GAO 

United States Government Accountability Office

Testimony 

Before the Subcommittee on Air and 

Land Forces, Committee on Armed 

Services, House of Representatives

DEFENSE ACQUISITIONS

Opportunities for the Army 

to Position Its Ground 

Force Modernization 

Efforts for Success 

Statement of Michael J. Sullivan, Director

Acquisition and Sourcing Management 

For Release on Delivery 

Expected at 2:00 p.m. EDT 

Wednesday, March 10, 2010 

GAO-10-493T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 10, 2010

DEFENSE ACQUISITIONS

Opportunities for the Army to Position its Ground 

Force Modernization Efforts for Success

Highlights of GAO-10-493T, a report to 

Subcommittee on Air and Land Forces, 

Committee on Armed Services, U.S. 

House of Representatives 

T

Since 2003, the Future Combat 

System (FCS) program has been 

the centerpiece of the Army’s 

efforts to transition to a lighter, 

more agile, and more capable 

combat force. In 2009, however, 

concerns over the program’s 

performance led to the Secretary of 

Defense’s decision to significantly 

restructure and ultimately cancel 

the acquisition program. As a 

result, the Army is outlining a new 

approach to ground force 

modernization. This statement 

outlines the Army’s preliminary 

post-FCS actions and identifies the 

challenges DOD and the Army must 

address as they proceed. This 

testimony is based on GAO’s report 

on the Army’s Ground Force 

Modernization effort scheduled for 

release March 15, 2010. It 

emphasizes the December 2009 

decision to begin low-rate initial 

production for Increment 1 of the 

Brigade Combat Team 

Modernization. 

What GAO Recommends

In its draft report that is currently 

with DOD for comment, GAO 

recommended that the Secretary of 

Defense mandate the Army correct 

the identified maturity and 

reliability issues with the 

Increment 1 systems and network 

prior to approving any additional 

production lots. The GAO also 

recommended the Secretary of the 

Army not field the Increment 1 

network or systems until the 

identified maturity and reliability 

issues have been corrected. 

DOD has not yet responded to the 

GAO recommendations. 

The Army is implementing DOD direction and redefining its overall 

modernization strategy as a result of the Secretary of Defense’s decision to 

significantly restructure the FCS program. It is transitioning from the FCS 

long-term acquisition orientation to a shorter-term approach that biannually 

develops and fields new increments of capability within capability packages. 

It now has an approved acquisition program that will produce and field the 

initial increment of the FCS spinout equipment, which includes unmanned 

aerial and ground vehicles as well as unattended sensors and munitions. It has 

preliminary plans for two other major defense acquisition programs to (1) 

define and develop follow-on increments and (2) develop a new Ground 

Combat Vehicle (GCV). The individual systems within Increments 1 and 2 are 

to be integrated with a preliminary version of an information network. 

Currently, the Army is continuing selected development work—primarily that 

related to Increments 1 and 2, and the information network—under the 

existing FCS development contract. The Army has recently released a request 

for proposals for the technology development phase of the proposed GCV 

development effort. The Army’s projected investment in Increments 1 and 2 

and GCV is estimated to be over $24 billion through fiscal year 2015. 

With these modernization efforts at an early stage, DOD and the Army face the 

immediate challenge of setting them on the best possible footing by buying the 

right capabilities at the best value. DOD and the Army have an opportunity to 

better position these efforts by utilizing an enhanced body of acquisition 

legislation and DOD policy reforms—which now incorporate many of the 

knowledge-based practices that GAO has previously identified—as well as 

lessons learned from the FCS program. Preliminary plans suggest the Army 

and DOD are strongly considering lessons learned. However, DOD recently 

approved the first of several planned low-rate initial production lots of 

Increment 1 despite having acknowledged that the systems and network were 

immature, unreliable, and not performing as required. That decision reflects 

DOD’s emphasis on providing new capabilities quickly to combat units. This 

decision did not follow knowledge-based acquisition practices and runs the 

risk of delivering unacceptable equipment to the warfighter and trading off 

acquisition principles whose validity has been so recently underscored. 

The Army needs to seize the opportunity of integrating acquisition 

reforms, knowledge-based acquisition practices, and lessons-learned from 

FCS into future modernization efforts to increase the likelihood of 

successful outcomes. 

View GAO-10-493T or key components.

For more information, contact Michael J. 

Sullivan at (202) 512-4841 or 

sullivanm@gao.gov. 
Page 1 GAO-10-493T 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss some of the Department of the 

Army’s ground force modernization efforts as it moves away from the 

now-cancelled Future Combat System (FCS) program. My statement today 

is based on the work we conducted over the last year in response to a 

request from this subcommittee. This statement focuses on the Army’s 

post-FCS acquisition plans. In particular, it emphasizes the December 2009 

decision to begin low-rate initial production for Increment 1 of the Brigade 

Combat Team Modernization. Our upcoming report on the Army’s ground 

force modernization efforts, scheduled for release next week, will provide 

additional information on the Army’s efforts.1

This statement is based on work we conducted between March 2009 and 

March 2010 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. 

Since it started development in 2003, FCS has been at the center of the 

Army’s efforts to modernize into a lighter, more agile, and more capable 

combat force. The FCS concept involved replacing existing combat 

systems with a family of manned and unmanned vehicles and systems 

linked by an advanced information network. The Army anticipated that the 

FCS systems, along with the soldier and enabling complementary systems, 

would work together in a system of systems wherein the whole provided 

greater capability than the sum of the individual parts. The Army expected 

to develop this equipment in 10 years, procure it over 13 years, and field it 

to 15 FCS-unique brigades—about one-third of the active force at that 

time. The Army also had planned to spin out selected FCS technologies 

and systems to current Army forces throughout the system development 

and demonstration phase. 

Background 

 

1

GAO, Defense Acquisitions: Opportunities Exist to Position the Army’s Ground Force 

Modernization Efforts for Success, GAO-10-406 (Washington, D.C.: Mar. 15, 2010). 

 Defense Acquisitions 
As we have reported in 2009,2

 the FCS program was immature and unable 

to meet DOD’s own standards for technology and design from the start. 

Although adjustments were made, such as adding time and reducing 

requirements, vehicle weights and software code grew, key network 

systems were delayed, and technologies took longer to mature than 

anticipated (see fig. 1). By 2009, after an investment of 6 years and an 

estimated $18 billion, the viability of the FCS concept was still unknown. 

As such, we concluded that the maturity of the development efforts was 

insufficient and the program could not be developed and produced within 

existing resources. 

duced within 

Figure 1: FCS Acquisition Program (2003 versus 2009) 

2003 2009

Cost estimate

(Fiscal year 2009

billions of dollars)

Research and

development: $20.9

Research and

development: $29.0

Schedule

(Milestone B to initial

operational capability)

7 yr 6 mo 12 yr 3 mo

Undefined System-level requirements

not matched with

emerging designs

Procurement: $68.2 Procurement: $129.3

Total: $89.8 Total: $159.3

Requirements

Software lines of code 34 million 114+ million

Projected maturity date 2006 2009

of critical technologiesa

Source: DOD (data); GAO (analysis and presentation). 

$8.1 billion increase

$61.1 billion increase

$69.5 billion increase

Over 4 1/2 years added 

Persistent gaps

Tripled in size

3 years added

a

For FCS, the Army projected maturity based on a Technology Readiness Level 6, which is a 

representative model or prototype that has been tested in a relevant environment, but requires 

additional work for the appropriate form, fit, and function. Based on our best practices work, 

technologies that have reached a Technology Readiness Level 7, a prototype demonstrated in a 

realistic environment, are mature. 

In April 2009, the Secretary of Defense proposed a significant restructuring 

of the FCS program to lower risk and address more near-term combat 

needs. The Secretary noted significant concerns that the FCS program’s 

 

2

Defense Acquisitions: Decisions Needed to Shape Army’s Combat Systems for the 

Future, GAO-09-288 (Washington, D.C.: March 12, 2009). 

Page 2 GAO-10-493T Defense Acquisitions
vehicle designs—where greater information awareness was expected to 

compensate for less armor, resulting in lower weight and higher fuel 

efficiency—did not adequately reflect the lessons of counterinsurgency 

and close-quarters combat operations in Iraq and Afghanistan. As such, the 

Secretary recommended 

• accelerating fielding of ready-to-go systems and capabilities to all 

brigades, 

• canceling the vehicle component of the FCS program, reevaluating the 

requirements, technology, and approach, and re-launching the Army’s 

vehicle modernization program, and 

• addressing fee structure and other concerns with current FCS 

contracting arrangements. 

In June 2009, the Under Secretary of Defense for Acquisition, Technology, 

and Logistics issued an acquisition decision memorandum that canceled 

the FCS acquisition program, terminated manned ground vehicle 

development efforts, and laid out plans for follow-on Army brigade combat 

team modernization efforts. DOD directed the Army to transition to an 

Army-wide modernization plan consisting of a number of integrated 

acquisition programs, including one to develop ground combat vehicles. 

Subsequently, the Army has been defining its ground force modernization 

efforts per the Secretary’s decisions and the June 2009 acquisition decision 

memorandum. Although the details are not yet complete, the Army took 

several actions through the end of calendar year 2009. It stopped all 

development work on the FCS manned ground vehicles—including the 

non-line of sight cannon—in the summer of 2009 and recently terminated 

development of the Class IV unmanned aerial vehicle and the countermine 

and transport variants of the Multifunction Utility/Logistics and Equipment 

unmanned ground vehicle. For the time being, the Army is continuing 

selected development work under the existing FCS development contract, 

primarily residual FCS system and network development. In October 2009, 

the Army negotiated a modification to the existing contract that clarified 

the development work needed for the brigade modernization efforts. 

The Army is implementing DOD direction and redefining its overall 

modernization strategy as a result of the Secretary of Defense’s decisions 

to significantly restructure the FCS program. It is transitioning from the 

FCS long-term acquisition orientation to a shorter-term approach that 

biannually develops and fields new increments of capability within 

capability packages. It now has an approved acquisition program that will 

The Army Has Started 

a Series of 

Development and 

Fielding Efforts 

Page 3 GAO-10-493T Defense Acquisitions
produce and field the initial increment of the FCS spinout equipment, 

which includes unmanned aerial and ground vehicles as well as 

unattended sensors and munitions, and preliminary plans for two other 

major defense acquisition programs to define and develop follow-on 

increments and develop a new GCV. The Army also plans to integrate 

network capabilities across the Army’s brigade structure and to develop 

and field upgrades to other existing ground force equipment. 

• The first program, Increment 1, is a continuation of previous FCSrelated efforts to spin out emerging capabilities and technologies to 

current forces. Of the Army’s post-FCS modernization initiatives, 

Increment 1, which includes such FCS remnants as unmanned air and 

ground systems, unattended ground sensors, the non-line-of-sight 

launch system, and a network integration kit, is the furthest along in 

the acquisition development cycle (see fig. 2). The network integration 

kit includes, among other things, the integrated computer system, an 

initial version of the system-of-systems common operating 

environment (SOSCOE), early models of the Joint Tactical Radio 

System, and a range extension relay.3

 In December 2009, the Army 

requested and DOD approved, with a number of restrictions, the lowrate initial production of Increment 1 systems that are expected to be 

fielded in the fiscal year 2011-12 capability package.4

 The Army will be 

continuing Increment 1 development over the next 2 years while lowrate initial production proceeds. The projected development and 

production cost to equip nine brigades with the Increment 1 network 

and systems, supported by an independent cost estimate, would be 

about $3.5 billion. 

 

3

SOSCOE is the operating environment that serves as middleware between operating 

systems and software applications. 

4

The Army had developed a concept of continual modernization of ready-to-go capabilities 

through biannual deliveries of what are called capability packages. 

Page 4 GAO-10-493T Defense Acquisitions
Figure 2: Increment 1 Systems 

Provides the ability to precisely attack armored, lightly armored, 

and stationary or moving targets at extended ranges despite 

weather/environmental conditions and/or presence of countermeasures.

Provides enhanced situational awareness, force protection, and 

early warnings in a tactical setting through cross-cues to sensors

and weapon systems.

Provides force protection in an urban setting through a leavebehind, network-enabled reporting system of movement and/or 

activity in cleared areas.

Provides independent, soldier-level aerial reconnaissance, 

surveillance, and target acquisition capability.

Provides enhanced situational awareness and force protection 

through reduced exposure to hazards during soldier-intensive 

and/or high-risk functions.

Provides enhanced communications and situational awareness

through radios with multiple software waveforms, connections to 

unattended sensors, and links to existing networking capabilities.

Non-Line-of-Sight Launch System (NLOS-LS)

Tactical Unattended Ground Sensor (T-UGS)

Urban Unattended Ground Sensor (U-UGS) 

Class 1 Unmanned Aerial Vehicle Block 0 

Small Unmanned Ground Vehicle (SUGV) Block 1 

Network Integration Kit (NIK) 

Urb

Integrated 

Computer

JTRS Multi-Band 

Antennas

Detection Node Imaging Node

Source: Army (data and photos); GAO (analysis and presentation).

• For the second acquisition program, Increment 2 of brigade 

modernization, the Army has preliminary plans to mature Increment 1 

capabilities—potentially demonstrating full FCS threshold 

Page 5 GAO-10-493T Defense Acquisitions
requirements—as well as contributing further developments of 

SOSCOE and battle command software, and demonstrating and 

fielding additional capabilities. For example, these may include the 

Armed Robotic Vehicle Assault (Light)—an unmanned ground vehicle 

configured for security and assault support missions—and the 

Common Controller, which will provide the dismounted soldier a 

handheld device capable of controlling, connecting, and providing data 

transfer from unmanned vehicles and ground sensors. Army officials 

indicated they are currently working to define the content, cost, and 

schedule for Increment 2 with a low-rate initial production decision 

planned for fiscal year 2013 and a Defense Acquisition Board review 

expected in the third quarter of fiscal year 2010. 

 

• The third acquisition program would develop a new GCV. The Army 

reviewed current fighting vehicles across the force structure to 

determine whether to sustain, improve, divest, or pursue new vehicles 

based on operational value, capability shortfalls, and resource 

availability. Per DOD direction, the Army also collaborated with the 

Marine Corps to identify capability gaps related to fighting vehicles. 

For development of a new GCV, the Army’s preliminary plans indicate 

the use of an open architecture design to enable incremental 

improvements in modular armor; network architecture; and 

subcomponent size, weight, power, and cooling. According to a DOD 

official, DOD and the Army met recently to make a materiel 

development decision on the GCV and the Army was subsequently 

authorized to release a request for proposals for GCV technology 

development.5

 Over the next several months, the Army will be 

conducting an analysis of alternatives to assess potential materiel 

solutions for the GCV. The Army expects to follow the analysis with a 

Milestone A decision review on whether to begin technology 

development in September 2010.6

 After Milestone A, Army officials are 

proposing the use of competitive prototyping with multiple 

contractors—the number of which will depend on available funding—

during the technology development phase, which will feature the use 

of mature technologies and the fabrication and testing of prototype 

 

5

A materiel development decision is a review that is the formal entry point into the 

acquisition process and is mandatory for all programs. A successful materiel development 

decision may approve entry into the acquisition management system at any point 

consistent with phase-specific entrance criteria and statutory requirements. 

6

Milestone A is the point at which a program enters the technology development phase; 

Milestone B is entry into the engineering and manufacturing development phase; and 

Milestone C is entry into the production and deployment phase. 

Page 6 GAO-10-493T Defense Acquisitions
subsystems. In the technology development phase, the contractors will 

be expected be fabricate and evaluate several subsystem prototypes 

including an automotive test rig and a mine blast test asset. The 

contractors will also be expected to develop a near-critical design 

review level design for their integrated vehicle and, in the process, 

inform the GCV concept development document. That document is 

expected to be finalized at the Milestone A decision point. Competitive 

prototypes will be fabricated and tested during the engineering and 

manufacturing development phase. A preliminary design review would 

be used to validate contractor readiness to enter detailed design at 

Milestone B in fiscal year 2013. The Army’s preliminary plans indicate 

that the first production vehicles could be delivered in late fiscal year 

2017, about 7 years from Milestone A. 

 

• The Army is planning to incrementally develop and field an 

information network to all of its brigades in a decentralized fashion, 

that is, not as a separate acquisition program. The Army has defined a 

preliminary network strategy and is in the process of defining what the 

end state of the network will need to be, as well as how it may build up 

that network over an undefined period of time. In the near term, the 

Army is working to establish a common network foundation to build 

on and to define a common network architecture based on what is 

currently available and expected to come available in the near future. 

Current communications, command and control, and networking 

acquisition programs will continue and will be expected to build on to 

the current network foundation and architecture over time. 

Networking capabilities will be expected to meet specific standards 

and interface requirements. According to Army officials, the ongoing 

incremental network and software development activities and 

requirements will be dispersed to these acquisition programs, where 

they will be considered for further development and possible fielding. 

The only original FCS network development activities that the Army 

plans to continue under the FCS development contract are those 

supporting the network integration kit for Increment 1 and whatever 

additional networking capabilities may be needed for Increment 2. 

DOD expects the Army to present network development plans in 

March 2010. 

Page 7 GAO-10-493T Defense Acquisitions
Table 1: Army Budget Requests for Fiscal Year 2011 and Fiscal Years 2012-2015 for 

Increments 1 and 2 and GCV (millions of dollars) 

Research and Development Fiscal Year 2011 Fiscal Years 2012-2015

Increment 1& 2 1,568.0 4,126.0

GCV 934.4 6,245.4

Subtotal 2,502.4 10,371.4

Procurement 

Increments 1& 2 682.6 9,840.5

GCV 0 876.2

Subtotal 682.6 10,716.7

Total 3,185.0 21,088.1

Source: Fiscal Year 2011 President’s Budget. 

As shown in Table 1 above, the Army is proposing to make substantial 

investments in its post-FCS acquisition initiatives. For fiscal year 2011, the 

Army is proposing research and development funding of about $2.5 billion 

and procurement funding of about $683 million. For the following four 

years (fiscal years 2012-2015), the Army plans additional research and 

development investments of about $10.4 billion and procurement 

investments of about $10.7 billion. 

Recent Army Contract 

Actions Related to its PostFCS Efforts 

For the time being, the Army is continuing selected development work— 

primarily that related to Increment 1, Increment 2, and network 

development—under the existing FCS development contract. In October 

2009, the Army negotiated a modification to the existing contract, which 

clarified the development work needed for the brigade modernization 

efforts. The Army previously awarded a contract for long lead item 

procurement for Increment 1. A modification to that contract was recently 

issued to begin low-rate initial production of the Increment 1 systems. The 

Army has also recently released a request for proposals for the technology 

development phase of the proposed GCV development effort. 

Contractor proposals for GCV are expected to include plans and/or 

solutions for, among other things, survivability (hit avoidance system, 

armor, and vehicle layout) and mobility (propulsion and power generation 

and cooling). According to the request for proposals, the proposals can 

utilize prior Army investment in armor recipes, but they will not get an 

inherent advantage for doing so. Each solution will be based on its own 

merits. Contractor proposals are to be submitted in April 2010 and 

Page 8 GAO-10-493T Defense Acquisitions
contract awards, for cost-plus type contracts, are to be awarded after the 

Milestone A decision in September 2010. 

The challenge facing both DOD and the Army is to set these ground force 

modernization efforts on the best footing possible by buying the right 

capabilities at the best value. In many ways, DOD and the Army have set 

modernization efforts on a positive course, and they have an opportunity 

to reduce risks by adhering to the body of acquisition legislation and 

policy reforms—which incorporate knowledge-based best practices we 

identified in our previous work—that have been introduced since FCS 

started in 2003. The new legislation and policy reforms emphasize a 

knowledge-based acquisition approach, a cumulative process in which 

certain knowledge is acquired by key decision points before proceeding. In 

essence, knowledge supplants risk over time. Additionally, DOD and the 

Army can further reduce risks by considering lessons learned from 

problems that emerged during the FCS development effort. Initial 

indications are that the Army is moving in that direction. However, in the 

first major acquisition decision for the Army’s post-FCS initiatives, DOD 

and the Army—because they want to support the warfighter quickly—are 

proceeding with low-rate initial production of one brigade set of 

Increment 1 systems despite having acknowledged that the systems are 

immature, unreliable, and cannot perform as required. 

Acquisition Direction 

and FCS Lessons 

Learned Offer 

Opportunities to 

Promote Successful 

Outcomes, But 

Decision to Proceed 

with Initial 

Production is 

Premature 

New Acquisition Reforms 

Point Way to Lower Risk 

The body of acquisition legislation and DOD policy reforms introduced 

since FCS started in 2003 incorporates nearly all of the knowledge-based 

practices we identified in our previous work (see table 2). For example, 

DOD acquisition policy includes controls to ensure that programs have 

demonstrated a certain level of technology maturity, design stability, and 

production maturity before proceeding into the next phase of the 

acquisition process. As such, if the Army proceeds with preliminary plans 

for new acquisition programs, then adherence to the acquisition direction 

in each of its new acquisition efforts provides an opportunity to improve 

the odds for successful outcomes, reduce risks for follow-on Army ground 

force modernization efforts, and deliver needed equipment more quickly 

and at lower costs. Conversely, acquisition efforts that proceed with less 

technology, design, and manufacturing knowledge than best practices 

suggest face a higher risk of cost increases and schedule delays. 

Page 9 GAO-10-493T Defense Acquisitions
Table 2: Comparison of Controls Used in Best Practices Model and DOD Policy 

Commercial best practices model 

May 2003 DOD 

policy 

December 2008

DOD policy 

Knowledge point 1: Occurs as programs begin the engineering and manufacturing development phase (Milestone B). Match exists 

between requirements and resources. Technologies needed to meet essential product requirements have been demonstrated to work 

in their intended environments and the producer has completed a preliminary design of the product. 

Demonstrate high technology readiness levels X X 

Ensure product requirements are informed by the systems engineering process X X 

Establish cost and schedule estimates for product based on knowledge from preliminary 

design using systems engineering tools 

X 

Conduct decision review for program launch X X 

Knowledge point 2: Occurs at the critical design review between integration and demonstration. Design is stable and has been 

demonstrated through prototype testing. Ninety percent of engineering drawings are releasable to manufacturing organizations. 

Complete 90 percent of design drawings a 

Complete subsystem and system design reviews X 

Demonstrate with prototype that design meets requirements X X 

Obtain stakeholder concurrence that drawings are complete and producible b 

Complete failure modes and effects analysis X 

Identify key system characteristics X 

Identify critical manufacturing processes X 

Establish reliability targets and growth plan based on demonstrated reliability rates of 

components and subsystems 

X 

Conduct design review to enter system demonstration X X 

Knowledge point 3: Occurs at low-rate initial production commitment. Product is ready to be manufactured within cost, schedule, and 

quality targets. All key manufacturing processes are under statistical control and product reliability has been demonstrated. 

Demonstrate manufacturing processes X 

Build production-representatives prototypes X 

Test production-representative prototypes to achieve reliability goal c 

Test production-representative prototypes to demonstrate the product in a realistic 

environment 

X 

Collect statistical process control data X 

Demonstrate that critical processes are capable and under statistical control X 

Conduct decision review to begin production X X 

Sources: DOD (data); GAO (analysis and presentation). 

a

DOD criteria do not specify the percentage of drawings to be completed at the critical design review. 

b

DOD’s revised policy includes the post-critical design review assessment, which is the Milestone 

Decision Authority’s assessment of the program manager’s critical design review. However, we could 

not determine whether stakeholder concurrence was necessary to proceed. 

c

DOD criteria establish reliability goals, but do not specify testing on production-representative 

prototypes. 

Page 10 GAO-10-493T Defense Acquisitions
As shown in table 2, the cumulative building of knowledge consists of 

information that should be gathered at three critical points over the course 

of a program: 

Knowledge point 1 (at the program launch or Milestone B 

decision): Establishing a business case that balances requirements 

with resources. At this point, a match must be made between the 

customer’s needs and the developer’s available resources—technology, 

engineering, knowledge, time, and funding. A high level of technology 

maturity, demonstrated via a prototype in its intended environment, 

indicates whether resources and requirements match. Also, the developer 

completes a preliminary design of the product that shows that the design 

is feasible and that requirements are predictable and doable. 

Knowledge point 2 (at the critical design review between design 

integration and demonstration): Gaining design knowledge and 

reducing integration risk. At this point, the product design is stable 

because it has been demonstrated to meet the customer’s requirements as 

well as cost, schedule, and reliability targets. The best practice is to 

achieve design stability at the system-level critical design review, usually 

held midway through system development. Completion of at least 90 

percent of engineering drawings at this point provides tangible evidence 

that the product’s design is stable, and a prototype demonstration shows 

that the design is capable of meeting performance requirements. 

Knowledge point 3 (at production commitment or the Milestone C 

decision): Achieving predictable production. This point is achieved 

when it has been demonstrated that the developer can manufacture the 

product within cost, schedule, and quality targets. The best practice is to 

ensure that all critical manufacturing processes are in statistical control—

that is, they are repeatable, sustainable, and capable of consistently 

producing parts within the product’s quality tolerances and standards—at 

the start of production. 

The Army did not position the FCS program for success because it did not 

establish a knowledge-based acquisition approach—a strategy consistent 

with DOD policy and best acquisition practices—to develop FCS. The 

Army started the FCS program in 2003 before defining what the systems 

were going to be required to do and how they were going to interact. It 

moved ahead without determining whether the FCS concept could be 

developed in accordance with a sound business case. Specifically, at the 

FCS program’s start, the Army had not established firm requirements, 

mature technologies, a realistic cost estimate, or an acquisition strategy 

Page 11 GAO-10-493T Defense Acquisitions
wherein knowledge drives schedule. By 2009, the Army still had not shown 

that emerging FCS system designs could meet requirements, that critical 

technologies were at minimally acceptable maturity levels, and that the 

acquisition strategy was executable within estimated resources. 

With one notable exception, there are initial indications that DOD and the 

Army are moving forward to implement the acquisition policy reforms as 

they proceed with ground force modernization, including the Secretary of 

Defense’s statement about the ground vehicle modernization program—to 

“get the acquisition right, even at the cost of delay.” In addition, DOD 

anticipates that the GCV program will comply with DOD acquisition policy 

in terms of utilizing competitive system or subsystem prototypes. 

According to a DOD official, a meeting was recently held to consider a 

materiel development decision for the GCV, and the Army is proposing to 

conduct a preliminary design review on GCV before its planned Milestone 

B decision point. Additionally, a configuration steering board is planned 

for later in 2010 to address reliability and military utility of infantry 

brigade systems. 

Army’s Decision to 

Proceed with Low Rate 

Initial Production for 

Increment 1 Increases Risk 

In the first major acquisition decision for the Army’s post-FCS initiatives, 

DOD and the Army—because they want to support the warfighter 

quickly—are proceeding with low-rate initial production of Increment 1 

systems despite having acknowledged that systems are immature, are 

unreliable, and cannot perform as required. In December 2009, the Under 

Secretary of Defense for Acquisition, Technology, and Logistics approved 

low-rate initial production of Increment 1 equipment for one infantry 

brigade but noted that there is an aggressive risk reduction plan to grow 

and demonstrate the network maturity and reliability to support continued 

Increment 1 production and fielding. In the associated acquisition decision 

memorandum, the Under Secretary acknowledged the risks of pursuing 

Increment 1 production, including early network immaturity; lack of a 

clear operational perspective of the early network’s value; and large 

reliability shortfalls of the network, systems, and sensors. The Under 

Secretary also said that he was aware of the importance of fielding 

systems to the current warfighter and that the flexibility to deploy 

components as available would allow DOD to “best support” the Secretary 

of Defense’s direction to “win the wars we are in.” Because of that, the 

Under Secretary specified that a number of actions be taken over the next 

year or more and directed the Army to work toward having all 

components for the program fielded as soon as possible and to deploy 

components of the program as they are ready. However, the Under 

Secretary did not specify the improvements that the Army needed to make 

Page 12 GAO-10-493T Defense Acquisitions
or that those improvements are a prerequisite for approving additional 

production lots of Increment 1. 

The approval for low-rate initial production is at variance with DOD policy 

and Army expectations. DOD’s current acquisition policy requires that 

systems be demonstrated in their intended environments using the 

selected production-representative articles before the production decision 

occurs. However, the testing that formed the basis for the Increment 1 

production decision included surrogates and non-productionrepresentative systems, including the communications radios. As we have 

previously noted,7

 testing with surrogates and non-productionrepresentative systems is problematic because it does not conclusively 

show how well the systems can address current force capability gaps. 

Furthermore, Increment 1 systems—which are slated for a fiscal year 

2011-12 fielding—do not yet meet the Army’s expectations that new 

capabilities would be tested and their performance validated before being 

deployed in a capability package. As noted in 2009 test results, system 

performance and reliability during testing was marginal at best. For 

example, the demonstrated reliability of the Class I unmanned aerial 

vehicle was about 5 hours between failure, compared to a requirement for 

23 hours between failure. The Army asserts that Increment 1 systems’ 

maturity will improve rapidly but admits that it will be a “steep climb” and 

not a low-risk effort. 

While the Under Secretary took current warfighter needs into account in 

his decision to approve Increment 1 low-rate initial production, it is 

questionable whether the equipment can meet one of the main principles 

underpinning knowledge-based acquisition—whether the warfighter needs 

can best be met with the chosen concept. Test reports from late 2009 

showed conclusively that the systems had limited performance, and that 

this reduced the test unit’s ability to assess and refine tactics, techniques, 

and procedures associated with employment of the equipment. The 

Director, Operational Test and Evaluation, recently reported that none of 

the Increment 1 systems have demonstrated an adequate level of 

performance to be fielded to units and employed in combat. Specifically, 

the report noted that reliability is poor and falls short of the level expected 

of an acquisition system at this stage of development. Shortfalls in meeting 

reliability requirements may adversely affect Increment 1’s overall 

operational effectiveness and suitability and may increase life-cycle costs. 

 

7

GAO-09-288

Page 13 GAO-10-493T Defense Acquisitions
In addition, in its 2009 assessment of the increment’s limited user test—the 

last test before the production decision was made—the Army’s Test and 

Evaluation Command indicated that the Increment 1 systems would be 

challenged to meet warfighter needs. It concluded that, with the exception 

of the Non-Line-of-Sight Launch System, which had not yet undergone 

flight testing, all the systems were considered operationally effective and 

survivable, but with limitations, because they were immature and had 

entered the test as pre-production representative systems and/or preengineering design models. Additionally, the Command noted that these 

same systems were not operationally suitable because they did not meet 

required reliability expectations. 

Army and DOD officials made a very difficult decision when they canceled 

what was the centerpiece of Army modernization—the FCS program. As 

they transition away from the FCS concept, both the Army and DOD have 

an opportunity to improve the likely outcomes for the Army’s ground force 

modernization initiatives by adhering closely to recently enacted 

acquisition reforms and by seeking to avoid the numerous acquisition 

pitfalls that plagued FCS. As DOD and the Army proceed with these 

significant financial investments, they should keep in mind the Secretary 

of Defense’s admonition about the new ground vehicle modernization 

program: “get the acquisition right, even at the cost of delay.” Based on the 

preliminary plans, we see a number of good features such as the Army’s 

decision to pursue an incremental acquisition approach for its post-FCS 

efforts. However, it is vitally important that each of those incremental 

efforts adheres to knowledge-based acquisition principles and strikes a 

balance between what is needed, how fast it can be fielded, and how much 

it will cost. Moreover, the acquisition community needs to be held 

accountable for expected results, and DOD and the Army must not be 

willing to accept whatever results are delivered regardless of military 

utility. 

Concluding Remarks 

We are concerned that in their desire for speedy delivery of emerging 

equipment to our warfighters in the field, DOD and the Army did not strike 

the right balance in prematurely approving low-rate initial production of 

Increment 1 of brigade modernization. Although the Army will argue that it 

needs to field these capabilities as soon as possible, none of these systems 

have been designated as urgent and it is not helpful to provide early 

capability to the warfighter if those capabilities are not technically mature 

and reliable. If the Army moves forward too fast with immature Increment 

1 designs, then that could cause additional delays as the Army and its 

contractors concurrently address technology, design, and production 

Page 14 GAO-10-493T Defense Acquisitions
issues. Production and fielding is not the appropriate phase of acquisition 

to be working on such basic design issues. 

In our upcoming report, we will make recommendations intended to 

reduce the risk of proceeding into production with immature technologies. 

In that regard, we will recommend that the Secretary of Defense mandate 

that the Army correct the identified maturity and reliability issues with the 

Increment 1 network and systems prior to approving any additional lots of 

the Increment 1 network and systems for production. Specifically, the 

Army should ensure that the network and the individual systems have 

been independently assessed as fully mature, meet reliability goals, and 

have been demonstrated to perform as expected using productionrepresentative prototypes. We will also recommend that the Secretary of 

the Army should not allow fielding of the Increment 1 network or any of 

the Increment 1 systems until the identified maturity and reliability issues 

have been corrected. 

Mr. Chairman, this concludes my prepared statement. I would be happy to 

answer any questions you or members of the subcommittee may have. 

For future questions about this statement, please contact me on 

(202) 512-4841 or sullivanm@gao.gov. Individuals making key 

contributions to this statement include William R. Graveline, Assistant 

Director; William C. Allbritton; Andrea M. Bivens; Noah B. Bleicher; Tana 

M. Davis; Marcus C. Ferguson; and Robert S. Swierczek. 

Contacts and Staff 

Acknowledgements 

(120901) Page 15 GAO-10-493T Defense Acquisitions
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