Background

According to USMC officials, the AAV has become increasingly difficult to  operate, maintain, and sustain. As weapons technology and threat  capabilities have evolved over the past four decades, the AAV is viewed  as having capability limitations in the areas of water speed and land  mobility, lethality, protection, and network capability. The AAV is a self- deployed tracked (non-wheeled) vehicle with three variants, each  describing its intended function—Personnel, Command, and Recovery.  The AAV has a water speed of approximately six knots, and needs to be  deployed from within 7.4 nautical miles of the shore. This factor may  represent a significant survivability issue not only for the vehicle’s  occupants, but also for naval amphibious forces that must move closer to  potential threats on shore to support the vehicle. Over time, emerging  threats—such as next generation improvised explosive devices—have  changed the performance requirements for a vehicle that moves from  ship to shore.
According to DOD, the need to modernize USMC’s capability of  transitioning from ship to shore is essential. In response to the need for  new and better capabilities, the USMC began development of the EFV in  2000. We reported on the EFV program in 2006 and 2010. The EFV was  to travel at higher water speeds—around 20 knots—which would have  allowed transporting ships to launch the EFV further from shore than the  AAVs it was to replace. However, following the expenditure of $3.7 billion  between fiscal years 1995 and 2011 and a 2007 breach of a statutory  cost thresholdcanceled by DOD due to affordability concerns. DOD authorized the  USMC to seek a new solution, emphasizing the need for cost- effectiveness and requiring the establishment of cost targets. The USMC  was granted flexibility in tailoring its acquisition approach to achieve those  goals.   that program was restructured and subsequently, in 2011,  In 2011, the USMC completed initial acquisition documentation providing  the performance requirements of a new replacement amphibious vehicle  called the ACV. The ACV would be self-deploying with a water speed of 8  to 12 knots—permitting deployment beyond visual range of the shore— and would provide for sustained operations on shore with improved troop  protection. The ACV would not, however, be required to achieve high  water speed. An analysis of alternatives was completed for the ACV in  the summer of 2012. This analysis identified two potential solutions for  the ACV performance requirements. However, USMC leadership then  requested that an affordability analysis be completed to explore the  technical feasibility of integrating high water speed into the development  of the ACV. According to DOD officials, the analysis indicated that  achieving high water speed was technically possible but required  unacceptable tradeoffs as the program attempted to balance vehicle  weight, capabilities, and cost. Meanwhile, the USMC retained a  requirement to provide protected land mobility in response to the threat of  improvised explosive devices—a requirement the AAV could not meet  due to its underbody design. In 2014 we reported that, according to  program officials, the program office was in the process of revising its  ACV acquisition approach based on this affordability analysis. In addition,  DOD officials reported that the 2012 ACV analysis of alternatives might  need to be updated or replaced based on potential changes to required  capabilities.

	ACV Acquisition Approach Prioritizes Protected Land Mobility over Amphibious Capabilities

Since we reported on the ACV acquisition in 2014, the USMC has  adopted a new ACV acquisition approach consisting of three concurrent  efforts that emphasize the requirement for protected land mobility in the  near term and seek improved amphibious capabilities over time. This  approach is a significant change from the more advanced amphibious  capabilities sought for the ACV in 2011. According to USMC officials, the  first effort is the AAV Survivability Upgrade Program that plans to upgrade  legacy AAV protection and mobility. The second effort subdivides into two  increments, ACV 1.1 and 1.2. The third effort, referred to as ACV 2.0,  focuses on technology exploration to attain high water speed capability.  According to USMC officials, this acquisition approach was selected  based on several factors, including (1) recognition that the ACV would  spend much of its operating time on land, (2) shortfalls in the AAV’s ability  to meet protected land mobility requirements once on shore, and (3)  technical and affordability challenges that preclude the development of a  high water speed vehicle in the near term. Figure 1 provides information  on these three concurrent efforts.

		AAV Survivability Upgrade Program Intends to Mitigate Current AAV Fleet Shortfalls in Force Protection

The AAV Survivability Upgrade Program expects to upgrade survivability  and mobility capabilities for a portion of the existing AAV fleet, thereby  providing increased protection against threats such as improvised  explosive devices. The AAV is expected to remain in operation until  2035. According to DOD officials, planned upgrades include the addition  of underbelly armor, blast resistant seats, external fuel tanks and other  modifications, such as suspension upgrades, intended to maintain  mobility given the weight of extra armor. The upgraded AAVs expect to  retain the six knot water speed of the legacy AAV. The AAV Survivability  Upgrade Program plans to upgrade 392 of the fleet’s 1058 AAVs. The  upgrades will be made to the AAV Personnel variant—the version of the  AAV used to transport infantry. The estimated average procurement unit  cost for the upgrades—the total procurement cost divided by the number  of units to be procured—is $1.7 million (fiscal year 2014 dollars). The  program has passed Milestone B with anticipated initial operational  capability—generally attained when some units in the force structure have  received the upgraded vehicles and have the ability to employ and  maintain it—in fiscal year 2019.

		ACV Acquisition Emphasizes Protected Land Mobility in the Near Term and Improved Amphibious Capabilities in the Second Iteration

The first increment of ACV development—ACV 1.1—is a wheeled vehicle  that is intended to provide enhanced protected land mobility and limited  amphibious capability. ACV 1.1 is a continuation of the previously  suspended Marine Personnel Carrier program.speed of five knots, ACV 1.1 intends to offer swim speeds comparable to  the AAV and is expected to swim from shore to shore, crossing obstacles  such as rivers, rather than from ship to shore. The ACV 1.1 is not  planning to have a self-deployment capability and as a result, will rely on  the assistance of connectors to move from ship to shore. The vehicle  expects to feature a troop-carrying capacity of 10 infantry, with the  objective of expanding this capacity to 13 infantry. According to program  officials, the ACV acquisition will be informed by both a 2008 analysis of  alternatives done for the Marine Personnel Carrier program as well as the  2012 ACV analysis of alternatives. USMC has recently completed an   At an expected water  update to these two analyses—the 2014 ACV analysis of alternatives— with a focus on cost and affordability that, according to DOD officials,  needed to be updated to reflect the current approach. The ACV 1.1 will  likely be used concurrently with upgraded AAVs that are expected to  provide amphibious capabilities that complement the enhanced protected  land mobility sought by ACV 1.1. Table 1 provides a summary of selected  capabilities of the legacy AAV, upgraded AAV and ACV 1.1.
The 2012 analysis of alternatives done to support the ACV acquisition  considered a vehicle based on the Marine Personnel Carrier, with  capabilities similar to the ACV 1.1, and concluded that the vehicle was not  an effective alternative to fill the identified ACV water mobility capability  gaps. The analysis found that the vehicle performed well in land-based  scenarios, but as a non-amphibious armored personnel carrier, did not  perform as well in amphibious assault scenarios. In addition, the vehicle’s  reliance on a connector craft to travel from ship to shore would extend the  time necessary to complete force landings and achieve objectives in  amphibious scenarios. Since a connector craft, such as the ship to shore  connector currently being developed by the Navy (see figure 2), would  have to transport these vehicles as well as personnel and other vehicles  and equipment, it would also increase the number of connector loads and  connector crew time. The analysis found that the increased use of  connectors would result in a significant delay relative to self-deploying  alternatives. Finally, the vehicle had less capacity than the other vehicles  assessed in the analysis. The vehicle held nine infantry—similar to ACV  1.1’s threshold capacity of 10—while the other assessed vehicles held 17.  According to the analysis, reduced capacity would require a higher  number of vehicles to transport an infantry battalion. The larger number of  vehicles would then require additional space on transportation vessels,  potentially displacing other cargo and impacting logistical support and  manning, as well as increasing the number of these vehicles required in  the field. However, according to the analysis, the resulting vehicle  dispersion would reduce infantry exposure to improvised explosive  devices and increase the number of vehicles available to support a  counterattack.
The USMC plans to acquire 204 ACV 1.1s and anticipates achieving  initial operational capability in fiscal year 2020. According to program  officials, the current estimated average procurement unit cost is between  $3.8 million and $7.2 million (fiscal year 2014 dollars). The ACV 1.1 effort  will enter the acquisition process at Milestone B, currently scheduled for  the first quarter of fiscal year 2016. According to DOD officials, the  planned use of existing, non-developmental technologies in ACV 1.1  reduces acquisition risk and facilitated the decision to enter the  acquisition process at Milestone B with the goal of fielding a solution more  quickly. The program office issued a Request for Proposal in the second  quarter of fiscal year 2015 and plans to award contracts to two vendors at  Milestone B and require each vendor to provide 16 prototype vehicles.  DOD officials stated that the large number of prototypes will facilitate and  expedite the testing process, allowing multiple tests to take place  concurrently, and allowing testing to continue in the event of a prototype  breakdown. They indicated that the USMC plans to begin testing the ACV  1.1’s swim capability and other factors in fiscal year 2017. The two  contracts are to run through the engineering and manufacturing  development phase of the acquisition process, at which point USMC  anticipates potentially down selecting to a single contractor. Figure 3  provides a notional drawing of the ACV 1.1.
The second increment of ACV development—ACV 1.2—aims to improve  amphibious capability. Program officials anticipate that ACV 1.2 will  demonstrate amphibious capability that matches the legacy AAV,  including the ability to self-deploy and swim to shore without the  assistance of connector craft. According to DOD officials, ACV 1.2 will be  based on ACV 1.1 testing and some 1.1s will be retrofitted with ACV 1.2  modifications. The USMC plans to acquire approximately 490 ACV 1.2s  with initial operational capability scheduled for fiscal year 2023. In  addition, the USMC plans to complete fielding of all ACV 1.1s and 1.2s,  as well as the upgraded AAVs between the years 2026 and 2028.
According to DOD officials, the changes made for the ACV 1.2 increment  may be done through improvements within the same program, or ACV 1.2  may be a separate program from ACV 1.1. This determination has not yet  been made. In previous reports, we have found that managing weapon  systems that are being developed in increments as separate acquisition  programs with their own cost and schedule baselines facilitates  management and testing and helps avoid unrealistic cost estimates. This  practice can result in more realistic long-range investment funding and  more effective resource allocation.

		Technology Exploration Is Underway for High Water Speed Capability for Use in a Possible ACV 2.0

The third effort, referred to as ACV 2.0, focuses on technology exploration  to attain high water speed capability. According to DOD, high water speed  remains a critical capability. Technology exploration efforts are pursuing  design options that may enable high water speed capability without  accruing unacceptable trade-offs in other capabilities, cost or schedule.  According to USMC officials, vehicle weight is the key barrier to achieving  high water speed. Current technology exploration efforts include some  technology from the canceled EFV program and focus primarily on  various approaches addressing this weight challenge, including improving  the technology that lifts the vehicle body onto plane and reducing the  vehicle weight. According to DOD officials, the results of this high water  speed research, knowledge gained from fielding the ACV 1.1 and 1.2,  and information from the naval surface connector strategy are expected  to inform the development of a replacement for the AAV fleet. According  to officials, ACV 2.0 is a conceptual placeholder for that future  replacement decision, which is expected to occur in the mid-2020s. High  water speed capability may ultimately be achieved through an amphibious  vehicle or a connector craft that will provide high water speed for vehicles  without that capability.

	Upcoming Activities Will Permit Further Analysis to Determine Use of Best Practices

Our prior work on best practices has found that successful programs take  steps to gather knowledge that confirms that their technologies are  mature, their designs stable, and their production processes are in  control.the right knowledge at the right time, enabling leadership to make  informed decisions about when and how best to move into various  acquisition phases. Successful product developers ensure a high level of  knowledge is achieved at key junctures in development, characterized as   The knowledge-based acquisition framework involves achieving  knowledge points. During the initial stages of an acquisition process,  referred to as Knowledge Point 1, best practices recommend ensuring a  match between resources and requirements. Achieving a high level of  technology maturity and preliminary system design backed by robust  systems engineering is an important indicator of whether this match has  been made. This means that the technologies needed to meet essential  product requirements have been demonstrated to work in their intended  environment. In addition, the developer has completed a preliminary  design of the product that shows the design is feasible. Figure 4 further  describes the three knowledge points and identifies the ACV 1.1  acquisition’s status within the DOD acquisition process.
The ACV 1.1 acquisition has yet to reach the first knowledge point,  limiting our ability to determine how fully the acquisition will adopt the best  practices knowledge-based framework. However, our review of the  planned acquisition approach for ACV 1.1 has identified both the use of— and a deviation from—best practices.
The ACV acquisition’s incremental approach to development is  consistent with best practices. We have previously reported that  adopting a more evolutionary, incremental strategy that delivers  proven and operationally suitable capabilities when available—but  acknowledges that more time is needed to deliver the full  capabilities—can enable the capture of design and manufacturing  knowledge as well as increase the likelihood of success in providing  timely and affordable capability. The ACV acquisition demonstrates  this evolutionary approach, seeking smaller increases in capability  with improvements planned over time. In contrast, the canceled EFV  program sought significant increases in capability in a single  development process. The adoption of an incremental approach has  helped the program progress towards striking the balance between  customer needs and resources (e.g., technologies, cost and  schedule) that is sought at Knowledge Point 1. The ACV program has  demonstrated a willingness to trade customer needs—such as high  water speed in the near term—and utilize mature technologies in  order to identify an affordable solution that is available in the  necessary time frames.
The ACV acquisition’s pursuit of high water speed capabilities via  technology exploration is also aligned with best practices. In previous  reports, we have found that DOD should separate technology  development from product development, and fully develop  technologies before introducing them into the design of a system. A science and technology environment is more conducive to the ups  and downs normally associated with the discovery process. This  affords the opportunity to gain significant knowledge before  committing to product development and has helped companies  reduce costs and time from product launch to fielding.
The ACV 1.1 acquisition is planning to hold its preliminary design  review 90 days after the Milestone B decision. According to program  officials, the program office is seeking a waiver to permit this  approach. Best practices recommend that the preliminary design  review is held prior to Milestone B to increase the knowledge available  to the agency at development start. In 2012, we reported that  beginning product development and setting the acquisition baseline  before completing this review increases technical risks and the  possibility of cost growth by committing to product development with  less technical knowledge than recommended by acquisition best  practices and without ensuring that requirements are defined,  feasible, and achievable within cost and schedule constraints.  According to DOD officials, the review will be held after Milestone B  because no contracts will have been awarded prior to that time. In  addition, they stated that the use of non-developmental technology  will reduce acquisition risks and result in a high level of knowledge  prior to the Milestone B decision. However, it is the program office’s  intent that the engineering and manufacturing development phase be  contracted under a hybrid contract that includes cost-plus-fixed-fee  elements. Cost-plus-fixed-fee contracts are appropriate when  uncertainties in requirements or contract performance do not permit  the use of fixed-price contract types. These contracts are considered  high risk for the government because of the potential for cost  escalation. The selection of this contract type may denote some  program risk; however, we will not be able to determine the extent of  the risk and its potential impacts to the acquisition process until further  information is available.
As the acquisition moves forward, we will continue to monitor the ACV  effort by assessing its use of acquisition best practices.
According to program officials, a number of program documents,  including a final report on the recent ACV 2014 analysis of alternatives  update, were finalized to support a key program meeting that took place  in March 2015. We have identified a number of best practices for the  development of analyses of alternatives. These analyses can vary in  quality, which can affect how they help position a program for success. In  September 2009, we concluded that many analyses of alternatives do not  effectively consider a broad range of alternatives for addressing a need or  assess technical and other risks associated with each alternative. We  have begun preliminary analysis on the existing 2008 Marine Personnel  Carrier and 2012 ACV analyses of alternatives, including assessment of  the analyses against our previously identified best practices and cost   We have recently received the final report, the 2014  estimation criteria.ACV analysis of alternatives, reflecting how the prior analyses have been  updated. Other documents completed recently include an acquisition  strategy, results of a system requirements review, and the finalized  document providing key acquisition requirements. These documents will  permit us to conduct a more robust analysis and assessment of the ACV  acquisition’s use of best practices.

	Agency Comments and Our Evaluation

DOD provided written comments on a draft of this report. The comments  are reprinted in appendix I.
In commenting on a draft of this report, DOD stated that it believes its  efforts on this program are aligned with our best practices and it will  continue to monitor the program and ensure that mitigations are in place  to address potential risk areas. Given that we have not been able to  conduct a robust analysis of key documents, including the analysis of  alternatives, we cannot yet assess how well the program is aligned with  best practices. DOD also provided technical comments that were  incorporated, where appropriate.
We are sending copies of this report to interested congressional  committees; 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 also is available at no  charge on GAO’s website at http://www.gao.gov.
Should you or your staff have any questions on the matters covered in  this report, please contact me at (202) 512-4841 or makm@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 are listed in appendix II.

Appendix I: Comments from the Department of Defense

Appendix II: GAO Contact and Staff Acknowledgments

	GAO Contact

	Staff Acknowledgements

Key contributors to this report were Bruce H. Thomas, Assistant Director;  Betsy Gregory-Hosler, analyst-in-charge; David Richards; Marie Ahearn;  Brian Bothwell; Susan Ditto; Jennifer Echard; Dani Greene; Jennifer  Leotta; Kenneth Patton; Karen Richey; and Ozzy Trevino.

Summary:
Why GAO Did This Study

The National Defense Authorization Act for Fiscal Year 2014 mandated GAO to review and report annually to the congressional defense committees on the ACV program until 2018. In April 2014 GAO produced the first of the mandated reports describing the status of the Marine Corps' efforts to initiate an ACV program. This second mandated report discusses (1) the current ACV acquisition approach and (2) how the ACV acquisition approach compares to acquisition management best practices.
To conduct this work, GAO reviewed program documentation and other materials for the ACV acquisition, including Acquisition Decision Memorandums, relevant analyses of alternatives, and a briefing on the most recent analysis of alternatives update. GAO also reviewed documentation and budget information for the AAV Survivability Upgrade Program and the Marine Personnel Carrier program. GAO identified acquisition best practices based on its prior body of work in that area and DOD guidance. GAO also interviewed program and agency officials.

What GAO Found

Since GAO reported on the Amphibious Combat Vehicle (ACV) acquisition in 2014, the Marine Corps has adopted a new ACV acquisition approach consisting of three concurrent efforts that emphasize the requirement for improved protection from threats such as improvised explosive devices in the near term with improved amphibious capabilities over time. The first of the three efforts, the Assault Amphibious Vehicle (AAV) Survivability Upgrade Program, plans to upgrade legacy AAV protection and mobility. The second effort subdivides into two increments, ACV 1.1 and ACV 1.2. ACV 1.1 is a continuation of a previously suspended Marine Personnel Carrier program that intends to provide enhanced protected land mobility and limited amphibious capability. Testing on the ACV 1.1 will inform the development of the ACV 1.2, with the intent that the ACV 1.2 will demonstrate improved amphibious capability and at a minimum, achieve parity with the legacy AAV. The third effort, referred to as ACV 2.0, focuses on technology exploration to attain high water speed capability. Results of this high water speed research are intended to further inform the development of a replacement for the AAV fleet.
GAO's analysis of the ACV 1.1 planned acquisition approach has demonstrated the Marine Corps’ use of, and deviation from, best practices; however, ACV 1.1 is still in the initial stages of the acquisition process, limiting our ability to determine how fully this approach will adopt a best practices knowledge-based framework. GAO’s prior work on best practices has found that successful programs take steps to gather knowledge that confirms that their technologies are mature, their designs stable, and their production processes are in control. The knowledge-based acquisition framework involves achieving the right knowledge at the right time, enabling leadership to make informed decisions about when and how best to move into various acquisition phases. Specifically, the Marine Corps' incremental approach for the ACV acquisition is consistent with best practices and can increase the likelihood of success. The adoption of an incremental approach has helped the program progress towards achieving the balance—that is sought in accordance with best practices—between customer needs and resources (e.g., technologies, cost, and schedule). In addition, the ACV acquisition’s pursuit of high water speed capabilities via technology exploration is also aligned with best practices. In previous reports, GAO has found that DOD should separate technology development from product development, and fully develop technologies before introducing them into the design of a system. In contrast, the program plans to hold the ACV 1.1 preliminary design review after Milestone B—the decision point allowing entry into system development—which is a deviation from best practices that can increase technical risk. According to DOD officials, this approach was selected because no contracts will have been awarded prior to Milestone B and the use of non-developmental technology will reduce acquisition risks and result in a high level of knowledge prior to the Milestone B decision. The recent completion of key documents—including an updated analysis of alternatives—will permit a more robust analysis and assessment of the ACV program’s use of additional acquisition best practices.

What GAO Recommends

GAO is not making recommendations in this report. In commenting on a draft of this report, DOD stated that it believes its efforts on this program are aligned with GAO's best practices and it will continue to monitor the program and ensure that mitigations are in place to address potential risk areas. In GAO's upcoming review, additional analysis will assess how well the program is aligned with best practices.