changes to the approved LRIP quantities will be
based on an updated evaluation of quantities required to support
testing and the ramp up for full-late production that will support the
Milestone C LRIP decision. Our comments on each recommendation are
enclosed.
It is unclear from the report format that the GAO analysts had the
opportunity to gain a full understanding of the EFV acquisition in
terms of system engineering and reliability. I have a significantly
different understanding of the effectiveness of the design and build
efforts that have been the focus of the EFV acquisition program since
the Nunn-McCurdy restructure in June 2007 than is apparent in the
report. That restructure initiated an extensive rework of the EFV
design with a focused emphasis on system engineering and design for
reliability. I would welcome the opportunity to discuss your team's
conclusions regarding status of the EFV development at the earliest
opportunity.
Sincerely,
Signed by:
David G. Ahern:
Director:
Portfolio Systems Acquisition:
Enclosure: As stated:
[End of letter]
GAO Draft Report Dated May 27, 2010:
GAO-10-758R (GAO CODE 120842):
"Defense Acquisitions: Expeditionary Fighting Vehicle (EFV) Program
Faces Cost, Schedule, And Performance Risks":
Department Of Defense Comments To The GAO Recommendations:
Recommendation 1: The GAO recommends that prior to the start of
procurement that the Secretary of Defense reevaluate the Expeditionary
Fighting Vehicle (EFV) business case and confirm that the EFV remains
a required asset and is the preferred approach to providing amphibious
assault capabilities desired.
D©D Response: Concur. The decision to procure the EFV will be informed
by an assessment of the EFV acquisition strategy (business case) as
well as a review of the EFV capability to confirm that the EFV remains
a required asset and the EFV acquisition is the preferred approach to
providing the desired amphibious assault capabilities.
Recommendation 2: If it is determined that the program should
continue, we recommend that the Secretary of Defense direct the Marine
Corps to ensure that knowledge is gained from the following prior to
the start of OA-2:
a) delivery and testing of the Mod 100 prototype vehicles;
b) delivery and developmental testing of SDD-2 prototypes and training
of OA-2 operational crews;
c) completion of qualification testing and modifications of SDD-2
prototypes; and;
d) availability of armor applique for OA-2 testing.
DoD Response: Concur.
Recommendation 3: if it is determined that the program should
continue, the GAO recommends that the Secretary of Defense add another
operational assessment to better verify that the EFV effort is in fact
progressing along a reliability growth curve that should result in the
EFV's demonstrating required reliability during its initial
operational test and evaluation.
DoD Response: Partially concur. It is premature at this time to direct
an additional operational assessment, however the current Test and
Evaluation Master Plan provides for additional opportunities for
subsequent operational assessments. When the program was restructured
in 2007, operational and developmental testing events were laid out to
support confirming the reliability growth needed for a successful
IOT&E. Results from the near-term test events, including the
reliability testing to the operational mission profile and the OA-2
will help inform us if additional operational testing is required. If
OA-2 findings indicate that additional testing is needed; there are
two post-OA-2 operational assessments specified in the approved Test
and Evaluation Master Plan that can be used for this purpose. Although
these two operational assessments are currently intended to examine
SOD-2 vehicle performance in hot and cold environments, respectively,
the scope of the one or both can be modified to examine any
significant areas of concern from the OA-2, including vehicle
reliability.
Recommendation 4: If it is determined that the program should
continue, the GAO recommends that the Secretary of Defense to delay
the EFV production decision (Milestone C) until the recommended
additional operational assessment and a design projected to provide
the minimum required reliability are completed.
DoD Response: Partially concur. The EFV Program continues to
successfully execute to the schedule established as a result of the
Nunn-McCurdy program restructure, and will continue to do so through
the Operational Assessment (OA-2). However, we support delaying the MS
C Decision not in order to do an additional Operational Assessment,
but to better align the program schedule with the program's new
production funding profile which was modified due to fiscal
considerations as part of the 2011 President's Budget submission. We
plan to further evaluate program progress against the current MS C
exit criteria at the LR1P Long Lead DAB, which will be similarly
delayed to better align it with the new President's Budget funding
profile. We do not concur with the need with the need for an
additional operational assessment.
Recommendation 5: If it is determined that the program should
continue, the GAO recommends that the Secretary of Defense to reduce
the low-rate initial production (LRIP) quantities to the minimum
necessary and if in excess of 10 percent of the current total planned
buy have the acquisition executive approve the rationale for the
higher LRIP quantity.
DoD Response: Partially concur. Any changes (reductions or increases)
to the approved LRIP quantities by the acquisition executive will be
based on the evaluation of the LRIP quantities needed to support
testing and an orderly ramp to full-rate production quantities. This
evaluation will support the MS C decision.
[End of section]
Footnotes:
[1] 10 U.S.C. § 2433 establishes the requirement for DOD to prepare
unit cost reports on major defense acquisition programs. If a program
exceeds cost growth thresholds specified in the law, known as a Nunn-
McCurdy breach, DOD is required to report the breaches to Congress and
in certain circumstances DOD must reassess the program and submit a
certification to Congress in order to continue the program, in
accordance with 10 U.S.C. § 2433a.
[2] GAO, Defense Acquisitions: The Expeditionary Fighting Vehicle
Encountered Difficulties in Design Demonstration and Faces Future
Risks, [hyperlink, http://www.gao.gov/products/GA0-06-349]
(Washington, D.C.: May 1, 2006).
[End of section]
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