Background

The Army, which has over 250,000 TWVs, generally categorizes the  vehicles as heavy, medium, and light. Heavy TWVs represent about            10 percent of the Army’s TWV fleet and include vehicles like the Heavy  Equipment Transporter System, which is used to transport main battle  tanks and other heavy equipment. Medium TWVs represent about              40 percent of the Army’s TWV fleet and include vehicles for hauling cargo  and for launch and support platforms’ weapon systems such as the High- Mobility Artillery Rocket System. Light TWVs represent about 50 percent  of the Army’s TWV fleet and currently consist of the HMMWV family of  vehicles, which began production in 1983. The Army’s HMMWV program  also provides vehicles to satisfy Marine Corps and Air Force requirements.
The HMMWV has gone through various upgrades during its nearly 30-year  history and has served as DOD’s primary wheeled vehicle for shelter  carriers, command and control systems, light cargo and troop carriers,  weapons carriers, and ambulances. This report addresses issues related to  light tactical vehicles and the M-ATV. The M-ATV is not considered a light  vehicle by its weight, but it is being used for functions typically done by  light tactical vehicles.
In February 2005, Marine Corps combatant commanders identified an  urgent operational need for armored tactical vehicles to increase crew  protection and mobility of Marines operating in hazardous fire areas  against improvised explosive devices, rocket-propelled grenades, and  small arms fire. In response, the Marine Corps identified the solution as  the up-armored HMMWV. Over the next 18 months, however, combatant  commanders continued to call for more robust mine-protected vehicles.  The solution to the requirement was the MRAP family of vehicles.
MRAPs provide warfighters with platforms capable of mitigating the  effects of improvised explosive devices, underbody mines, and small arms  fire threats, which are currently the greatest casualty producers overseas.  The MRAP family of vehicles consists of four categories: Category I for  urban combat missions; Category II for convoy escort, troop transport,  explosive ordinance disposal, and ambulance missions; Category III for  clearing mines and improvised explosive devices; and the M-ATV for small- unit combat and tactical operations in complex and highly restricted rural,  mountainous, and urban areas. The current M-ATV requirement is to  rapidly acquire 8,104 vehicles for use primarily in Afghanistan. Delivery  orders for production were awarded to a single contractor, Oshkosh  Defense. Like the Category I, II, and III variants, vehicles are prepared to  accommodate government-furnished equipment during production at  Oshkosh with government-furnished equipment integrated at the Space  and Naval Warfare Systems Command.
In 2007, the Army reported that there were approximately  120,000 HMMWVs in use by the services. The Army also reported that the  need for additional armor for current operations, among other things, had  pushed the use of the HMMWV far beyond its original purpose and  capabilities. The effect of this employment, according to the Army, led to  an imbalance in protection, payload, and performance; specifically,    protection: light vehicles required the adoption of supplemental armor;    payload: the supplemental armor reduced the vehicles’ useable payload  (including warfighters, mission equipment, and cargo); and    performance: the supplemental armor degraded mobility, reliability, and  maintainability, decreased fuel efficiency, decreased vehicle stability and  safety, and decreased operational availability.
The objective of the JLTV program is to address the HMMWV fleet’s  protection, payload, and performance imbalance within a transportable  vehicle. JLTV is expected to provide comparable protection to the MRAP  vehicles in most cases—the major exception being underbody  protection—but with better payload and performance.
To guide the future investment decisions related to JLTV and the M-ATV,  as well as other TWVs, the Army and Marine Corps have prepared  investment strategies, which enable the services to synchronize their  respective TWV programs to maximize the use of limited funding. The  Army’s most recent strategy was prepared in October 2009 and will be  updated later this year. The Marine Corps prepared a TWV strategy in  August 2008; an updated strategy is scheduled for release the end of this  year. In 2008, the Army and Marine Corps also prepared a joint TWV  investment strategy at the request of the Office of Management and  Budget. DOD is also committed to preparing a comprehensive and unified  strategy and implementation plan for making sound investment decisions  for TWVs.
In 2007, at the request of the Subcommittees, we were asked to assess the  extent to which DOD had developed a DOD-wide TWV investment  strategy. We found that DOD did not have such a strategy. To improve  DOD’s ability to plan for and manage the development, production, and  sustainment of TWVs across the department, we recommended that the  Secretary of Defense develop a DOD-wide strategy and implementation  plan for making sound investment decisions for TWVs. DOD concurred  with our recommendation, stating the following.
Upon completion of the ongoing TWV studies by the Army and Marine  Corps, and the Analysis of Alternatives for Joint Light Tactical Vehicles,  DOD will unite these efforts into a comprehensive strategy that dovetails  with the services’ equipping strategies.
DOD will endeavor to align requirements, resources, and acquisition  strategies into a unified plan for TWV investment decisions.

	DOD’s Rapid Acquisition of M-ATVs Is Ahead of Schedule and No Major Performance Issues Have Been Identified to Date

DOD has acquired and fielded the M-ATV as quickly as possible in  response to an urgent need. This acquisition was successful on a number  of fronts. Multiple vendors responded to the urgency; in June 2009 the  government awarded the first production delivery order to a single  manufacturer—Oshkosh Defense—and the contractor has consistently  delivered vehicles well ahead of schedule. The cost to acquire and field  8,104 M-ATVs is now estimated to be $12.5 billion. As it did for MRAP,  DOD chose to begin fielding the M-ATV before it had completed  developmental and operational testing due to the urgency of the  requirement. Before fielding began in December 2009, however, ballistic  testing did establish that the vehicles met the requirements for crew  protection and vehicle survivability and automotive testing confirmed that  the vehicles were generally safe to operate. No major issues have been  identified in subsequent testing and the vehicles appear to be performing  well in their operational environments.

		DOD’s Acquisition Strategy Enabled Rapid Fielding

DOD expedited many M-ATV acquisition decisions because of the urgent  nature of the requirement. In September 2008, combatant commanders  identified a need for a lighter and more agile version of the MRAP—one  that offered at least the same protection as the MRAP but was better  suited to the conditions in Afghanistan. In quick succession, the Joint Staff  approved the requirement; the Under Secretary of Defense for Acquisition,  Technology, and Logistics directed the Navy to procure and test vehicles  against the requirement; and the Army released a request for proposal. In  early 2009, the Army examined proposals, armor samples, and production  representative vehicles and in April awarded fixed-price, indefinite  delivery, indefinite quantity contracts to five manufacturers for three  additional vehicles for mobility and ballistic testing.
In seeking sources for the vehicles, the government placed a strong  emphasis on a desire for mature, nondevelopmental vehicles and  contractor support for an accelerated program schedule—one of the  lessons learned from the MRAP acquisition—according to the program  manager. Fully functional prototypes had to be available quickly for test  and evaluation. Of the evaluation criteria for awarding a contract, delivery  schedule and production capability were second only to the technical  performance requirement to provide MRAP-like protection. The first  vehicles to be delivered were designated for testing that was necessary to  ensure that vehicles were safe to operate before being operated by users.  The next priority was to begin delivering vehicles for home station  training, which was necessary before the vehicles could be fielded to  users. Delivery of vehicles for theater use began shortly after and took  place concurrently with delivery and fielding of vehicles for home station  training.
The government reserved the right to place production orders with  multiple contractors as it had for the MRAP, but elected to issue a delivery  order for production vehicles to a single contractor—Oshkosh Defense— after the vehicles completed the additional tests in June 2009. The  contractor delivered the first 46 vehicles the next month and the first  vehicles arrived in theater in December 2009, about 15 months after  combatant commanders identified the need. By December, Oshkosh had  ramped up delivery to its maximum of 1,000 vehicles per month and had  delivered 300 more vehicles than planned in the first 6 months of the  effort. The contractor consistently exceeded planned deliveries and has  begun to ramp production back down, with planned deliveries ending in  November 2010.
As of late August 2010, 7,488 vehicles had been delivered to the  government and 4,379 vehicles had been fielded to units in Afghanistan.  Fielding is expected to be completed in December 2010. DOD took several  actions to expedite fielding, including beginning the process of installing  vehicle mission equipment during the manufacturing process—a lesson  learned from the MRAP production. On MRAP vehicles, some work had to  be done on the vehicles after production and before integration could  begin, which took time. For example, wiring on the vehicles had to be  reconfigured first to accommodate the mission equipment. On the M-ATV,  the wiring was configured on the manufacturing line. Figure 1 compares  planned and actual deliveries of vehicles to the vehicles fielded through  August 2010, and the planned deliveries through November 2010.

		M-ATV Acquisition Cost

As of June 2010, the cost to acquire the M-ATV is estimated to be about  $12.5 billion through fiscal year 2024. Through fiscal year 2010, all costs  continue to be resourced through supplemental funding across all  services, except for program management costs—approximately              $55 million in fiscal years 2010 through 2015 to be budgeted into baseline  service budgets. All other program costs will remain budgeted via annual  supplemental requests until the services are able to determine long-term  usage plans and add funding to their baseline budgets. It is not currently  clear when the services will include MRAP and M-ATV operating and  support costs in the base budgets. Table 1 summarizes the estimated  acquisition costs.
The average unit cost for an M-ATV is about $1.4 million, including the  vehicle, mission equipment, and transportation. Mission equipment— which the program office estimates will cost about $4.3 billion—includes  communications and situational awareness subsystems. Procurement  costs beginning in fiscal year 2011 are for expected upgrades to the  vehicles. The estimate includes about $1.6 billion for fiscal years  2011 through 2018 to pay for upgrades to vehicles. For example, an  increase in vehicle weight due to the addition of armor could in turn  require upgrades to subsystems such as the independent suspension  system and door assist. Other upgrades could include additional egress  lighting, seat upgrades, and floor upgrades.

		M-ATV Testing and Fielding Was Highly Concurrent

Conventional DOD acquisition policy reflects a statutory requirement that  weapons be tested before they are fully fielded to the user. However, due  to the urgency of the requirement, and because the vehicle technologies  and designs were mature, DOD began fielding the M-ATV in theater well  before it completed the bulk of the planned testing. The test plan included  ballistic tests, two phases of developmental tests, and operational test and  evaluation. This approach resulted in a high degree of overlap between  testing and delivery of the M-ATV. For example, 6,244 vehicles had already  been placed on contract and 229 had been fielded before operational  testing was completed in mid-December 2009. Developmental testing is  scheduled to continue even as fielding is completed in December 2010,  according to an Army official. Figure 2 shows the concurrent nature of the  overall test plan.
DOD’s emphasis that the competing contractors provide only mature,  nondevelopmental vehicles was a key element in achieving the M-ATV  schedule objectives. According to program officials, source selection  testing of all the contractors’ prototype vehicles further mitigated the risk  associated with the concurrent M-ATV production and test schedule.  Testing evaluated component- and system-level vehicle survivability and  crew protection, and included multiple ballistic events against armor  samples and candidate vehicles. Source selection also included  automotive testing—such as human factors, mobility, braking, and  steering—of the prototype vehicles. Before fielding began for any  production M-ATVs, additional ballistic testing between October and  December 2009 established that the vehicles met the requirements for  crew protection and vehicle survivability and automotive testing  confirmed that the vehicles were generally safe to operate.
The Director, Operational Test and Evaluation, in a June 2010 live-fire  operational test and evaluation report, found that the M-ATV was  operationally effective in the conduct of unit missions providing armored  tactical mobility over Afghanistan terrain and that it demonstrated off-road  mobility comparable to the up-armored HMMWV with the Expanded  Capability Vehicle additional armor. The Director also found that the        M-ATV was operationally suitable, although egress from the vehicle was  difficult due to the location of some mission equipment, the height of the  front seats, and potential damage to exterior door handles when the  vehicle rolls over and there is no other means to open the door from the  outside.

		M-ATV Is Performing Well in Theater but Will Be Challenged to Keep Pace with the Threat

M-ATV vehicles appear to be performing well in their operational  environment, according to program officials who monitor incident reports  from the field. Ballistic and automotive performance in the field mirrors  that seen in testing. In addition, users report favorably on both aspects of  the vehicles’ performance. For example, a recent survey of users in theater  found the vehicles are well accepted, have good mobility, and offer  protection and survivability that is comparable to the MRAP. On the down  side, users reported that visibility is limited and the vehicle is cramped,  tall, and heavy.
Although the vehicle appears to be performing well in the operational  environment, future challenges for the M-ATV include keeping pace with  the evolving threat. The vehicle meets the current performance  specifications and requirements, but the enemy keeps changing its tactics,  according to the acquisition officials. The officials note that as the  requirement for protection increases, for example, armor will have to be  added, especially underbody—an effort that is already under way. They  further note that modifying M-ATV vehicles in Afghanistan will be more  difficult than it was to modify the MRAP in Iraq because Afghanistan has  less infrastructure and fewer facilities to support it. According to  acquisition officials, as the number of M-ATV in theater increases, this will  be a challenge.

	JLTV Expected to Feature More Balanced Payload, Protection, and Performance Than Other Vehicles, but Transportability and Reliability Are Recognized Risks

A comparison of JLTV’s capabilities with those of the M-ATV and HMMWV  indicates the JLTV is expected to offer protection levels comparable to the  M-ATV at a weight nearer to the HMMWV. The JLTV is early in its  development and its acquisition cost has not yet been determined, but is  expected to be substantial. The JLTV acquisition strategy calls for an  incremental, knowledge-based approach, reflective of best practices. The  services have recognized transportability and reliability as risks and are  considering design and requirement tradeoffs to reduce these risks. For  example, to meet the transportation requirement, the services have made  the decision to focus on a four-passenger vehicle in the first increment  rather than a six-passenger vehicle. Testing of prototypes from each of the  contractor teams is under way and is being used to validate and refine  requirements and to reduce technical risks prior to the EMD phase.  Scheduled to start in late fiscal year 2011, the EMD phase is a crucial point  for the program. The Under Secretary of Defense for Acquisition,  Technology, and Logistics established several exit criteria that must be  completed prior to competitively awarding contracts for the EMD phase.

		JLTV Acquisition Strategy Is Incremental

The Army and Marine Corps are pursuing an incremental development  approach for JLTV that would feature a basic capability initially—with  enhanced force protection, increased fuel efficiency, greater payload, and  other improvements to be added in later increments. DOD acquisition  policy defines an increment as a militarily-useful and supportable  operational capability that can be developed, produced, deployed, and  sustained. As we have observed in an earlier report, each increment will  need to provide needed capabilities within cost and schedule projections  and be justifiable on its own.
The services currently plan to acquire 60,383 vehicles in the first increment  of JLTV. For that first increment, three categories of JLTV vehicles are  being developed with different payload capabilities and expected use. The  Category A vehicle is expected to have a payload of 3,500 pounds and is  being developed for general-purpose mobility to move reconnaissance and  surveillance teams. The Category B vehicle is expected to have 4,000 to  4,500 pounds of payload capability and is being developed to move  infantry, weapons, security forces, and tactical command and control. The  Category C vehicle is a utility vehicle being developed for combat support  missions and is planned to carry shelters and light cargo and operate as an  ambulance. Table 2 summarizes the different JLTV categories and  subconfigurations.
The Army awarded JLTV technology development contracts to three  industry teams in October 2008, for a total of $263.7 million; however, a  bid protest delayed the actual start of work until February 2009. The  36-month technology development effort features competitive prototyping.  It includes 15 months for design and build and 12 months for testing  prototype vehicles. Prototype testing is under way at the Aberdeen and  Yuma test facilities.
The services plan for a full and open competition to select two contractors  for the EMD phase and one contractor from those two will be selected for  the production phase. DOD is planning the Milestone B decision for JLTV  during the fourth quarter of fiscal year 2011, with a contract award  scheduled for the first quarter of fiscal year 2012. The EMD phase is  scheduled to last almost 3 years and culminate with a Milestone C decision  point in late fiscal year 2014. A fixed-price production contract is expected  to be awarded in the first quarter of fiscal year 2015. The initial operating  capability is expected early in fiscal year 2017. An analysis of alternatives  for the JLTV is required to support a Milestone B decision on the program  and will be provided to DOD’s Cost Assessment and Program Evaluation  group 60 days in advance of the Defense Acquisition Board review. The  purpose of the analysis of alternatives is to assess alternatives for  capitalizing the fleets of light tactical vehicles currently operated by the  four services.
At Milestone B, DOD may consider an early start of initial production for a  JLTV variant if technical maturity and risks are deemed appropriate. That  would assume that JLTV prototypes would be at a high level of technical  maturity and their designs very stable. Currently, it is unknown how this  would affect the contractor competition plans, which call for two  contractors to proceed through EMD.

		JLTV to Offer Protection Comparable to M-ATV and More Protection Than HMMWV

JLTV is being designed to protect its occupants from the effects of mines  and improvised explosive devices without sacrificing its ability to carry a  payload or its automotive performance, which has not been the case with  other TWVs. The improved balance of capabilities expected from the JLTV  is summarized in table 3, which compares the capabilities of the M-ATV,  the JLTV, and the current generation of HMMWVs.
Our comparison of TWV capabilities indicates that the JLTV capabilities  are expected to balance personnel protection, payload, and performance,  provide defensive measures covering troops while in transport, and  increase payload capability. In the performance area, JLTV is intended to  be better than the M-ATV and HMMWV in terms of turning radius, cross- country speed, acceleration, minimum range, power generation, and  ground clearance. In addition, JLTV operational availability is intended to  be better than both other vehicles. The JLTV’s payload, protection, and  performance will be equal to or better than the Expanded Capability  Vehicle (ECV)/Up-armored HMMWV (UAH) in all categories.
Unlike the M-ATV, the HMMWV is and the JLTV is planned to be  transportable by helicopter. JLTV’s level of protection is expected to be  significantly better than ECV/UAH, especially the underbody protection.  The JLTV payload requirement is a minimum of 3,500 pounds for its  general-purpose mobility vehicle and 5,100 pounds for its utility vehicle.  Those levels are comparable to the M-ATV payload and better than the  HMMWV levels. The reliability of the JLTV is projected to be 3,900 miles  better between operational mission failures than the M-ATV and more than  2,250 miles better between operational mission failures than the  ECV/UAH.

		Achieving Transportability and Reliability Requirements Is a Recognized Program Risk

Unlike the M-ATV, the JLTV program will need to demonstrate emerging  technologies to determine if it can meet its proposed requirements. The  services are not directly developing new technologies for JLTV, but are  expecting the competing contractors to use new and existing technologies  in their prototype vehicles. The purpose of the JLTV technology  development phase is to validate the maturity of those technologies and to  provide test data to evaluate the technical risks in meeting the proposed  requirements for the JLTV family of vehicles. The knowledge gained from  the tests will be used to assess the capability of meeting critical  requirements such as force protection, mobility, transportability, reliability  and maintainability, and technical performance.
The Army Test and Evaluation Command is conducting JLTV testing at  Aberdeen Proving Ground and Yuma Proving Ground. Ballistic testing of  samples of the vehicle armor began in September 2009 and has been  completed, but results are not yet available. Ballistic testing of vehicle  hulls began in December 2009 at Aberdeen. The three contractors  delivered prototype vehicles in May to Aberdeen and Yuma and testing has  begun. Vehicle performance testing is being conducted at Aberdeen and  reliability, availability, and maintainability testing is being conducted at  Yuma. On the basis of the initial analysis of physical characteristics, the  majority of the prototypes are within the current limits for vehicle weight.  Testing on the prototypes is expected to last about a year and a formal test  report will be issued at the end of testing. Interim reports will be issued  throughout the year.
The technology development phase is currently scheduled for completion  in the fourth quarter of fiscal year 2011, to be followed by the Milestone B  decision review. According to direction from the milestone decision  authority, the following technology development phase exit criteria are  expected to be completed for the Milestone B decision point:    approval of the appropriate capabilities development document,  supported by analysis from technology development work,    demonstration of a technology readiness level 6 or higher for all critical  technologies in an integrated system,    an assessment of commonality across the JLTV family of vehicles, and    an assessment of the technical risks relevant to entering initial production.
Under best acquisition practices, the JLTV program would need to  achieve a match between its requirements and available resources  (technologies, money, and schedule) at the Milestone B decision point and  before proceeding into the EMD phase. During the remainder of the  technology development phase, the task for the JLTV program will be to  determine, through the system engineering process, whether the proposed  requirements can be met with the resources expected to be available  including existing technologies. If that match cannot be demonstrated, the  program may have to adjust the requirements to more achievable levels or  increase its estimate of resources needed. Fully resolving these questions  with knowledge at the Milestone B point is a key to establishing a sound  business case for the JLTV program. Such knowledge would include a  completed preliminary design review, evidence of robust system  engineering analyses, and a technology readiness assessment. Our prior  work has consistently shown that a sound business case is a critical  determinant of a program’s ultimate success. The JLTV program has  identified risks in achieving some of its key requirements and is  considering trade-offs in vehicle designs and requirements.
Transportability and force protection are key performance parameters for  JLTV, but the vehicle’s currently projected weight may preclude its  transport by rotary wing aircraft. The vehicle’s weight is driven by the  level of force protection expected from JLTV. Force protection is achieved  with armor and the currently available armor is heavier than desired. JLTV  vehicles are being designed with a basic layer of armor that is integrated  with the chassis and additional armor that is bolted on over that basic  layer of armor. Transportability by rotary winged aircraft is a critical joint  requirement, with the potential that the Marine Corps could withdraw  from the program if rotary wing transport of JLTV is not possible. The  services are using 15,600 pounds, the lift capacity of the CH-47F, to  determine the maximum transport weight of the vehicle. The transport  weight differs from the gross vehicle weight in that the add-on armor is  removed prior to transport by aircraft. However, the JLTV program is  concerned that the transport weight may be in excess of the CH-47F’s lift  capacity. In order to meet the weight limit, the services are considering  design and requirement trade-offs. Although a six passenger Category B  vehicle was the original joint priority, the services are now focusing on a  four-passenger vehicle, at least initially. According to program officials,  the technology will not have advanced far enough to make armor light  enough to build a six-passenger vehicle with the needed protection level  and at a transport weight that can be transported by the CH-47F. As a  result, the services are proposing to build a four-passenger vehicle in the  first increment. A six-passenger vehicle is still under consideration by the  Army for the first increment; however, it would not be in the initial  procurement. Progress in armor technology development and  demonstration—and its impact on JLTV force protection and  transportability requirements—will be evaluated throughout the  technology development phase and at the Milestone B review.
The JLTV requirement for operational availability has been set at               95 percent and is considered a key performance parameter. JLTV  reliability is a key system attribute and is an element within operational  availability. The original technology development requirement was  4,500 mean miles between operational mission failures for the Category B  vehicles and 6,100 miles for the Category A and C variants. This level of  reliability may be aggressive since it is two to three times greater than the  reliability levels for other tactical vehicles. For example, the M-ATV  requirement is 600 miles between failures and at least one version of the  ECV/UAH has a reliability of less than 1,300 miles between failures. If the  JLTV reliability metrics cannot be met, availability will suffer and total  ownership cost, another key system attribute, could increase significantly.  While contractor modeling suggests that JLTV will meet its requirements  at the subcomponent level, program officials remain uncertain. The  services are conducting extensive reliability testing of JLTV prototypes  during the technology development phase. However, according to program  officials, the reliability requirement is up for reconsideration and may need  to be adjusted. Also, the services have a plan to increase the reliability for  EMD.

		JLTV Cost Is Not Yet Known but Will Be Substantial and Affect Affordability

JLTV investment to date has been modest—about $300 million for the  technology development phase through fiscal year 2010. However, JLTV  funding will be expanding in the coming years. From fiscal years  2011 through 2015, an additional $580 million will be needed for JLTV  development through the EMD phase. JLTV production funding is  currently projected to start in fiscal year 2013. Through fiscal year 2015,  the services are projecting JLTV procurement funding of about $2.7 billion.
JLTV’s total acquisition costs could ultimately be substantial. The target  unit production cost for JLTV ranges from $306,000 to $332,000, depending  on vehicle category. That compares to the base M-ATV unit price of about  $445,000. The JLTV target cost does not include general and administrative  cost and fees. Armor kits and mission equipment packages are also  additional, which have not yet been determined. As a reference point, the  cost of government-furnished equipment averaged $532,000 per vehicle for  the M-ATVs. If similar costs apply to JLTV, its procurement unit cost could  be in excess of $800,000.
An independent cost estimate will be developed in support of Milestone B  decision review; however, the vehicle cost will be substantial when  calculating the cost of the first increment. The joint requirement is for  60,383 vehicles to be bought and fielded by fiscal year 2022. Using the  lowest projected vehicle cost of $306,000, the cost of 60,383 JLTV vehicles  would be almost $18.5 billion and much more when government-furnished  equipment and other costs are included.
JLTV’s affordability will be a key determination at the Milestone B  decision point. The services and DOD will have to balance the cost of the  JLTV against other service needs. The cost could determine whether to  continue with the program as planned, look at other ways of meeting the  requirements, or buy fewer vehicles.

	Uncertainty about Future MRAP, HMMWV, and JLTV Decisions May Affect Planned TWV Investments

The acquisition plans for both the M-ATV and JLTV are consistent with the  services’ TWV strategies, which emphasize maintaining a balance of  performance, payload, and protection capabilities across their TWV fleets  as they continue to adjust to the improvised explosive devices/roadside  bomb threats. M-ATV fulfills a short-term, joint, urgent operational need in  support of current operations and JLTV is the long-term solution for the  joint services to replace the HMMWV. The strategies indicate that the  services plan to recapitalize older HMMWVs in the inventory, integrate  MRAPs, including M-ATVs, into their respective fleet mixes, and acquire  JLTVs if costs and performance goals can be achieved. However, those  assumptions could be affected by several forthcoming decisions and  events, including those related to (1) the development of revised plans for  continued production of new HMMWVs or recapitalization of older  HMMWVs; (2) the availability of sufficient funds in the base budgets for  the operation and support of those MRAP vehicles to be integrated into  the service fleets; and (3) the extent to which the JLTV program can meet  cost, schedule, and performance expectations. These events and decisions  could change how and when the strategies are implemented as well as the  specific composition of the TWV fleets in the coming years.

		Current Service Strategies Are Based on Four Tenets and Highlight Need for Affordability

The Army’s October 2009 strategy reiterated that the 2008 Army and  Marine Corps joint TWV investment strategy was based on four tenets:    Take maximum advantage of existing platforms by recapitalizing their  platforms and introducing product improvements.
Plan for the integration of MRAP vehicles into the fleet mixes.
Emphasize a mixed fleet approach that spans the “iron triangle” of  protection, payload, and performance.
Transition to a fleet of tactical vehicles that have scalable protection  (integrated A-kit and add-on-armor B kits).
Both services have also acknowledged that planning uncertainties  included JLTV cost and performance, and emphasize the need for the  adoption of TWV strategies that are affordable as a whole. The Army  strategy states that in an era of constrained financial support and ever-  increasing materiel costs, it will work to control cost growth and variant  complexity within the TWV fleet. The Marine Corps strategy states that the  underlying guidance for the strategy requires the fielding of an affordable  fleet of ground combat and tactical vehicles that provide required  capabilities and adequate capacity. Each of the underlying tenets, as well  as the consideration of affordability, may be affected by one or more  forthcoming events and decisions.

		Uncertainty about the Future of HMMWV Production and Recapitalization Programs

The first tenet of the respective Army and Marine Corps strategies is that  the services would recapitalize existing platforms and introduce product  improvements. In fiscal year 2010, the Army planned to reprogram  approximately $560 million to the HMMWV Recapitalization program,     $13 million to initiate a competitive effort to assess alternative solutions to  recapitalize up-armored HMMWVs, and use the remaining funds to support  other unspecified Army priorities. The HMMWV Recapitalization program  converts older utility HMMWVs into upgraded configurations. Begun in  2004, approximately 30,000 vehicles have been recapitalized at a cost of  approximately 35 percent of the value of a new production light-utility  vehicle. The strategy also reported that the recapitalized vehicles are “like- new” and will serve the Army for an additional 15 years. In January 2010,  the Army also began a pilot program to recapitalize up-armored HMMWVs  to the same level of performance and protection as the newest production  up-armored HMMWVs.
Subject to the approval of the requested reprogramming and the  availability of funds, the Army planned to continue the recapitalization of  nonarmored HMMWVs and the up-armored HMMWVs to ensure continued  sustainment of the HMMWV fleet in the near term, and competitively  procure and test prototypes that demonstrate survivability improvements  that may be possible on the expanded-capability vehicle HMMWV chassis.  However, because the Army’s requested reprogramming action has been  denied by the Congress, all recapitalization plans have been suspended  pending the development of revised plans for the HMMWV production and  recapitalization programs. Until the scope and cost of those plans are  clarified, it may be difficult for the services to identify the funds that may  be available to support other TWV needs, such as long-term funding for  MRAP and M-ATV operations and support, and to define what they can  afford in terms of JLTV procurement.

		Long-term Funding for MRAP and M-ATV Operations and Support

The second underlying tenet of the services’ TWV strategies involves the  planning for the integration of MRAP vehicles (including the M-ATV) into  the fleet mixes. By the end of fiscal year 2010, the Army and Marine Corps  will have invested $35.7 billion to acquire the MRAP family of vehicles and  most of these vehicles have been delivered to units operating in Iraq and  Afghanistan. Also, improved suspension systems have been added on  some original MRAP vehicles to maintain acceptable levels of protection  while improving automotive performance.
In general, DOD considers the MRAP vehicle an important part of the  tactical vehicle portfolios, but not one that replaces the need for other  vehicles in the force structure, such as HMMWVs or JLTVs. Despite the  significant investment in MRAP vehicles, it is not likely that MRAPs would  be used to offset quantities of JLTVs, although MRAPs may be able to  offset some quantities needed for route clearance, explosives ordinance  disposal, and medical evacuation units. In addition, the continuation of  operations in Iraq and Afghanistan will influence the quantities of MRAP  vehicles available for integration into the services’ force structures, the  pace of the integration, and the funding for operations and support costs  by the services.
The military services continue to refine their plans to integrate the            M-ATV—and its predecessor, the MRAP—into the force structure. As of  June 2010, the Army had more than 19,800 M-ATV and MRAP vehicles in  the theater and in the continental United States. The Marine Corps has a  combined MRAP and M-ATV fleet of about 3,300 vehicles. Both services  acknowledge the potential operating and support costs as a factor that  could affect implementation of their plans. Thus far, most of the cost to  acquire, field, operate, and sustain the M-ATV and the MRAP has been  funded through supplemental appropriations. However, beginning in 2012,  the services will likely assume at least part of the operation and  sustainment costs for these vehicles, according to MRAP Joint Program  Office officials.
While the cost to operate and sustain the vehicles for their expected  service life will depend on the military services’ specific plans to integrate  the vehicles into their force structures, the MRAP joint program office  estimates that the cost to operate and maintain the vehicles through 2024  will be about $10.8 billion. With much of it currently funded out of  supplemental appropriations, the services have expressed some concerns  about their ability to fund operations and support costs for TWVs in the  out years within base budget requests. For example, Marine Corps officials  acknowledged that the projected cost to sustain their tactical vehicle fleet  contributed to a decision to reduce the quantities of tactical vehicles by 30  percent over the next few years. A senior Army headquarters official told  us that the Army would likely be requesting funds for sustainment in its  overseas contingency operations budget request for fiscal year 2012 to  supplement sustainment in its base budget.

		JLTV Identified as a Key Future Capability, but It Has Cost and Performance Uncertainties

The strategies’ third and fourth tenets of rebalancing payload,  performance, and scalable protection are intended to be provided by JLTV.  Both the Army and Marine Corps TWV investment strategies identify JLTV  as an important future capability. Both services have acknowledged that  planning is complicated by current JLTV cost and performance  uncertainties. The strategies recommend the scheduling of dates within  the yet to be developed TWV Modernization Strategy by which  current/legacy light tactical vehicles will no longer be procured and the  procurement focus switched to JLTV variant production. The Army’s  October 2009 strategy identifies the JLTV Force Application vehicles as the  objective solution for the armament carrier mission. The strategy states  that this payload category is the Army’s number one priority for  development and fielding. However, as discussed previously, this category  of JLTV vehicles is at risk of not meeting the transportability requirement  due to their projected weight and the projected requirement for reliability  is two to three times greater than other tactical vehicles.

		Implications for DOD-wide TWV Strategy

Last year, we reported that DOD does not have a comprehensive TWV  investment strategy and concluded that the development of a strategy  would be beneficial to DOD and the services in minimizing the potential  for unplanned overlap or duplication. In commenting on the report, DOD  stated that it plans to prepare a departmentwide strategy for making sound  TWV investment decisions that it says will dovetail with the services’  equipping strategies and will endeavor to align requirements, resources,  and acquisition strategies into a unified plan. However, as of September  2010, DOD has not yet set a timetable for completing the strategy.
In recommending such a strategy and implementation plan in 2009, we  noted that DOD should    assess and prioritize the capabilities and requirements of similar vehicles  needed in the near and long term;    estimate the funding, time, and technologies that will be required to  acquire, improve, and sustain these systems;    balance protection, payload, and performance needs with available  resources, especially for light tactical vehicles; and  identify contingencies in case there are development problems, delays  with key systems, or funding constraints.
There are several issues specific to TWVs which will likely influence the  DOD-wide strategy. These include the near-term decisions and events  related to the continued production or recapitalization of HMMWVs, the  operational requirements for MRAPs (to include the M-ATV), and the  projected cost and capabilities of the JLTV family of vehicles. In addition,  the Secretary of Defense has recently announced several initiatives to free-  up funds for modernization and to create efficiencies in programs. This is  a contingency that may also have an influence on the DOD-wide strategy  by reinforcing the need to minimize the potential for unplanned overlap or  duplication. For example, up until now, the services have not considered  the vehicles in the MRAP family—with the exception of some vehicles  planned for use by route clearance, explosives ordinance disposal, and  medical evacuation units—to offset the need for or replace other TWVs.  Given the high potential cost of the JLTV, an offset could offer substantial  savings, albeit with potential performance tradeoffs. To illustrate, a             5 percent reduction in JLTV quantities could save nearly $2.5 billion,  assuming a unit cost of $800,000; a 10 percent reduction could save nearly  $5 billion. While the Army and Marine Corps have completed and continue  to conduct engineering, cost, funding, and vehicle mix analyses, neither  service has performed a formal cost-benefit analysis to consider savings  from JLTV offsets or costs of increasing recapitalization of existing  vehicles.

	Conclusions

The M-ATV program has been successful, delivering well-performing  vehicles early and at an estimated cost of $12.5 billion. Common to the  success of the larger MRAP vehicles produced earlier, the M-ATV program  did not have new technologies to develop. JLTV is a well-structured  program with desirable features, such as a competitive technology  development phase with an incremental approach to fielding increasingly  capable vehicles. Unlike the M-ATV and MRAP, JLTV has demanding  requirements—to provide MRAP-like protection at HMMWV-like weight— that necessitate technological and engineering advances. It is less certain,  then, that at the conclusion of the technology development phase, a JLTV  solution will emerge that provides all of the performance required, yet stay  within weight limits and deliver the desired high reliability. Before the  decision can be made to proceed into the engineering and manufacturing  development phase, the precursor to production, DOD may find that  tradeoffs are necessary to match JLTV requirements with available  resources (including time, money, and technical knowledge).
The knowledge of what is achievable with JLTV should be in hand by late  fiscal year 2011. Also, by that time, the services should have a better  understanding of (1) the scope and cost of the HMMWV recapitalization or  production effort, and (2) the placement of the MRAP family of vehicles in  the services’ force structures, including funding in base budgets for  operating and support costs. To the extent the DOD-wide TWV strategy  captures the knowledge gained from these activities, it can provide a  sound guide for making near-term decisions that facilitate attainment of  longer term objectives. In so doing, the DOD-wide strategy can help  reconcile the aggregate affordability and other implications of these  programs with the competing demands of the department. Specifically,  any potential offsets between the MRAP vehicles and JLTVs, to the extent  they are supported by cost-benefit analyses, could save both acquisition  and support costs.

	Recommendations for Executive Action

We recommend that the Secretary of Defense:    Enhance the prospects for the successful outcome of the JLTV program by  ensuring that the JLTV program clearly demonstrates at the Milestone B  decision point that it has achieved a match between its requirements,  particularly the transportability and reliability requirements, and available  resources (technologies, funding, and schedule) before beginning its  EMD  phase.
Stage the timing of the DOD-wide TWV strategy so that it captures the  knowledge gained during the year from the JLTV technology development  phase, as well as from the decisions made on the HMMWV and MRAP  programs.  Include in the strategy a cost-benefit analysis that could minimize the  collective acquisition and support costs of the various TWV programs, and  reduce the risk of unplanned overlap or duplication. Such cost-benefit  analysis should provide an estimate of dollar savings for various options  for offsetting JLTV quantities in favor of recapitalizing existing vehicles.

	Agency Comments and Our Evaluation

In its comments on our draft report, DOD concurred with all of our  recommendations.  DOD’s response is reprinted in appendix II.
On our recommendation that the JLTV program clearly demonstrate that it  has achieved a match between its requirements and available resources,  DOD concurred and noted that this is a Milestone B requirement.  We  made the recommendation because the requirements for JLTV  transportability and reliability are recognized risks and tradeoffs will be  needed to achieve an appropriate balance of requirements and resources  at the Milestone B decision point.  Such tradeoffs will need to be  supported by quantifiable evidence and rigorous analysis.
Regarding our recommendation on the DOD-wide TWV strategy, DOD  concurred, noting that the DOD-wide TWV strategy will not be limited to  the JLTV, HMMWV, and MRAP vehicles and will leverage the Army TWV  strategy to be released shortly.  We agree that because of the size of its  TWV fleet and acquisitions, it seems reasonable for DOD to leverage  knowledge from the Army strategy.  However, in the end, it is essential for  DOD to ensure that the services’ desire to have the most modern, capable  TWVs is balanced with fiscal realities.
On our final recommendation that calls for cost-benefit analyses to reduce  the risk of unplanned overlap and duplication among the TWV programs,  DOD concurred and stated that the JLTV program is conducting an  Analysis of Alternatives that explores potential offsets to JLTV quantities,  including those related to the placement of MRAPs in authorized brigades.  DOD also notes that the recapitalization of existing vehicles is a major  component of an affordable TWV strategy.  We appreciate DOD’s  initiatives to manage its TWV portfolio in a balanced and affordable  manner.
We are sending copies of this report to the Chairmen and Ranking  Members of other Senate and House committees and subcommittees that  have jurisdiction and oversight responsibilities for DOD. We will also send  copies to the Secretary of Defense; the Secretaries of the Air Force, Army,  and Navy; and the Director, Office of Management and Budget. Copies will  also be available at no charge on GAO’s Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-4841. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  Major contributors to this report included William Graveline, Assistant  Director; Dayna Foster; Danny Owens; Bob Swierczek; Hai Tran; Paul  Williams; and Marie Ahearn.

Appendix I: Scope and Methodology

To determine the Department of Defense’s (DOD) strategy for and  progress in rapidly acquiring and fielding the Mine Resistant Ambush  Protected (MRAP) All Terrain Vehicle (M-ATV), we obtained and reviewed  program documents and held discussions with system developers,  acquisition officials, and contractor representatives. To determine the cost  of M-ATV, we obtained and reviewed cost estimates and held discussions  with program officials. To determine the challenges that remain for the    M-ATV program, we held discussions with system developers, acquisition  officials, and technologists. Discussions were held with officials from  Department of the Army, Office of the Deputy Chief of Staff, G3/5/7,  Arlington, Virginia; Army Tank and Automotive Command, Research,  Development and Engineering Center, Warren, Michigan; Defense  Contract Management Agency, Oshkosh, Wisconsin; Joint MRAP Vehicle  Program Office, Stafford, Virginia; Marine Corps Combat Development  Center, Quantico, Virginia; Marine Corps Systems Command, Quantico,  Virginia; and Oshkosh Corporation, Oshkosh, Wisconsin. To determine the  demonstrated performance of the M-ATV, we obtained and reviewed test  reports and held discussions with officials from the Army Test and  Evaluation Command, Aberdeen Test Center, Aberdeen, Maryland; and the  National Ground Intelligence Center, Charlottesville, Virginia.
To determine the expected features of the Joint Light Tactical Vehicle  (JLTV) as it moves toward Milestone B in fiscal year 2011, we obtained and  reviewed updated program documents and held discussions with Army  and Marine Corps acquisition and test officials. Using comparison data  provided by Army officials, we prepared a table comparing JLTV’s  expected features and cost with those of the M-ATV and current  generation High Mobility Multi-purpose Wheeled Vehicle. We held  discussions with officials from the Army, Program Manager, Tactical  Vehicles, Warren, Michigan; Army, Product Manager, Joint Light Tactical  Vehicle, Selfridge Air National Guard Base, Michigan; and the Army Test  and Evaluation Command, Aberdeen Proving Ground, Aberdeen,  Maryland.
To determine the extent to which current plans for M-ATV and JLTV are  consistent with Army and Marine Corps tactical wheeled vehicle  investment strategies, we obtained and reviewed updated strategies and  held discussions with DOD, Army, and Marine Corps officials. Discussions  were held with officials from the Under Secretary of Defense, Acquisition,  Technology, and Logistics, Arlington, Virginia; Army, Office of the Deputy  Chief of Staff, G8, Arlington, Virginia; Assistant Secretary of the Army,  Acquisition, Logistics, and Technology, Arlington, Virginia; and Marine  Corps Systems Command, Quantico, Virginia.
We conducted this performance audit from November 2009 to November  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.

Appendix II: Comments from the Department of Defense

Summary:
Why GAO Did This Study

The Department of Defense (DOD) is acquiring two new tactical wheeled vehicles (TWV): the Mine Resistant Ambush Protected (MRAP) All Terrain Vehicle (M-ATV) and the Joint Light Tactical Vehicle (JLTV). The $12.5 billion M-ATV is for use in Afghanistan; JLTV is the future replacement for vehicles like the High Mobility Multi-purpose Wheeled Vehicle (HMMWV). GAO was asked to assess (1) DOD's progress in rapidly acquiring and fielding M-ATVs, (2) JLTV's expected features and cost compared to other TWV, and (3) the extent to which the current plans for M-ATV and JLTV are consistent with the services' TWV investment strategies. GAO reviewed documents and held discussions with key officials to determine program strategies, costs, performance, and anticipated features; and compared M-ATV and JLTV plans with service strategies.

What GAO Found

The M-ATV program has been successful, delivering well-performing vehicles ahead of schedule at an estimated cost of $12.5 billion. No major issues have been identified in testing and early fielding. In developing the M-ATV acquisition strategy, lessons learned from the acquisition of MRAPs in Iraq were applied. Like the earlier MRAPs, the M-ATVs did not require technology development, a key factor in the program's success. As of late August 2010, 7,488 vehicles had been delivered to the government and 4,379 had been fielded to units in Afghanistan. Fielding is expected to be completed in December 2010. The urgent need for these vehicles resulted in their fielding and testing at the same time; however, source selection testing was conducted, and no vehicles were fielded until their safety was verified. Jointly managed by the Army and Marine Corps, JLTV is expected to provide protection levels that are comparable to the M-ATV but without loss of payload or automotive performance. JLTV's acquisition costs are yet to be determined but are expected to be substantial. Unit costs could be over $800,000--somewhat less than M-ATV, with mission equipment making up more than half of the costs. Unlike M-ATV and earlier MRAPs, JLTV has demanding projected requirements that necessitate technological and engineering advances. Key challenges are whether the vehicle can provide the performance and reliability required yet stay within the weight limits for helicopter transport. Difficult tradeoffs in requirements may be necessary. At this point, it is a well-structured program with desirable features like a competitive technology development phase. This phase is scheduled to be completed by late fiscal year 2011, when DOD will decide if the program should enter the engineering and manufacturing development phase. That is the point where JLTV should clearly demonstrate that its projected requirements can be met with available resources. Evidence of that match would include a completed preliminary design review and a technology readiness assessment that shows all technologies to be fully mature. Current plans for M-ATV and JLTV dovetail with the objectives of the most recent Army and Marine Corps investment strategies. The implementation of those strategies, however, will be influenced by (1) the decision to continue producing new HMMWVs, recapitalize the existing HMMWV fleet, or both; (2) long-term funding for MRAP and M-ATV sustainment, and (3) specific cost and capabilities of JLTV. The departmentwide strategy for TWVs that DOD plans to prepare would benefit greatly from the resolution of these issues. To the extent this strategy captures the knowledge gained by the services, the strategy can reconcile the aggregate affordability and other implications of the various tactical wheeled vehicle programs with the competing demands of the department. For example, at this point, the service strategies consider MRAP vehicles to be additive to the force structure, not offsetting quantities of HMMWVs or JLTVs. Any potential offsets between the MRAP vehicles and JLTVs, to the extent they are supported by cost-benefit analyses, could save both acquisition and support costs.

What GAO Recommends

GAO recommends that DOD (1) ensure that the JLTV program clearly demonstrates a match between requirements and resources; (2) stage the timing of the DOD-wide TWV strategy so that it captures key knowledge; and (3) include in the strategy a cost-benefit analysis that could minimize the collective acquisition and support costs of the various TWV programs, and reduce the risk of unplanned overlap or duplication. DOD concurred with our recommendations.