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37–981 2008

[H.A.S.C. No. 110–65]

EXPEDITIONARY FIGHTING VEHICLE

PROGRAM UPDATE

HEARING

BEFORE THE

SEAPOWER AND EXPEDITIONARY FORCES

SUBCOMMITTEE

OF THE

COMMITTEE ON ARMED SERVICES

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

HEARING HELD

JUNE 26, 2007

(II)

SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE

GENE TAYLOR, Mississippi, Chairman

NEIL ABERCROMBIE, Hawaii

JAMES R. LANGEVIN, Rhode Island

RICK LARSEN, Washington

MADELEINE Z. BORDALLO, Guam

BRAD ELLSWORTH, Indiana

JOE COURTNEY, Connecticut

JOE SESTAK, Pennsylvania

ROSCOE G. BARTLETT, Maryland

KEN CALVERT, California

TERRY EVERETT, Alabama

JO ANN DAVIS, Virginia

J. RANDY FORBES, Virginia

JOE WILSON, South Carolina

WILL EBBS, Professional Staff Member

HEATH BOPE, Professional Staff Member

JENNESS SIMLER, Professional Staff Member

JASON HAGADORN, Staff Assistant

(III)

C O N T E N T S

CHRONOLOGICAL LIST OF HEARINGS

2007

Page

HEARING:

Tuesday, June 26, 2007, Expeditionary Fighting Vehicle Program Update ....... 1

APPENDIX:

Tuesday, June 26, 2007 ........................................................................................... 29

TUESDAY, JUNE 26, 2007

EXPEDITIONARY FIGHTING VEHICLE PROGRAM UPDATE

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Bartlett, Hon. Roscoe G., a Representative from Maryland, Ranking Member,

Seapower and Expeditionary Forces Subcommittee .......................................... 3

Taylor, Hon. Gene, a Representative from Mississippi, Chairman, Seapower

and Expeditionary Forces Subcommittee ........................................................... 1

WITNESSES

Ahern, David G., Director, Portfolio Systems Acquisition, Office of the Deputy

Under Secretary of Defense (Acquisition and Technology); Roger M. Smith,

Deputy Assistant Secretary of the Navy (Expeditionary Warfare), accompanied by Col. William Taylor, Program Executive Officer Land Systems

(PEO LS), U.S. Marine Corps; Lt. Gen. Emerson N. Gardner, Jr., Deputy

Commandant, Programs and Resources Department, Headquarters, U.S.

Marine Corps beginning on ................................................................................. 5

APPENDIX

PREPARED STATEMENTS:

Ahern, David G. ................................................................................................ 33

Gardner, Lt. Gen. Emerson N., Jr. ................................................................. 51

Smith, Roger M., joint with Col. William Taylor ........................................... 42

DOCUMENTS SUBMITTED FOR THE RECORD:

[There were no Documents submitted.]

QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD:

Mr. Forbes ......................................................................................................... 63

Mr. Taylor ......................................................................................................... 59

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EXPEDITIONARY FIGHTING VEHICLE PROGRAM

UPDATE

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE, Washington, DC, Tuesday, June 26, 2007.

The subcommittee met, pursuant to call, at 4:04 p.m., in room

2212, Rayburn House Office Building, Hon. Gene Taylor (chairman

of the subcommittee) presiding.

OPENING STATEMENT OF HON. GENE TAYLOR, A REPRESENTATIVE FROM MISSISSIPPI, CHAIRMAN, SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE

Mr. TAYLOR. The committee will come to order.

The purpose of this afternoon’s hearing is to receive testimony

from representatives of the Department of Defense (DOD), the Department of Navy, and the Marine Corps on the status of the Expeditionary Fighting Vehicle (EFV) program, which recently completed an extensive review triggered by program delays and significant cost growth.

The hearing will consist of one panel: Mr. David Ahern, Director

of Portfolio Systems Acquisition, Office of the Under Secretary of

Defense for Acquisition, Technology and Logistics; Mr. Roger

Smith, Deputy Assistant Secretary of the Navy for Expeditionary

Warfare; Lieutenant General Emerson Gardner, Deputy Commandant of the Marine Corps, Programs and Resources; and Colonel William Taylor, Program Executive Officer, Marine Corps Land

Systems.

The program under review today, the Expeditionary Fighting Vehicle, was conceived in the mid–1990’s, but its primary focus is an

enduring Marine Corps mission: getting Marines from ship to shore

and then helping them fight on land.

The ancestor of the EFV is the amphibious tractor or AMTRAC,

first developed during World War II to get Marines ashore while

providing limited protection and firepower support.

However, compared to the original AMTRAC, the EFV seeks to

make a dramatic step forward. The role of this program is to build

an armored personnel carrier with a 30-millimeter cannon that can

launch from ships 25 miles offshore and approach at 25 knots carrying 17 Marines—a daunting technical challenge.

Building armored combat vehicles for today’s combat environment, a threat that can come from any direction at anytime is hard

enough. Building one that can go 25 knots in the water is an order

of magnitude more difficult.

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From the start of the program in 1995 until late 2006, the Marine Corps and its prime contractor, General Dynamics, appeared

to be making good progress toward low-rate production in 2007.

The Marine Corps and the contractors reported that the EFV prototypes were meeting all their performance goals. Congress, for its

part, provided strong support for the EFV through defense authorization and appropriations legislation.

Then something apparently went wrong. Last fall, the Marine

Corps program manager raised concerns about the lower reliability

of the EFV prototypes undergoing developmental testing. The production version of the EFV is supposed to be able to operate about

43 hours before breaking down. The prototypes being tested were

only going between 4 and 10 hours before breaking down, and

there were many different systems in the EFV with reliability

issues.

I want to be very clear what this kind of reliability problem can

mean for Marines who operate these vehicles. Going into combat in

armored vehicles that float is dangerous enough. If that same vehicle gets ashore far from the nearest maintenance support and

breaks down, the Marines on that vehicle could be extremely vulnerable.

It is clear that a reliable vehicle is a must, and while I am disappointed and troubled that the prototypes performed so poorly

after U.S. taxpayers provided more than $2.3 billion in funds, my

concern is tempered somewhat by the fact that the Marine Corps

noticed these reliability problems with the prototypes supplied by

the contractor and are trying to do something about it now, rather

than waiting until the vehicles are in the hands of the Marines.

After these reliability problems arose, another major decision

was made by the Marine Corps, which changes the program originally authorized by this Congress. Rather than buying more than

1,000 EFVs as originally planned, the Marine Corps was directed

to only purchase 573.

Obviously, when you cut the number of vehicles in half, each one

is going to cost more. In this case, the cost of a single EFV went

from $6 million a copy to $17 million, which I would believe would

make the EFV the most expensive ground combat vehicle in the

history of the U.S. military.

The combination of this dramatic cost growth and reliability

problems triggered a Nunn-McCurdy review of the EFV program

by the secretary of defense. The results of that review are the primary focus of this hearing. The Nunn-McCurdy review decided to

keep the program going but with a four-year delay and numerous

additional oversight.

While there are many important technical and financial issues

involved in a major program like EFV, I am particularly concerned

about DOD’s decision to award another contract for continued development of the EFV to the same contractor, General Dynamics,

whose poor performance led in part to the delays and cost overruns

of the EFV program.

I am concerned about what kind of message this sends to the

public and to those in the defense industry. An observer might reasonably ask why a contractor should get $82 million in award fees

for a program that did not perform as promised and then get, in

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effect, a four-year contract extension that will be worth millions

more.

At a minimum, the committee expects the panel of witnesses

today to address the following issues: Why does the Marine Corps

need this vehicle? What is the net gain in amphibious assault capability that the EFV will provide? What happened? Why did a program that appeared to be moving along on schedule suddenly encounter serious reliability problems? Were there warning signs and

were they ignored? Who was responsible for the program getting so

far off track? What actions did they take to try to fix the problems

when they arose?

Why did the DOD agree to let the Marine Corps keep the same

contractor in place whose poor performance led, at least in part, to

things going wrong? Why not run a new competition so that another company can get involved? Have lessons learned been captured, and is there a mitigation plan in place that would ensure

that these problems will not occur again in the future?

Congress has an oversight responsibility to the American taxpayer. There are few programs of which I am aware that actually

meet their cost and schedule goals. That must change. This committee and this Congress understand that advanced combat vehicles like the EFV represent difficult engineering challenges and are

not easy to build. However, effective program oversight, sound engineering and program maintenance policies are supposed to manage that risk.

Congress cannot continue to just throw money at problems as

they overrun projections. There needs to be more accountability

and more openness across a wide range of acquisition projects. This

is just one.

Finally, before turning to our Ranking Member, Representative

Roscoe Bartlett, I wanted to point out that one of our witnesses,

Lieutenant General Gardner, has been nominated by the President

to serve as Deputy Director of Program Analysis and Evaluation in

the Office of the Secretary of Defense (OSD). If confirmed, he will

be the first Marine in this very important position.

The committee wishes him well with his Senate confirmation and

new responsibilities.

I would now like to recognize the Ranking Member of this committee and my partner in trying to solve some of these problems,

Representative Roscoe Bartlett.

STATEMENT OF HON. ROSCOE G. BARTLETT, A REPRESENTATIVE FROM MARYLAND, RANKING MEMBER, SEAPOWER AND

EXPEDITIONARY FORCES SUBCOMMITTEE

Mr. BARTLETT. Thank you, Mr. Chairman.

Good afternoon, ladies and gentlemen.

I have followed the progress of the Expeditionary Fighting Vehicle with interest, especially because the program falls within the

jurisdiction of this subcommittee. Clearly, this vehicle is a one-ofa-kind marvel. Comparisons to other ground vehicles are unproductive.

The Expeditionary Fighting Vehicle has demonstrated it can

keep up with the M1 Abrams tank on land, but can the Abrams

tank be launched from a ship and do more than 25 knots to shore?

4

Many comparisons to other amphibious assault capabilities are

poor. The V–22 tilt-rotor aircraft is designed for amphibious assault, but the V–22 doesn’t have a 30-millimeter cannon and

doesn’t protect the Marines inside from most nuclear, chemical, or

biological attacks.

The amphibious assault vehicle, or AAV, that the Marines have

had in inventory since the 1970’s provides amphibious assault from

the sea, but the AAV is over 75 percent slower and can only be

launched from two nautical miles out, as compared to 25 nautical

miles that the EFV has, and the AAV’s range on land is 40 percent

less than the EFV.

But the EFV program does have one striking similarity to a

number of other Pentagon programs. It has been unable to stay on

cost and on schedule. The EFV still has a number of technical hurdles to overcome. Like several of EFV’s sister acquisition programs

in the Navy and Marine Corps, the program is not just a little over

budget and over schedule. This program is going to cost more than

three times what Congress was originally informed.

If all goes well from here on out, system development and demonstration is going to take nearly twice as long as originally

planned. What is even more troubling perhaps is that the reasons

for the cost and schedule growth are also quite similar to other acquisition programs.

For example, at least two reviews of the program have found

that there was a lack of systems engineering experience at both the

government and contractor levels. Further, the schedule for the

program was unrealistic, with design reviews that were held even

when the contractor was not ready.

The level of effort on the program was not properly adjusted to

reflect funding realities. There was not sufficient emphasis on developmental testing and the test and evaluation master plan was

not properly developed.

One of the requirements appears to have been the major design

drive, and consequently it was a major driver in the reliability,

costs, and schedule issues. Yet at no point does there appear to

have been consideration made for adjusting this requirement and

spiraling an additional capability at a later date.

As well, despite these programmatic challenges, it would appear

that the contractor continued to earn the majority of the award fee

associated with the program. There is a disturbing familiarity here.

It almost sounds like we could replace the name EFV with the

name of other major acquisition programs and we would be dealing

with a lot of the same issues. In this very room, we have had hearings to discuss nearly identical issues on LCS and DDG–1000.

Many of these same challenges face V–22.

I have listened to our road fighters tell me that the capabilities

that EFV can help fill a critical gap. I hope we will hear more

about that today to assure our members that this is not simply a

program that the Marine Corps feels it has to have because it is

time to replace the AAV, but rather the EFV provides capabilities

we need for tomorrow’s battle space.

However, this pattern of cost overruns, schedule delays and apparent lack of accountability has got to stop. These are serious systemic problems. I want to hear some serious systemic answers. As

5

a result of this re-certification, what are you going to do to fix the

specific issues encountered on EFV and what are you going to do

to start re-learning this lesson?

I thank the witnesses for being with us to discuss these issues,

and I thank them for their service.

Thank you, Mr. Chairman.

Mr. TAYLOR. Thank you, Mr. Bartlett.

Without objection, all prepared witness statements will be accepted for inclusion in the record.

Mr. Ahern, I understand that you have an opening statement, to

be followed by Mr. Smith and Lieutenant General Gardner.

STATEMENT OF DAVID G. AHERN, DIRECTOR, PORTFOLIO SYSTEMS ACQUISITION, OFFICE OF THE DEPUTY UNDER SECRETARY OF DEFENSE (ACQUISITION AND TECHNOLOGY);

ROGER M. SMITH, DEPUTY ASSISTANT SECRETARY OF THE

NAVY (EXPEDITIONARY WARFARE), ACCOMPANIED BY COL.

WILLIAM TAYLOR, PROGRAM EXECUTIVE OFFICER LAND

SYSTEMS (PEO LS), U.S. MARINE CORPS; LT. GEN. EMERSON

N. GARDNER, JR., DEPUTY COMMANDANT, PROGRAMS AND

RESOURCES DEPARTMENT, HEADQUARTERS, U.S. MARINE

CORPS

STATEMENT OF DAVID G. AHERN

Mr. AHERN. Thank you, Chairman Taylor. I have a very brief

opening statement.

Chairman Taylor, Ranking Member Bartlett and members of the

subcommittee, I am honored to have the opportunity to discuss the

Department’s recent Nunn-McCurdy certification of the Marine

Corps restructured Expeditionary Fighting Vehicle pursuant to the

requirements of section 2433 of the Title X United States Code.

Your letter of 6 June requested that OSD, AT&L, address three

specific issues: a description of the Nunn-McCurdy review process;

an explanation of the outcome from that process; and any initiatives the Department is pursuing to avoid similar challenges in

other acquisition programs.

I have submitted a written statement that addresses those three

issues, and I am prepared to further discuss how the Department

addressed those issues this afternoon.

Before completing my opening statement, I would like to mention

that in order to have successful execution of the certified EFV program, it is contingent upon receiving the full funding requested in

the fiscal year 2008 President’s budget.

I thank the committee for your time today and leadership in addressing the Marine Corps’ operational needs. The committee has

consistently provided our men and women in the armed forces with

systems and support they need.

Thank you for your unwavering support, and I would be happy

to take any questions on those issues and the other issues that you

mentioned, sir.

Mr. TAYLOR. Mr. Ahern, with all due respect, I don’t recall you

answering a single question that we just asked you.

Mr. AHERN. Yes, sir.

6

Mr. TAYLOR. I hope you know that in this subcommittee, we regularly waive the five-minute rule to give our witnesses the opportunity to answer questions. This isn’t for show; this is dead-serious.

I want to give you a second opportunity to answer the questions

that the committee just asked of you.

Mr. AHERN. Yes, sir.

Mr. TAYLOR. And do it in any manner that you wish.

Mr. AHERN. In discussing the review process and the lessons

learned, I would say that we learned most specifically, the Department’s initiatives focused primarily on starting the programs correctly, that we have the right balance of requirements, acquisition

planning, including technological maturity, and funding. If we do

that at the beginning of a program, we stand a much better chance

of having that program proceed successfully.

Second, we have to have a very robust ability to frame markers

for early intervention for troubled programs prior to breaches, ensuring that systems engineering processes specifically—and I think

we have done that in the EFV program with the restructured

schedule the way it is laid out—and contract performance management systems, and I think we have done that also with the recertification effort of the earned value management system (EVMS) of

General Dynamics, and a focus on using the earned value management by the program office, that they are fully utilized as key elements in indicating the status of the program.

We are conducting a rapid review of all the major acquisitions to

identify any problem programs for early attention based on our experience in this Nunn-McCurdy process in 2007. Additionally, we

are working to identify the effective cost goals indicators for early

acquisition program course correction, and initiatives to improve

acquisition processes continue to be a department priority.

That, from the standpoint, as I understood your question, sir, addresses the questions of the lessons learned from the Nunn-McCurdy certification of the earned value management of the EFV.

[The prepared statement of Mr. Ahern can be found in the Appendix on page 33.]

Mr. TAYLOR. Mr. Ahern, we will proceed in the regular order, but

I would hope that for the benefit of everyone concerned, starting

with the Marines who will be riding in these vehicles, their parents, their loved ones, the taxpayers that are going to pay for

these, and who have paid $2.3 billion to date for an uncompleted

program, that we will get some better answers later on during the

course of this hearing.

The chair now recognizes Mr. Smith.

STATEMENT OF ROGER M. SMITH

Mr. SMITH. Mr. Chairman, Mr. Bartlett and distinguished other

members of the subcommittee, I thank you on behalf of our sailors

and Marines to appear before you today to discuss the current status of the EFV, its restructuring following the Nunn-McCurdy certification process, and the Office of the Secretary of Defense’s approved way ahead for the program.

Today, I will provide a joint statement, and I have Colonel Bill

Taylor with me, our new Marine Corps Program Executive Officer

(PEO) for land systems. We are going to provide the Department

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of Navy’s testimony on the programmatic and technological factors

that led to the EFV’s reliability issues in 2006, the outcome of the

program’s Nunn-McCurdy certification, and the restructuring and

management initiatives the Department has implemented to ensure that we progress on a successful track to fill this capability.

In the interest of time, I will close by saying the EFV is the top

priority program of the Department of Navy, or is a top priority

program of the Department of Navy, and it is the most cost-effective way ahead as far as a restructured program, and will provide

the Marine Corps the capability to perform its Title X mission of

projecting combat power from the sea in an increasingly anti-access

security environment.

EFV’s ability to maneuver at speeds in excess of 25 knots

through the water, combined with its superior land-ability,

lethality and survivability, will provide both over-the-horizon amphibious capability and significantly greater warfighting power projection on land than the current amphibious assault vehicle.

I look forward to your questions.

Mr. TAYLOR. Mr. Smith, I am going to say the same thing to you.

The program spent $2.3 billion. Apparently, the vehicles can’t go

but a few hours between major breakdowns. It is not ready to be

fielded after all this money. You have just given a contract to the

contractor who has apparently had serious problems. You haven’t

told me how you are going to redress them.

You have not done a good justification of where $2.3 billion went.

As far as I am concerned, you have done nothing to promote the

purpose of this vehicle, which is to make it safer for the amphibious assaults. You have to be further offshore to get the Marines

to the battle safely, and then get them home safely.

The purpose of this is not to waste your time or our time, but

to explain to the moms and dads and loved ones of those Marines

what we are doing and to the citizens who are paying for this.

Would you like another chance at answering some of the questions

the committee has supplied to you?

Mr. SMITH. Absolutely. I was given the guidance to provide a

short opening statement, and I will address your questions, sir.

Mr. TAYLOR. With the consent of the committee members, we

think that what you have to say is important enough to where we

regularly waive the five-minute rule. And so with unanimous consent, I would ask to do that today.

Without objection.

Mr. SMITH. All right, sir. Some of the problems that led to the

poor reliability was that the program was not fully funded in the

1990’s, leading up to deferred systems engineering. And then the

deferred systems engineering that was not performed in the latter

part of the program, in the systems development and demonstration timeframe, created a situation where we did not fully understand when we corrected some part of the program content from

testing, something else perhaps was not addressed.

Our developmental test that was conducted did not adequately

identify the poor reliability in a number of the systems. The vehicle

did pass or did demonstrate all of its key performance parameters

with the exception of reliability during the operational assessment.

However, it could not do it consistently, as you have addressed.

8

We have through four different independent assessments determined that the lack of systems engineering that was not performed

is one of the main factors that caused the reliability to be so poor.

Do you have anything to add, Bill?

Colonel TAYLOR. No, sir.

[The joint prepared statement of Mr. Smith and Colonel Taylor

can be found in the Appendix on page 42.]

Mr. TAYLOR. General Gardner, would you like to make your

statement?

STATEMENT OF LT. GEN. EMERSON N. GARDNER, JR.

General GARDNER. Yes, sir. I would like to answer the first two

of your questions. First, Chairman Taylor, Congressman Bartlett,

distinguished members, thank you for the opportunity to be here

and thank you for your well wishes, sir.

Why do we need the EFV? The EFV is essential to the Nation’s

forcible entry capability, a capability that carries strategic weight

in this dangerous world. Our concept of projecting power is to use

a triad of Marine tilt-rotor and rotor-wing aircraft, Navy landing

craft air cushions, LCACs, and the EFV, to achieve speed and sustainable power ashore. Without the EFV, the United States does

not have the ability to conduct surface assaults from ships over the

horizon.

The necessity of over-the-horizon operations was reinforced about

a year ago when Hezbollah rebels used an Iranian missile to successfully engage an Israeli patrol boat about ten miles offshore of

Lebanon. If we Marines were told today to perform our primary

mission of forcible entry from the sea, Navy ships would have to

operate well within the range of those kinds of coastal defense.

Rapidly acquiring the EFV will reduce the risk of casualties and

the loss of ships.

I believe that answers your question, sir, about the need and the

net gain in capability.

We believe that the acquisition community within OSD as represented at the table today has restructured the EFV program in

a way that will give us the high-speed amphibious capability that

we need. As the final piece to our long-sought triad of forcible entry

capability, we seek the support of the Congress in fully resourcing

this program in fiscal year 2008 and the years to come.

Thank you.

[The prepared statement of General Gardner can be found in the

Appendix on page 51.]

Mr. TAYLOR. Thank you, General.

General, the first question will be, how practical is it? It seems

to me it would be great to have a vehicle that can do 26 knots in

the water speed with equal survivability. But how practical is that

to couple with a vehicle that is going to go several hundred miles

inland?

And the next question is, given the enemy’s unfortunate exploitation of the Humvee, and their continued improvements in the use

of mines, particularly from below a vehicle, how well protected is

this vehicle if we solve the technical problems on the breakdowns?

How vulnerable will it be to mines from underneath? And is that

being taken into account?

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Nowhere have I read that that was one of the initial goals, and

that is forgivable because we didn’t see this coming with the

Humvee. We didn’t see it coming with the Bradley. South Africa

saw it ten years ago, but we, is the word, did not see this coming.

But we see it now, and we are taking steps with the Mine Resistant Ambush Protected Vehicle (MRAP) now.

So what steps are being taken, once we solve the mechanical

problems and the breakdown problems, how susceptible to mines

from beneath will this vehicle be? And has that been a part of the

testing?

General GARDNER. Sir, let me try and take those in order.

First, you know, the Marine Corps is a balanced force. We are

a multi-mission force, and we have to be organized, trained, and

equipped to do a multitude of missions. This is one of the reasons

that we embarked on looking at our portfolio of armed vehicles

here and reduced the overall objective from 1,013 EFVs to 573.

At the same time, we decided to balance our portfolio by seeking

in the future about 600 or so wheeled vehicles, armored vehicles,

which will then together provide the kind of capability you would

need ashore, but still provide us this forcible entry capability from

the sea.

So I would say that the EFV provides this niche. It is the only

machine in the world that provides that capability, so zero is clearly the wrong answer. As we looked at the mission sets and what

we saw in the strategic planning guidance, we felt that 573 was the

right number to properly equip and position assets on

prepositioned ships, and in training assets.

So I think that goes after what you are talking about, is it practical to do that. We need that capability. When we are standing offshore from the forcible entry requirement, we need the ability to

go both air and surface, or some mix, according to the situation at

the time, and this provides that.

With regard to the protective capabilities, I think maybe Colonel

Taylor or Mr. Smith is maybe better postured to answer the specific attributes of the vehicle, but we recognize that there must be

certain trades made when you are trying to get all of these capabilities to provide the overall capability to the Marine Corps.

To provide this kind of high-speed capability that we need to be

able to get up on plane, we need a flat-bottom vehicle, and flat-bottom vehicles are not ideally suited for damage control against buried mines. However, the side protection of the vehicle does provide

the kind of force protection that we are seeing in the vehicles

today.

Perhaps Colonel Taylor——

Colonel TAYLOR. Yes, sir, Mr. Chairman. Again, as General Gardner mentioned, this is sub-optimized as compared to some of the

pure combat vehicles once ashore, but because of the requirement

to have that flat bottom so that it can get up on plane, that is a

driving factor in being sub-optimized. But even once ashore, it does

compare favorably to purely ground-based combat vehicles such as

Strykers. So it does satisfy its firepower, armor protection KPPs.

Mr. TAYLOR. About two years ago right now, one of your AMTRACs out in Anbar Province, with a number of Marines on board,

was attacked by an extremely powerful device from underneath.

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Some of the Marine Corps reservists on that AMTRAC were from

Mississippi. They were a bit more fortunate than their counterparts from Louisiana Marine Corps Reserves. That certainly left a

lasting impression on a lot of people in that part of the world.

If this vehicle were to encounter that same device, number one,

has anyone run any tests like that? And I guess the follow up

would be, if a test has been run, would it be any more survivable

than that AMTRAC was on that day two years ago?

Colonel TAYLOR. Mr. Chairman, I think I would answer the question in this context, that this is a common risk area, and has to

be addressed in the Science & Technology (S&T) environment from

a common perspective. This is not purely an EFV concern. So EFV

has not done any dedicated testing to date.

Mr. TAYLOR. Colonel, believe me, I respect you. I respect your

profession.

Colonel TAYLOR. Yes, sir.

Mr. TAYLOR. But we are today operating AMTRACs hundreds of

miles inland, because there is a riverine environment where you occasionally, because of bridges being either suspect or gone, have to

have those capabilities. I understand that. I also understand that

we have an adaptive enemy who has been learning, unfortunately

pretty quickly, as he goes along.

If that vehicle were in production today—let’s say we fixed the

mechanical problems—so if that vehicle was in production today

and was traveling in Anbar Province or anywhere else in Iraq, and

encountered the same explosive device that the AMTRAC did a

couple of years ago, what would be the results? Has that been tested?

Believe me, I understand the production for this—I mean, the

faultline on this started in 1996. That was a long time ago. I appreciate the huge technological challenges, but if we don’t address this

now, shame on me and shame on all of us.

Colonel TAYLOR. Yes, sir. To the best of my ability, I will answer

it in this fashion. It has not been addressed on the EFV, but it has

not been addressed any better on any other vehicle at this moment

in time, but we have to get there.

Mr. TAYLOR. Well, given the Marine Corps’ crash program, and

I respect that crash program, to try to field an MRAP, because of

what we have seen happen to the Humvees and other flat-bottom

vehicles, why isn’t this being looked into? The program is already

behind schedule, so if we are going to build it, and if the Marine

Corps tells me they still want it, I want to work with you to build

it.

If we are going to build it, why don’t we build it in a way that

would make it more survivable to a threat that we didn’t know existed ten years ago—should have known, but didn’t—but we certainly know exists now?

Colonel TAYLOR. Yes, sir, I will take as an action to see what is

being done.

Mr. TAYLOR. Do you mind if I turn to your left?

General GARDNER. Sir, I would just say that in a sense of the

penetrating capabilities of underbelly mines out there, we are

somewhat limited by the flat belly, but there are things that have

been done to the EFV that make it more survivable in any kind

11

of incident than the current IED out there—an improved fire extinguishing system; spall liners—these sorts of armoring things out

there do make the vehicle more survivable today on the battlefield,

that same vehicle today out there.

Now, where that particular mine went though, I cannot sit here

and testify that it would not penetrate, it would not cause injury

and death. But I do feel that we have done everything else within

the capability of the vehicle to put in the kind of survivability—

things like fire extinguishing capability. You can help me out here

maybe with general capabilities, those sorts of things.

Mr. TAYLOR. I understand the need for a lifting body. I understand buoyancy, but you can also get a lifting body with a V-shape.

It is a bit more difficult. It actually makes the vessel more seaworthy, and it certainly would make it more survivable to an attack like that.

So my question is, if we are this far behind schedule; if we are

looking at other things, why aren’t we looking at that as well? Because I would hate to rush to production a vehicle that within several months, 60 Minutes, and moms and dads all across America

are saying, ‘‘What in the heck are you all doing? Why did you send

my child to battle in something you knew had a flat bottom, when

you are in the process of replacing every Humvee in-theater for the

Marine Corps?’’

General GARDNER. Sir, I would just submit that my understanding of what the ability of industry is to produce and the capabilities

out there, and the various threats which continue to evolve and

challenge us even in the MRAP program, that we have to balance

risk as well as we can against mission capability. We are probably

not going to have every vehicle at every time going to have an

equal amount of force protection to the most armored of vehicles.

Of course, that would be a laudable goal to get there, but technologically we need those kinds of science and technology efforts that

Colonel Taylor mentioned. We believe that there is some balance

of risk that takes place if you are going to achieve some of these

niche mission capabilities.

Mr. TAYLOR. Okay. Did any of the proposals, either in the beginning or more recent proposals for this program, include a V-shaped

bottom?

Colonel TAYLOR. I am not aware of any, sir. I believe that the

physics would then preclude you from being able to achieve your

high water speed KPP with a V-shaped hull.

Mr. TAYLOR. Again, I respectfully disagree. It would make it

more difficult. You are not going to get the kind of lift. They build

V-bottom boats every day all across the country that achieve great

speeds.

The chair yields to Mr. Bartlett.

Mr. BARTLETT. I am interested in totally understanding why

making it V-bottom would make it less like a boat. Most boats I

am in do have a V-bottom. I think properly designed, that shouldn’t

be inconsistent with our goal of high water speed, should it? Because every boat I have seen going fast on the water, has a V-bottom rather than a flat bottom. Am I correct?

Colonel TAYLOR. Yes, sir. I believe it comes down to the weight

and torque ratio. I really believe it has a lot to do with the existing

12

vehicle’s ability to get up on plane. That is what allows it to

achieve that last percentage of high-water speed, once it gets up on

plane. Without getting up on plane, this vehicle right now tends to

wallow down in about the 14- to 17-knot range.

Mr. BARTLETT. Almost everything we do is the result of some

compromise. I agree with the chairman that this newfound vulnerability in the Humvee would appear to necessitate a look at this

vehicle to see if we couldn’t build into this the kinds of protections

that were not in the Humvee, that we are now moving to the

MRAPs to get.

This vehicle clearly provides the Marines with the capabilities

that we do not now have. In deciding whether this is a must-have

or not, we need to look at this requirement as compared to many

other requirements that we have. It has been a long while since the

Marines en masse stormed a beach, hasn’t it?

General GARDNER. That is correct, sir.

Mr. BARTLETT. Of course, this could be used for a very small

group of people. I understand that. It has been a long time since

we en masse stormed a beach where this would be an ideal vehicle,

of course, particularly in the numbers that we are anticipating buying.

If you knew of all the problems that we were going to have in

developing this vehicle and in looking at all of the other needs that

the Marine Corps had, if you knew before we started this, where

we would be today, would you have started? Or could this money

have been spent better in some other area?

General GARDNER. Sir, we need the ability to mix our force lines

capability by air and surface, to have that surface capability. If the

threat has driven our ships over the radar horizon, significant distances from the coast, you have to get there. If you are going to

get there from the surface, then we need some sort of surface craft

to do that.

We think this is an essential capability. I think that we would

still take the same decision. Obviously, we would not want to see

the program structured as it has been and performing as it has

been. Hopefully, we are past that with this restructuring.

To your point, sir, about the Marines not storming the beach in

a long time, there are many capabilities that have not been used

that are essential to our Nation’s security. There is a significant

deterrent capability in the knowledge of people around the world

that the Marine Corps has a viable forcible entry capability. We

would agree that we don’t need too much of it.

Once again, I go back to the mix of vehicles and getting the right

number so that we have a viable operationally significant number

of Marines that we can do in this manner. That is how we arrived

at the 573 number. This would support surface assault of about

two Marine expeditionary brigades, and in each expeditionary brigade, about 15,000 Marines—so the surface portion of that initial

assault.

So that capability we think out there has a certain deterrent

value, and was clearly used in the first Gulf War, and is frequently

assessed as having pinned down a significant number of Iraqi divisions, even though non-employed in the liberation of Kuwait, as an

example.

13

Mr. BARTLETT. I have a question about the number of vehicles. When we thought it was going to cost $5 million, we needed over

1,000. When we learned it was going to cost a whole lot more than

that, all at once we need about half that number. And so one wonders about the analysis that is used in arriving at the number we

need.

One last question, and this is a problem that existed in many,

many programs. Apparently, the real cost driver here was our desire for high water speeds. That made it a very complex, costly and

potentially unreliable and difficult to maintain vehicle. When we

are designing these capabilities, is there anybody at the table who

is asking when is enough enough?

There are many of these designs that in spending 50 percent of

the money, you can get 95 percent of the way there, but that last

five percent will cost as much money as the first 95 percent. If we

just accept the 100 percent as a requirement, and nobody said, gee,

could you really make do with a little bit less, which will cut the

cost in half—is there nobody at the table that does that?

Because so many of these programs, Mr. Chairman, are driven

because of a requirement that if we had been able to reduce it just

a little might have massively reduced the cost and complexity and

kept it more reasonably on schedule and on-cost.

Who sits at the table to make these arguments?

General GARDNER. Sir, as part of the Nunn-McCurdy certification

process——

Mr. BARTLETT. But this is after the fact, sir. Who sits at the

table when we are designing these things and you are telling us

how much they are going to cost? Who sits at the table asking

these questions?

Mr. AHERN. I can address that question. I think that the requirements and the program management together—the acquisition and

the program management.

I am not going to say that we have had a great tradition of doing

it well, but the recognition that cost and schedule are flexible variables that we can get more of all the time is no longer part of our

way of doing business. There is in every acquisition summary of

the program a statement of what the technological drivers are for

cost in that program, and we look at those every month.

Further, as we begin programs, as I mentioned in my opening

statement now, we are very sensitive to the effect of pushing requirements against cost and schedule. We have a requirement to

check technological maturity, as well as integration maturity, before we go forward on birthing a program.

Finally, specifically in this program, Mr. Krieg has encouraged

us as we go forward in this reliability development portion of the

program, to recognize as we get to key reviews—the preliminary

and the critical design review—that we can and should address

whether we are over-required and need to tradeoff requirements in

order to have, as you said, sir, the 85 percent or 90 percent solution, rather than spending that inordinate amount of money and

schedule to get that final 10 percent.

I think the department has that message now, that cost and

schedule are variables that we must look at and performance has

to be looked at at the same time.

14

Mr. BARTLETT. We just underestimated——

Mr. AHERN. I think that in this particular area, and I think that

that was commented on before—this particular program, similar to

many other programs, the complicated nature of the technology,

the expectations of particularly the waterborne speed, and the integration effort that was going to be required, was not as well understood as it needed to be.

The analogies that were used in the initial costing in the middle–

1990’s were to programs that were available at that time. I couldn’t

go into which one of the programs, but I am comfortable from going

through this process that they didn’t have the analogies that were

accurate to do the cost estimating in terms of the complexity and

the technological effort that had to be made.

And so that cost estimating turned out I think to be a significant

portion of it. As Mr. Smith commented, then we needed to have

more robust systems engineering, and up front an early developmental testing, which I think we have in the restructured program,

to show us whether or not we are on the track—and that is the

way this restructured program is developed. Instead of being as

schedule-driven, as Chairman Taylor mentioned, it is an eventdriven schedule, with an expectation that we will carefully review

it at each episode.

So in summary, to answer your question, I think it was technology, cost-estimating connection there, and the integration, and

then the fact that we didn’t put the system engineering in to begin

with to make up for those. Then we had a more schedule-driven

than an event-driven program.

Mr. BARTLETT. Thank you very much.

Thank you, Mr. Chairman.

Mr. TAYLOR. The chair recognizes Mr. Courtney.

Mr. COURTNEY. Thank you, Mr. Chairman.

I am still trying to understand what the change is going to be

after the review. You were starting to describe a different process.

Maybe you can just help me, as one of the new guys here. What

does that mean?

In terms of what we were given, award fees were given out during the 1990’s and early 2000, in a process which clearly was a

mistake. I mean, it definitely seems that this process was not

working, if there were actually award fees given out. What is going

to change so that we are not going to see that type of mistake made

again?

Mr. AHERN. Yes, sir. I would like to address the award fees specifically, but only for a minute, and then I would turn it over to

Colonel Taylor or to Mr. Smith.

First off, I think that the award fees, the way they were structured in the 1990’s and in the beginning of the 2000s, were less objective and measurable than they needed to be, and that has been

recognized by the department. About three or four months ago, a

new directive came out on the criteria for developing award fees,

for writing award fees.

I think that the contract—and of course, the award fee plan is

a part of the contract, and that I where I will defer to the Navy,

and I will quit right now—that there were problems with award

fees earlier.

15

And in the specific case of this one, I would let the Navy answer

it—but that has definitely been addressed, and there is absolutely,

again as with other things that we have learned, not only from the

Nunn-McCurdy, but just other events in the department. We reissued a varied directive not only on award fees, but that ties into

objective, measurable events.

Mr. COURTNEY. And so let’s say as event progress or develop, and

the Pentagon determines that it is not working or it is not satisfying what the taxpayer is looking for, what happens?

Mr. AHERN. Those are described, and again I could defer to Colonel Taylor, but I want to say, because I was heavily involved in the

certification, there are off-ramps described—‘‘off ramp’’ meaning go

do something else, or we need to look at this program very hard—

three separate off-ramps before we get to a low-rate production decision. Again, the award fee is very definitely based on an objective

and measurable criteria.

Mr. COURTNEY. Does an ‘‘off ramp’’ mean cancellation?

Mr. AHERN. It is a possibility, yes, sir—measurable criteria for

those events that if not satisfied require a real hard look, and that

is certainly a possibility.

Mr. COURTNEY. Okay.

Colonel TAYLOR. Mr. Courtney, let me try and give you some additional insight into the award fee. Historically, most developmental contracts are in fact cost-plus award fee. That is no excuse.

It is just a statement of fact, probably a lesson learned. You are

correct in that General Dynamics earned $82 million in award fee

payments of a potential $103 million. Another way to look at that

is they failed to earn $21 million in award fees.

Additionally, historically award fee payments are probably up

around 14 percent or higher. There was only an available 11.5 percent opportunity and General Dynamics only earned 8.1 percent.

But you could say, okay, they earned 8.1 percent for bad behavior.

Noted.

What have we done to try and improve this? First of all, here

was the award fee criteria associated with the cost-plus incentive

fee contract. Forty percent of it was given for just the objective attainment of cost performance index (CPI) and scheduled performance index.

So for instance, if they only achieved a .09 on CPI, they still got

90 percent of that 40 percent. And then 60 percent was technically

oriented, but a subjective criteria. So it was more a focus on program risk areas at a given point in time, rather than objective and

tied to critical path events.

So what have we done to perhaps address the taxpayers’ concerns? On the 15th of June, we modified the existing contract and

we will follow suit in the follow-on contract and award a cost-plus

incentive fee.

What has changed? We have designed very discrete and objective

criteria that is tied to program critical path events—technical reviews. And we have assigned very specific exit criteria. General Dynamics must achieve the exit criteria at these technical reviews or

they get nothing.

So in essence, Mr. Ahern mentioned three decision points. These

new toll gates associated with technical reviews add an additional

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three to four toll gates for a total of as many as seven prior to the

milestone decision. Those are very discrete events and the award

fee is back-loaded, as opposed to previously where as long as they

achieved up front in terms of CPI and SPI, it was front-loaded.

Now, you take three of the key technical reviews, it is back-loaded. So the most critical one, critical design review, is the point at

which they must prove that they can meet the reliability with the

new design that is 50 percent of the award fee. So it is all or nothing—50 percent at that point in time.

And then backing off from that, there is an SFR review where

they can gain 30 percent, and an SSR where they can get 20 percent. But it gets more difficult as the program progresses for them

to earn award fees, and it must be very black and white. It is objective. They achieved the exit criteria or they did not.

Mr. COURTNEY. The other question I had is, General Gardner,

congratulations on your appointment. You described again the need

for this type of vehicle in terms of some scenario that could develop

in the future. If that need popped up today, or in the near future—

I mean, obviously we are still a long ways off of these vehicles

being available—what would the Marine Corps use?

General GARDNER. Yes, sir. We would have to use our amphibious assault vehicles, AAVs, that we currently have, which are displacement vehicles and operate—ships come in close to the beach,

5,000 yards off the beach; push the vehicles out and they go ashore

at somewhere around five knots or so. Hence, they have to go in

pretty close. Then you are taking risks with those ships to come in

that close.

So the Marine commander has to persuade the naval commander

that he needs to take that risk with those ships to push those vehicles out. The naval commander will obviously push back on that

and will not want to do that, and will try and persuade the Marine

commander not to have a surface assault capability.

There are situations where you need that surface assault capability. You cannot just do it by air. And so, it presents us with a dilemma today, and this is a situation that the commandant is concerned about, that we are putting our naval commanders—we are

forcing them to make this sort of risk decision.

Mr. COURTNEY. Thank you.

Thank you, Mr. Chairman.

Mr. TAYLOR. The chair recognizes Mr. Ellsworth.

Mr. ELLSWORTH. Thank you, Mr. Chairman.

Thank you, gentlemen.

I am not sure who the best person is for this first question, but

this vendor on this particular vehicle has been around a while.

They are not a brand new company that has just gotten into the

business of military supplies. Is that correct?

Colonel TAYLOR. Yes, sir.

Mr. ELLSWORTH. It is your experience that—and I will go ahead

and say it—General Dynamics has provided in the past good equipment that works, that has come in on time and on budget, ever in

history?

Mr. AHERN. Virginia class, I think, sir, is one recently. Of course,

that is not the land systems group. That is Electric Boat up in

17

Groton, Connecticut. That is one example that I believe is on track

now.

Mr. ELLSWORTH. They have done good things for our country and

our military.

Mr. AHERN. Yes, sir.

Mr. ELLSWORTH. I would agree with that.

Mr. Smith, there was something I would like to go back to. You

talked about the fact that this program was not fully funded, and

then you said—and I missed it; it was my fault—the third ‘‘blank’’

engineering.

Mr. SMITH. That caused a deferment. The lower funding levels

caused a deferment of the systems engineering that would normally be done in a later period of the systems development and

demonstration of the schedule, and that is what I was trying to articulate.

Mr. ELLSWORTH. Okay. I was just reading this document, and

one of the tables talked about it being underfunded by at least

$400 million, resulting in design shortcuts and inadequate testing.

That really concerns me, that if this company, obviously a price

when you sign a contract for anything it is both sides agreeing on

a price of what they think that will cost. If you get into that, then

I would expect, and it looks like—and that will come in another

question—that the company should have come and said this just

isn’t enough money.

It appears from this chart that when they got into it and because

they were underfunded that they took shortcuts on a vehicle that

is going to, like I said, design shortcuts on a vehicle that we are

putting American soldiers in. I cannot believe that this company

and we would accept that we are taking design shortcuts that are,

like Chairman Taylor said, to put our troops in a vehicle because

it was underfunded.

That is a huge concern. I don’t know if you want to respond to

that or not, but that is probably my biggest concern, that they

would willingly do that based on their funding. Or is it that for

$400 million less, did we take the C-team engineers to design this

at the company, because we are less? Or are they all paid the

same? I am stuttering because I am shocked, I guess.

Mr. SMITH. Let me see if I can offer a few comments in response,

sir, to help you understand perhaps a little bit better, and for the

other members. We did four different independent reviews, and in

part of the Nunn-McCurdy review process, there was a big management review, both of the government management structure and of

the corporation’s management structure.

General Dynamics Amphibious Systems, which is co-located with

the EFV Marine Corps Program Office down at Woodbridge, Virginia, in some instances was divorced from General Dynamics Land

Systems corporate knowledge base. Their systems engineering capability did not matriculate down. And also because it was a separate geographic location, we determined that some of the management perhaps did not pay as much attention to the oversight within the corporation.

As well, there is enough I think to go around here, the EFV program management in the Marine Corps because it was in ACAT

1D, an acquisition category 1D program, it did not have a typical

18

program executive officer structure that the Navy and other services have. It was a direct-report program manager to the acquisition secretary in the Navy. And I don’t know how long, but it was

a long time—at least since inception.

As a result, because of that lack of professional type of flag or

very senior acquisition professional officer oversight, some of the

hard questions and some of the hard reviews were not performed.

That is one of the reasons that both the assistant commandant of

the Marine Corps and the acquisitions secretary of the Navy have

selected Colonel Taylor, who was part and parcel in really getting

the MV–22 program back in the air successfully, and selecting him

as the program executive officer now.

So with the new management structure like that in place, it will

be much more rigorous oversight from here on out. That is one of

the EFV success points that we are trying to achieve as a way forward. So hopefully that answers you. It is a roundabout answer,

but hopefully it answers some of your questions.

Mr. ELLSWORTH. Mr. Chairman, did we waive the five minutes?

Mr. TAYLOR. Absolutely.

Mr. ELLSWORTH. Okay. I just wanted to know if I need to skip

a couple of questions.

One of you said—and I don’t know if it was Mr. Ahern—I am not

sure if Mr. Smith said that we could look at this a different way.

Maybe it was the Colonel. That on the bonus, the $82 million

bonus, that we could look at it in a different way, that they got cut

21 percent because they didn’t deserve the 21 percent.

In the list I am looking at in a chart in here, and going on a list

of failures, is there a laundry list somewhere of the 79 percent that

they did receive of good things that this vehicle does? I mean, are

you convinced that they deserved the 79 percent of that $82 million? Where is the laundry list of good things about this? How

many of these vehicles are actually operational right now?

Colonel TAYLOR. We haven’t reached IOC yet, but there are nine

prototype vehicles operating out there.

Mr. ELLSWORTH. Is there that list we can look at that says, ‘‘Here

is why they deserved the 79 percent’’?

Colonel TAYLOR. I think I would stop short of saying they deserved it. They were legally entitled to it by virtue of achieving the

terms and conditions of the negotiated contract, whether right or

wrong. And I think we have taken note of your concerns, and like

I mentioned previously, we have completely modified the existing

contract to try and take a more prudent approach to the award fee.

Mr. ELLSWORTH. I understand. I was a county official before, you

know, five months ago and was in on some contracts. Even in the

election, I made contract offers for a win bonus, but you had to win

for that group to get their bonus. I am building a new jail. We had

things built in, but it was at the completion. So I understand that.

I just think the American people expect the Federal Government—we have been around a while—and that we would do a better job when we supply equipment to our military that if it is good

enough for the feds, it is great. So I am just a little disappointed

sometimes when we get into this situation. I guess my last question is, and this was spec’ed out at $6.2 million apiece in 1995. Is that accurate, according to the documents?

19

Colonel TAYLOR. It was $6.7 million.

Mr. ELLSWORTH. Okay.

Colonel TAYLOR. And in 2007 dollars to baseline, your compari- son, it was about $6.7 in the original contract award back in 2000,

as a starting point.

Mr. ELLSWORTH. And now they are back to $16.9 million in 2008

dollars?

Colonel TAYLOR. In 2007 dollars, yes, sir.

Mr. ELLSWORTH. In 2007 dollars, and this contract is supposed

to go until 2025? I mean, can you tell me what is—that is pretty

drastic.

Colonel TAYLOR. We are actually only on the development contract right now. The actual production contract, there is an LRIP

contract planned for 2011, if all goes well. The full rate production

decision will be in 2015, I believe. Right now, we are strictly working with the development contract.

Mr. ELLSWORTH. In the contract, was there a percentage that the

company, the vendor would give us a range, a top-end of what this

could go to per vehicle, due to steel, due to electronics, capital,

whatever it might be—it could vary between this and this so we

know what the top end could be?

Colonel TAYLOR. Sir, that is actually the job of the CAIG estimate, and working with their cost curves. It is really a band and

a confidence level.

Mr. ELLSWORTH. It just seems like a huge—a huge—gain over

those years. I know there is inflation, but——

Colonel TAYLOR. The majority of that, it is nearly double the

original estimate back in the 2000 timeframe, and was based on

what Mr. Ahern mentioned earlier—estimating analogy errors. Essentially in retrospect, I think they would have been better off comparing the complexity of this vehicle to an aircraft instead of the

legacy combat vehicles that are much more simplistic designs. I

think that was a failure in the estimating.

Mr. ELLSWORTH. In closing, I thank you. I know this is not a fun

hearing for you. It is not fun for us. I would ask that we learn from

this and give the public more of what they deserve. They may not

expect perfection from any of us, but they expect and deserve a little bit better than this. So I would like to thank you all for your

testimony.

I yield back, Mr. Chairman.

Mr. TAYLOR. Thank you.

Mr. Ahern, I am curious. You touched on the varied requirements of this vehicle. One of them that really caught my attention

was that the vehicle could launch in two-foot seas 25 miles from

shore.

Now, I just had an opportunity to visit with Captain Ebbs, who

retired from the United States Navy, a captain, and asked him a

couple of scenarios. How often would he see two-foot seas 25 miles

off the coast of Korea? Or off the coast of Taiwan? Or on the Persian Gulf? He felt like that was an extremely small percentage of

the time.

So given that, number one, I certainly wasn’t there, but I have

seen the videos of D-Day, those Hades boats launched in significantly higher seas than that. How realistic an assessment was

20

that? And you were only counting on a breeze from shore? Again,

I think it would be fairly rare that you are having an off-shore

breeze 25 miles out at sea. I don’t think that is going to happen.

So even if it failed to meet the goals that you set out to meet,

and even those, in my opinion, were unrealistically low.

General GARDNER. Sir, at the risk—I will take that on, on the

requirements, with perhaps just a comment here.

We have talked the last few minutes here about something that

we see as sort of the iron triangle as we procure material capability, of requirements, resources, and acquisition. Instead of doing

this literally where the requirements people, the Marine Corps figures out exactly what they need; go to the resources people; go get

the money; and then go give it to acquisition and just patiently

wait.

We are working at this more like a triangle now in which there

has to be flex on the sides to achieve the objective. I think that gets

to a little bit of what Congressman Bartlett was talking about, who

is responsible here. On the requirements, we did a detailed scrub

of the overall review as part of this process, just a bottom-up. I will

be asking for more capability here than we need in any area.

Mr. TAYLOR. General, I think you are asking for less capability.

I am told that the shores of Normandy, that the bottom of that

water is full of what was supposed to be tanks that would float and

swim their way into shore, and failed and killed the crews. I sure

as heck don’t want to repeat that mistake.

General GARDNER. The direct answer to your question, sir, what

we are talking about is significant wave height, not seas per se, the

sea-state. I fear treading here, so I was talking to a former Coast

Guardsman about seas, but sea-state and the seas and the swells—

we are talking about the significant wave height which is the seas

above the swells—so it is that two to three feet that we are talking

about.

We have assessed that the impact of reducing from a three-foot

significant wave height to two-foot significant wave height, probably we would encounter the difference between those seas about

seven percent to 16 percent of the time in various places around

the world, depending on where it is and the time of year. There is

a chance where you would not be able to do a mission because you

had chosen this.

The reason we went down this road was to try and achieve, to

ensure we are not asking for more than we could actually use. We

are talking about the physics of moving ashore with this vehicle.

This is not an LCAC that transits back and forth to the beach routinely. Its primary mission is to go from ship to shore. It is not

really practical to take the EFV and slam into head seas at significant weight in there. It is too many Gs on the troops inside, on the

passengers in there.

So it is like a driver of an EFV, as we examined this requirement, it would not do that. We have to go to great lengths to find

seas of that nature that provide this three-foot significant wave

height above the swells to even test the vehicle to that. And then

when we find that, you set up the Gs and do this—and probably

somebody can talk to the actual tests that are taking place. It is

not something that the troop commander would do.

21

So we felt that this was an area that we could take risks and

provide some weight margin to the program manager so that he

could then design in components to improve the reliability of the

system. So this is where I get to on this triangle of making the adjustments.

We did the same thing with regard to tactical reach. The requirement at one time previously was 25 miles ship to shore, and then

go 200 miles inland. What we said is, once we go 25 miles ship to

shore and operate in an initial assault, we don’t need to fill the

tank up with 200 miles worth of gasoline, with fuel. We will fill it

up with 100 miles.

At that, we could take that risk and operate. The vehicle still has

the ability to go 345 miles while ashore if it is a land-assault-type

environment. And then we removed a smoke grenade launcher that

we felt was never really used in operational scenario.

So combined, what we did was try and find are there things in

here where we were asking for more than we would practically use.

The analogy that I have kind of thought this true, and I hope I can

use it here, is that it is going to a car dealership and having a car

that can go 100 miles an hour, and he tell you, yes, well, if you

just buy this spoiler and put it on here, it can go 100 miles in an

ice storm.

Well, yes, but why would I want to pay extra money to put that

spoiler on there to go do that? I wouldn’t drive 100 miles an hour

in an ice storm. So that is sort of the thought process behind the

reduction in significant wave length from three feet to two feet.

Mr. TAYLOR. General, I am less than convinced with the answer,

with all due respect. If you have only got a platform that can be

launched 18 percent of the time safely—and again, this isn’t from

me, this comes from Captain Ebbs, who spent the better part of his

life at sea—in the scenarios that are likely and foreseeable, that

just doesn’t make sense.

General GARDNER. No, sir. It is a reduction in——

Mr. TAYLOR. If I may, sir? The V-hull that would make the craft

more survivable in the event of a mine would also make the hull

ride better in a heavy sea. That is simple fact.

I am concerned that you still continue to have mechanical problems after $2.3 billion of the taxpayers’ money. You have nine vehicles to test that break down way too often. I haven’t heard anything today that gives me any degree of confidence that you are addressing these problems. So let’s walk through this hopefully so

that I can understand this.

How does the Marine Corps handle a program like this? Do you

take an officer and say, ‘‘It is your job to make this work; I want

you to ride that contractor, find out what the problems are and

solve them and report back to me’’? How does this work, and what

is the rank of that officer? How long will he have that job? Is that

his career billet or is he pulled out of combat and stuck in this for

a couple of months and then pulled back into combat? How does

that work for the Marine Corps?

Because, General, again, this is not something unique to the Marine Corps. We have problems with the littoral combat ship. We

had problems with the Deepwater program in the Coast Guard.

What we are trying to do is see to it that we don’t keep making

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the same mistakes. So I am curious how the Marine Corps handles

this now.

General GARDNER. That is the defense acquisition specialist, and

he may want to answer the question, sir. Please go ahead.

Colonel TAYLOR. I will at least attempt to get started here. It has

its genesis in the Defense Acquisition Workforce Improvement Act.

It specifies very stringent qualifications training, experience—years

of experience——

Mr. TAYLOR. Again, with all due respect, we are going to have

votes any minute now. Tell me how the program works right now.

Don’t give me the script that I would read in a DOD manual. In

terms that this committee can understand that you would be telling a friend over a cup of coffee, how does this program work within the Marine Corps?

General GARDNER. Sir, because the program has been——

Mr. TAYLOR [continuing]. From the uniformed Marine side.

General GARDNER. Yes, sir. Because the program is an ACAT 1B

program, the defense acquisition executive is the acquisition executive for the program.

Mr. TAYLOR. And his rank is what, sir?

Colonel TAYLOR. That is Mr. Krieg.

Mr. TAYLOR. Who do you have in-uniform who would really understand with a sense of situational awareness what this vehicle is

needed to do? Who do you have in uniform that has been there, can

envision this, that is following the program?

Colonel TAYLOR. The program manager is the rank of colonel. He

is fully qualified from an acquisition perspective. He also has

lengthy combat experience and combat vehicle experience as an operator.

Mr. TAYLOR. And his name is?

Colonel TAYLOR. Colonel John Bryant. He is the program manager.

Mr. TAYLOR. How long has he been the program manager?

Colonel TAYLOR. He has been the program manager since last

fall, I believe September.

Mr. TAYLOR. And under the normal routine, how long would he

be the program manager?

Colonel TAYLOR. Four years, sir, or the next milestone.

Mr. TAYLOR. I am curious, why isn’t he here today?

Colonel TAYLOR. The letter requested specific attendance.

Mr. TAYLOR. Okay. If I could, I would like to request, General,

that we have a follow-up in a briefing forum—whatever you are

more comfortable with. I think given the severity of the perceived

problems that it would be beneficial to all involved to get him here.

Colonel TAYLOR. Yes, sir.

Mr. TAYLOR. So keep going, sir. So you have a colonel?

Colonel TAYLOR. Above the program manager——

Mr. TAYLOR. And he is going to be doing this for four years.

Colonel TAYLOR. Yes, sir.

Mr. TAYLOR. So he sees a problem. He sees a problem with mechanical breakdowns. He sees a problem with unreliable hydraulics—any number of things. What does he do then?

Colonel TAYLOR. I would like to approach it from a different perspective, sir. The way that the restructured program is laid out, he

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is pulled from one of the books of acquisition doctrine and system

engineering doctrine, and he has applied to the program what I

haven’t seen in the past, which is knowledge points.

He has built in five knowledge points into the program, which

are benchmarks at which point the contractor must meet specific

reliability criteria, either from a predicted standpoint or a demonstrated standpoint, or based on modifications, lessons learned because of underachievement—another knowledge point is predicted.

Ultimately, the end-state, the last knowledge point, should give

you absolute confidence before it goes into IOT&E, the final exam,

that you can in fact achieve the reliability KPP before you actually

go in to test. It is a very disciplined process that I haven’t seen

used before.

Mr. TAYLOR. I understand it is a disciplined process, but we can

also see times when the requirement didn’t really fit reality. I

think a two-foot sea-state falls into that, 25 miles offshore—it is

one of them. It slaps me in the face that that is not realistic. Okay,

so does this colonel who has combat experience, who is responsible

for the lives of other Marines, does he just sit back and say, well,

that is not the requirements; I won’t look that way?

Colonel TAYLOR. No, sir.

Mr. TAYLOR. All right, when he sees something that he knows to

be wrong, what does he do?

Colonel TAYLOR. The acquisition benchmarks become triggering

mechanisms if at one of those knowledge points he believes he is

not on the reliability growth curve that will ultimately achieve the

reliability KPP at IOT&E. We turn to the requirements community

and ask them to assess additional trade space.

General GARDNER. The requirements, sir, are significant wave

height, not sea-state. I want to make that distinction. Because this

is an ACAT 1B program, that was a key performance parameter,

that is a JROC-held requirement. So once we develop the idea that

there is some trade space here in these requirements, that was

staffed through the Marine Corps operational concepts thing, and

then put into the joint process, and was approved by the JROC as

certification of that process, of the requirement.

That requirement, then, the acquisition community then seeks to

fill that requirement. The Marine Corps then at that point, you

know, we are here to support the acquisition community in terms

of seeking resources from the Congress and ensuring that our requirements are understood. If they are not there, then we need to

look at examining those.

Mr. TAYLOR. General, let’s go back to the issue—and, again, it is

something I didn’t see coming, should have seen coming. We spent

a lot of money to up-armor Humvees to have a vehicle that is susceptible to a blast with a bottom. I say that in that I don’t want

to keep making the same mistakes. You are doing the vehicle with

the flat bottom. You have people with combat experience who have

seen Humvees blown up in Iraq.

Did anyone along the way say maybe we ought to re-think this

before we go into full-scale production as far as the bottom of this

vehicle? And if not, why not?

General GARDNER. Sir, we looked at the overall—we are trying

to develop a ground vehicle portfolio, if you will, of all the vehicles

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that the Marine Corps has to accomplish its range of missions. We

tried to standardize all of the armoring requirements and their resistance to threats, and we put this on that scale.

So we did look knowing that this was not going to have the force

protection capability of an MRAP, for example. We were led to believe that this was not possible to achieve technologically without

even more time and more delay than what we had. So we felt that

this was, while a risk, an acceptable risk to be able to accomplish

this capability in the right time.

If we got into those threat profiles where we expect to see this

sort of underbelly mines, we would not use the EFV and the AED

in those sorts of profiles. This is a niche capability that we are

seeking to provide.

Mr. TAYLOR. Why would we rush to produce something that is

probably already obsolete? Because, again, I greatly respect the

Marine Corps making the most of what they have. I recently visited your guys in Fallujah in a helicopter I am told was built about

1972. That is pretty impressive that you have taken care of it this

long. On the flip side, it means you have to live with your mistakes.

Why not correct that mistake before we make it?

General GARDNER. Sir, I can only say that we are trying to do

that by looking at our ground vehicle mobility as a portfolio, and

providing our force commanders a choice of vehicles, sufficient vehicle support out there so he can use the right vehicle on the right

day for the right mission.

Mr. TAYLOR. Who owns the rights to the work done to date on

the EFV? Is it the government or the contractor? If we wanted to

take that design and turn it over to someone else for manufacture

because we have just had enough of the folks we are dealing with,

do we have the right to do that? That is the same question we have

asked with the LCS, and same question we have asked with the

Deepwater.

Mr. SMITH. I believe we do, sir, but I would have to absolutely

confirm what level of technical maturity that data is.

Colonel TAYLOR. I would go one step further, sir, and say we own

the right to potentially buy the data. It does not necessarily mean

that we currently own all the data.

Mr. TAYLOR. Okay. For the record, would you ask the legal community to answer that question?

Mr. Bartlett.

Mr. BARTLETT. Mr. Chairman, why would we enter into a contract where we pay for everything and give them very generous

fees for what in the real world would appear to be a failure? And

then you have to buy the data rights from them? Weren’t all these

data developed with taxpayer money? Why do we have to pay for

it twice? Because that is the way we wrote the contract?

Colonel TAYLOR. No, sir. This is fairly standard.

Mr. BARTLETT. But why do we want to pay for it twice? We have

paid for it, because all of the money that they spent on this program has come from the taxpayer, plus some very generous fees.

And now if we want the data rights, we have to pay them for it?

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Colonel TAYLOR. Typically, the data that goes into the initial design is proprietary and the government has an opportunity to buy

the data package.

Mr. BARTLETT. We run into this with many of the programs, and

we have been assured that the Navy will in the future try to write

the contract so that there is more assurance that what the taxpayer has paid for, the taxpayer in fact will have access to. That

appears not to have been true in the past.

Thank you, Mr. Chairman.

Mr. TAYLOR. Thank you, Mr. Bartlett.

Mr. Ellsworth.

Mr. ELLSWORTH. Thank you, Mr. Chairman.

Just one last question for me, and Colonel, maybe you are the

best one to answer. You started to allude to it about what we are

doing now and the benchmarks. At what point and how long—and

I want us to have a vehicle, from the bottom of my heart, I want

the biggest, baddest military, the meanest, the best equipped, and

then I am going to fight like hell to never have to use them, if I

had to speak about a philosophy of mine.

How long do we go on, and how much—where is our end? Where

do we say, or the vendor comes up and says, we just can’t produce

it; it is done; let’s pull it and move on to plan. Or we say, we can’t

wait any longer; we can’t spend any more dollars on this design.

When does that occur? Is that one of the benchmarks, the first one?

Or a group of those?

Colonel TAYLOR. Any one of the seven that I pointed out, eight,

including the actual milestone to go into LRIP production. So that

decision can come by virtue of the program manager’s assessment

at one of the knowledge points, that we are not on the reliability

growth curve; or it can come by way of the acquisition decision executive at one of his three decision points prior to the actual LRIP

decision that, hey, I am not comfortable with where the program

is. So there are numerous opportunities to assess continuing the

program.

Mr. ELLSWORTH. Just a basic time, is that going to occur in 2008,

or end of 2007–2008?

Colonel TAYLOR. The three decision points by the acquisition executive comes at contract award, critical design review, and then

before committing to long-lead items for the LRIP build. Those are

the three acquisition executives.

And the first two occur roughly in fiscal year 2008. The third

would not occur until just before the actual milestone C, so probably 2011. And then the knowledge points for the program manager, one occurs in 2008; two occur in 2011; and one is actually

post-milestone C.

So it is over the course of about four years, there are almost

seven of them.

Mr. AHERN. I would like to elaborate on that. As Colonel Taylor

said earlier, the decision authority informed by the program manager and other events is the defense acquisition executive. As a result of this process, he has determined that he wants to look into

the EFV on a quarterly basis. He has scheduled meetings with the

CEO of General Dynamics, as well as the acquisition executive in

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the Navy quarterly to review this program, as is done in industry

on essentially the same kind of an investment review.

So I think besides, as Colonel Taylor mentioned, the knowledge

points and the structured formalized meetings, the DAE working

with the CEO of General Dynamics is going to keep a very close

idea, pulse, on where this program stands for the duration of this

development phase. I think that also goes to answer your question

about are we focusing on looking at how the program manager is

doing, what issues he has, and what alternatives he has when he

runs into a problem, on a quarterly basis.

Mr. ELLSWORTH. Thank you, Mr. Ahern.

Mr. Chairman, I yield back.

Mr. TAYLOR. Hopefully in fairness to our witnesses, you have

been very patient. You have been with us for a while. Is there anything that you would like to add at this point? I will just open it

up to you.

Mr. AHERN. I would like to go back to your original question, Mr.

Chairman. I was in the Navy. I was a program manager for ACAT–

1 program. I have made a lot of mistakes, but now I am in AT&L.

I think that the lessons learned through this process, is that we

have begun to learn earlier or implement earlier, as General Gardner said, of the iron triangle.

We can no longer operate in that phase of a group of people who

make up requirements and then a group of people decide how they

are going to build it, and then another group of people decide how

it is going to be funded. This has been changed.

As I mentioned earlier, that lesson learned of having the right

combination of requirements, funding and an acquisition plan, including an informed sense of where the technology stands, is one

of the clear things, or reinforcement of what came out of this

Nunn-McCurdy process. Just the visibility of the numbers of

groups of people that were involved—four teams per Nunn-McCurdy, and we had six Nunn-McCurdys in 2007—encourages me to

think that we have all learned we have to birth them well.

And then further, I think as has been mentioned with this kind

of event-driven schedules, the use of earned value, the use of the

other management-focused things, including the CEO meetings,

convinces me that we have applied the lessons learned from these

programs so that in the future, our performance in acquisition in

the requirements community will be improved over what it was

previously.

Mr. TAYLOR. What are the most recent reliability statistics for

those vehicles? I understand that they were supposed to go about

50 hours without breaking down. Now they are doing it in less

than double digits. Is there any trend to give me or anyone else

some degree of confidence that that problem has been overcome?

Mr. AHERN. I would defer to Colonel Taylor.

Colonel TAYLOR. I would say, sir, that you have brief glimpses in

an operationally representative environment via operational testing, so those come in brief glimpses. To give you a pure look in the

developmental test environment, it is not an apples-to-apples comparison predominantly because developmental test vehicles are

loaded with orange wire and black boxes. A preponderance of the

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maintenance associated with these vehicles—getting them ready

for tests—involves configuration and de-configuration.

So there is a disproportionate amount of effort associated with

getting prepared for developmental tests. So the metrics are not a

good comparison. The best glimpse I can give you at this point are

those knowledge points, where at knowledge point one in fiscal

year 2008, the contractor is required to provide a new predicted reliability after the design.

So right there, we have our first glimpse of where the design

falls relative to a growth curve that will ultimately get us to the

KPP about four years later at IOT&E. So it is really through the

systems engineering process that we have to rely right now. The

developmental test process is not a very good gauge of it. The first

pure operational opportunity does not occur until 2011.

Mr. TAYLOR. Are the problems across the board? Do they tend to

be one thing in particular?

Colonel TAYLOR. Well, 60 percent of the reliability issues are associated either with the turret or the feed tray for the weapons system. Both these systems are proven technology on other applications. It is just that they weren’t anticipated to undergo the stress

and strain on this particular vehicle.

For instance, the turret is similar to I believe the one on the

LPD–17. The weapons system is 70 percent common with some of

the other ground combat vehicle systems, but the feed tray mechanism is unique. So reinforcing the structure that supports the turret and probably a redesign of the weapon feed tray are major initiatives to overcome what turned out to be 60 percent of the reliability issue.

Mr. TAYLOR. Mr. Bartlett.

Mr. BARTLETT. I have no more questions.

Mr. TAYLOR. Okay.

I thank you gentlemen for being here today.

The meeting stands adjourned.

[Whereupon, at 5:35 p.m., the subcommittee was adjourned.]

A P P E N D I X

JUNE 26, 2007

PREPARED STATEMENTS SUBMITTED FOR THE RECORD

JUNE 26, 2007

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QUESTIONS AND ANSWERS SUBMITTED FOR THE

RECORD

JUNE 26, 2007

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QUESTIONS SUBMITTED BY MR. TAYLOR

Mr. TAYLOR. Were there signs, before the fall of 2006, that the reliability of the

EFV prototypes was going to be such a major problem? Were any such warning

signs elevated for review by officials outside the program by the appropriate officials? If so, what action was taken to address these issues?

Mr. SMITH and Colonel TAYLOR. No. Prior to the Operational Assessment (OA),

the EFV underwent extensive developmental and reliability testing. Test data indicated the EFV was meeting the planned reliability growth curve; the last data point

prior to the OA measured 14.4 hours vs. a planned 15 hours Mean Time Between

Operational Mission Failure (MTBOMF). Despite this 0.6 hour shortfall, the system

was assessed to be ready for OA. However, data points during the OA revealed the

following shortcomings in the EFV program’s previous reliability test program: (1)

EFV’s mission essential functions were not always utilized during reliability testing;

(2) the developmental test profiles did not closely match the operational profiles performed during the OA. When these two factors were included in the pre-OA reliability data, analysis showed the EFV’s performance was significantly below the

planned curve. Thus, post-OA analysis largely confirmed the OA performance, and

pointed out lessons learned to improve future developmental and reliability testing

and analysis.

In response to the program’s poor performance during OA, during the fall of 2006,

the Assistant Secretary of the Navy, Research, Development and Acquisition (ASN

(RDA)) chartered an Independent Expert Program Review (IEPR) to examine the

EFV program, system, and processes in order to find the root causes of the reliability shortfall and recommend a path forward for the EFV Program. The panel reported that the root causes of poor reliability were: (1) insufficient funding in early

SDD that led to inadequate systems engineering rigor in design for reliability; (2)

focus on the high water speed requirement, which drove weight and complexity at

the expense of reliability, and; (3) an overconfident program advocacy. The panel

also cited shortcomings in both government and contractor program organization

and management, oversight, and test and evaluation.

During March and April 2007, additional in-depth reviews of the EFV reliability

program were conducted by two independent teams of experts commissioned by the

Office of the Secretary of Defense (OSD). Each team concluded that the EFV reliability requirement was achievable and that the EFV program was employing the

rigorous methods necessary to achieve the requirement.

Mr. TAYLOR. What explains the decision to continue EFV development with the

same contractor? What factors led to rejection of conducting a new competition for

the new systems development and demonstration phase?

Mr. SMITH and Colonel TAYLOR. The Nunn-McCurdy Certification process resulted

in a decision to continue with the current program and address deficiencies by fixing

EFV. General Dynamics Land Systems (GDLS) has been the sole EFV vehicle designer and developer since 1996. The main design development and production efforts are planned as sole source to GDLS because no other firm can perform the requirements of development and production without substantial duplication of cost

and additional, unacceptable delays to the EFV program. However, the EFV program plans to compete future contracts for certain EFV program efforts, where feasible, to increase performance and reduce program costs.

The factors that led to rejecting a new competition for EFV SDD–2 were cost and

capability, as related to the Nunn-McCurdy Certification process. The Nunn-McCurdy review examined three possible alternatives: (1) Fix EFV by continuing with the

current program and addressing deficiencies within; (2) Begin a new start by initiating a new program to provide capabilities similar to the EFV; and (3) Upgrade the

existing Assault Amphibious Vehicle (AAV).

Regarding the cost factor, the lowest Program Acquisition Unit Cost (PAUC) was

associated with the third alternative (Upgrade AAV). The next lowest PAUC was

estimated for the first alternative (Fix EFV). The second alternative (New Start)

had the highest PAUC due to additional Research, Development, Test and Evaluation (RDT&E) costs.

60

Regarding the capability factor, the Fix EFV and New Start alternatives would

provide equal capabilities, while the Upgrade AAV alternative provides less capability because of its slow speed, lack of firepower, and lack of all-night and all-weather

capability. However, pursuing the New Start alternative would unacceptably further

delay the vehicle’s availability for operational use by the Marine Corps, increasing

operational risk to U.S. forces during that period.

The Upgrade AAV alternative could provide the initial upgraded AAVs on the

same schedule as the Fix EFV alternative, but due to the slower speed of the AAV,

the operational risk to amphibious joint forcible entry operations is much higher.

In summary, there are no alternatives to the Fix EFV alternative which will provide equal or greater military capability at less cost. Initiating a New Start would

increase operational risk due to later deliveries and incur more cost; pursuing the

Upgrade AAV alternative, while entailing lower costs, would provide less military

capability, given the slow speed of the AAV.

Mr. TAYLOR. Who owns the rights to the work done to date on the EFV program?

The government or the contractor?

Mr. SMITH and Colonel TAYLOR. The following are the rights to Technical Data

and Software under the EFV System Development and Demonstration (SDD) Contract:

Defining Technical Data Ownership

The Government may order during the contract, or within 3 years after acceptance of all items under the contract, any technical data or software generated in

the performance of the contract or any subcontract (which expires 3 years after the

contractor accepts the last delivery under the subcontract). Generally, if the Government pays for data under cost type contracts, the Government gets unlimited rights

to that data. However, with the SDD contract, the Government would have to further develop or procure a technical data package on the vehicle design to support

a re-competition of the EFV. A decision was made early in the program not to purchase the Technical Data Package. The EFV SDD contract contains a requirement

for the delivery of a final design report. The final report includes information necessary to be able to produce, maintain and provision the EFV. The final report is

in contractor format and would not amount to a level three technical data package.

Restrictions on Non-commercial technical data and software per DFARS 252.227–

7013

There are three primary restrictions (Unlimited, Government Purpose and Limited) on Non-commercial technical data and software as follows:

The Government receives unlimited rights in tech data for an item, component or

process developed exclusively with Government funds. Unlimited rights is defined

as: data for an item, component or process developed exclusively with Government

funds; studies, analyses, test data or similar data produced for this contract and

specified for contract performance; form, fit and function data; necessary for installation, operation, maintenance or training; or data with Government purpose data

rights that have expired. The Government receives government purpose rights

(GPR) in tech data for an item, component or process developed with both Government and Contractor funds. Purpose rights are defined as: right to use, modify, reproduce, release, perform, display or disclose tech data within the Government without restriction plus release outside the Government for U.S. Government purposes.

Also, Government purpose includes competitive procurement. The Government receives limited rights when tech data is developed exclusively with Contractor funds

and marked with appropriate legend. Limited rights is defined as: contractor must

identify any data it is asserting has restrictions in a contract attachment and not

deliver data with markings unless on attachment.

Rights in Non-commercial Computer Software per DFARS 252.227–7014

The Government gets Restricted Rights [versus Limited Rights] to non-commercial computer Software required to be delivered or provided to the Government

under the contract if they were developed exclusively at private expense. The difference between limited rights and restricted rights is; under limited rights, the

Government’s internal use of the technical data is unlimited with the exception of

the right to use the data for manufacturing. Under restricted rights, the Government’s internal use of the software is only permitted for only one computer at a time

with minimum backup copies permitted.

Rights in Commercial technical data per DFARS 225.227–7015

If a particular item delivered under contract is Commercial, the Government typically only receives those rights customarily given in the commercial marketplace to

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any commercial buyer. The commercial rights provided for any commercial item

typically comes in one of the following three types of rights (Unlimited, Limited,

Specially Negotiated):

The commercial marketplace might provide for unlimited rights in a particular

commercial item. Under those circumstances, the Government receives data without

restrictions; may be in the medium of form, fit and function data; may be in the

form of correction or changes to technical data furnished to the contractor by the

Government; is data necessary for the operation, maintenance, installation or training (other than detailed manufacturing or process data); or is data to which the

Government already has unlimited rights.

The commercial marketplace might provide for limited rights in a particular commercial item. Under those circumstances, the Government receives limited rights in

technical data similar to non-commercial technical data. The Government may use,

modify, reproduce, release, perform, display, or disclose technical data within the

Government only.

Notwithstanding the commercial marketplace, the Government may seek to gain

additional license rights with the commercial manufacture through specially negotiated rights. In such a circumstance, the Government and the manufacturer comes

to mutually agreeable terms in connection with the specifics of any additional rights

provided to the Government.

Rights in Commercial Software per FAR 12.212

With regard to commercial computer software and commercial computer software

documentation, the Government shall have only those rights specified in the license

contained for the software. This is consistent with the Government receiving a license for commercial software customarily provided to the public.

Patent Rights per FAR 52.227–12

In the performance of a Government contract, the contractor may elect to retain

title to any invention created. In such a circumstance however, the Government

shall have a non-exclusive, non-transferable, irrevocable, paid-up license to practice,

or have practiced for, or on behalf of the United States, the subject invention

throughout the world. If the Government retains title to the invention created, then

the contractor shall retain a non-exclusive, royalty-free license throughout the world

in each subject invention to which the Government obtains title except if the contractor fails to disclose the subject invention within the required time frames provided by law and/or regulation during performance of the contract. As a result, for

any patents that might arise during the performance of a Government contract, the

Government typically retains at a minimum, a license to use the invention for its

purposes.

Validation of Restrictions per DFARS 252.227–7037

A Contractor must maintain records sufficient to justify restrictive markings on

technical data delivered or required to be delivered. The Procurement Contracting

Officer can request a Contractor to justify markings- pre-challenge. The Procurement Contracting Officer can formally challenge markings.

GD asserted restrictions on technical data and software

It appears that the Government partially funded most of items on GD’s list but

further investigation would be needed to challenge GD’s assertions of technical data

rights. These listed items were incorporated by bilateral modification into the contract. The listing does not constitute Government agreement with GD’s asserted restrictions on Government rights. However, the Procurement Contract Officer has not

challenged GD’s asserted restrictions on these items:

• The MTU Motoren-Und-Turbinen Union engine. [Limited/Restricted]; The

Intercom, hardware and software, developed the Canadian Forces and Computing Devices of Canada. [Limited/Restricted]; The vehicle transmission,

developed by Allison Transmission. [GPR or unlimited]; The azimuth and

elevation drive mechanisms, including the controller arm, developed by Missile Systems Division, MOOG Inc. [Limited]; The Air Handling Unit (AHU),

the Compressor Motor Unit (CMU) and the Nuclear Biological Chemical

(NBC) Evaporator, developed by Fairchild Controls. [Limited/Restricted];

The Compact Modular Site, developed by General Dynamics Land Systems,

Inc. [Limited]; Components of the suspension system, developed by General

Dynamics Land Systems Muskegon Operations (formerly Teledyne Vehicle

Systems). [Limited]; Engineering design concepts and interfaces for the High

Efficiency Waterjet (HEWJ), developed by Honeywell International Inc. The

following drawings are considered proprietary: [Limited]; and GDLS process

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sheets for the EFV(P) and EFV(C) vehicles containing GD confidential tradesecret manufacturing processes. [Limited/Restricted case-by-case].

GD did not identify whether it asserts the Government has Limited or GPR for:

• GDLS life cycle support concept and architectural development initiative

which includes but is not limited to internal GD processes and tools; Spraycool technology, developed by Isothermal Research Company (ISR); The Conformal Antenna (3) technology, the Radio Antenna Interface Unit (RAIU), the

HPA/LNA, and the RCS Boot material for the VHF antennas, developed by

Ball Telecommunications; The Hydraulic Manifold Components (Pilot Valves,

Pressure Switches), developed by Predator Systems, Inc.; The Gyroscopes

(MOTS), developed by Fibresense; The Remote Acquisition Control Module

(RACM) Sub-components including Power Bus Controller, developed by

Vetronics Research Corporation; The VIC Intercom (MOTS); The Commander’s Thermal Viewer (MOTS); The Harris HF Radio, Antenna Coupler and

Antenna (MOTS); The GPS LNA (COTS); The Electronic Compass (MOTS);

The Auxiliary Navigation System (ANS); The Wireless headset (MOTS); The

Computing Devices Canada (CDC) Display technology incorporated into the

Vetronics displays; The EFV(C) cosite solution; The EFV(C) MMU (COTS).

Conclusion

The Government:

• Is entitled to delivery of a final design report but the report would not provide

a technical data package that could be used for a re-competition.

• Could challenge GD technical data assertions but GD is likely to contest these

challenges as it will protect their interest in the EFV program.

• Funded much of the development and has government purpose rights but further investigation is required to confirm.

Mr. TAYLOR. What would it cost to terminate the current development EFV contract?

Mr. SMITH and Colonel TAYLOR. Closeout of the existing contract with General

Dynamics Amphibious Systems is estimated to cost $70M which was derived during

the Nunn-McCurdy Certification process. An accurate cost determination would

need to come from a Termination Contracting Officer at DCMA.

Mr. TAYLOR. How much of a delay in getting the first operational EFV to Marines

would be caused by terminating the current EFV contract and starting over with

a new competition in Fiscal Year 2008?

Mr. SMITH and Colonel TAYLOR. The delay would be at least five years. This is

based on assuming a contract award for a preliminary design in FY 2008, followed

by a detailed design with a Critical Design Review which would not occur until FY

2010; then fabrication of the new prototypes through FY 2012 with Developmental

Test and Evaluation through FY 2014, followed by an Operational Assessment occurring in FY 2016 and subsequent Milestone C if successful. The currently approved restructured EFV Program is scheduled to reach Initial Operational capability in 2015; the earliest estimate for the alternative program is 2022.

Mr. TAYLOR. Has any Department of Defense, Department of the Navy, Marine

Corp., or other government agency employee who had oversight or management authority over the EFV program become an employee of General Dynamics after leaving government service? If so, in what capacities did they serve while in government

service and in what capacities have they worked for General Dynamics since leaving

government service?

Mr. SMITH and Colonel TAYLOR. Yes. General Dynamics has provided a letter to

Congress detailing certain individuals that fit this category.

Mr. TAYLOR. Were any design options featuring a ‘‘v-shaped’’ hull considered at

any time in the EFV program’s history?

Mr. SMITH and Colonel TAYLOR. Yes, but not for mine blast purposes. The dihedral concept was first considered for over-the-water habitability effects from highspeed landings in order to evaluate ride suitability for delivering Marines to battle

positions without degrading their fighting capabilities. A Full-Scale Hydrodynamic

Vehicle (FSHV) for a future Landing Vehicle Assault of planning hull type served

as a technology forerunner to the Advanced Assault Amphibious Vehicle and later

became the EFV. The FSHV was tested at Camp Pendleton, California, in 1979. It

was determined the inherent form of a tracked vehicle and the nature of tracked

vehicle suspensions do not lend themselves to V-bottom designs.

63

QUESTIONS SUBMITTED BY MR. FORBES

Mr. FORBES. Do you believe that General Dynamics performance justifies the $82

million the company earned in award fees? To put this in a forward looking context,

how is the new award fees structured to ensure that the Navy and the taxpayers

are not providing awards when the overall performance clearly falls short of expectations?

General GARDNER. From 1996 to 2007, the EFV program’s prime contractor, Gen- eral Dynamics (GD) was paid approximately $1.7B for contract efforts performed

during the developmental phases of the program. Approximately $125M of the total

has been paid in fees ($43M in base fee and $82M in award fee), representing approximately 8.1 % of the total contract costs incurred to date ($1.53B). GD was entitled to the fee earned in accordance with the stated terms and conditions of each

legally-binding contract. The earned award fee was specifically subject to government evaluation of performance in accordance with established criteria at the beginning of each performance period. The criteria varied with each period to target key

risk areas particular to that phase of the program. When performance was less than

required, award fee was denied. To date, GD has been denied $21M in award fee

(they have received $82M of a total $103M available to earn, an average of 79%).

Although EFV reliability performance fell short of the plan for this stage of the

program, resulting in an extended development period, many other vehicle performance capabilities have been demonstrated at their required values due to the significant amount of effort performed during the development phase. These capabilities

include firepower, water speed, land speed, carrying capacity, and interoperability

performance.

The development period included highly complex GD engineering and design efforts associated with developing a combat vehicle that can not only match the M1A1

tank’s land speed but can also launch from naval ships 25 nautical miles offshore

and transition to the shore within one hour (at approximately 20 knots). In comparison, the currently-fielded vehicle, the Assault Amphibian Vehicle (AAV) launches

from ships approximately 2 nm offshore and has a peak water speed of approximately 5 knots. Accordingly, the EFV program determined cost type contracts were

appropriate due to the risk associated with the complexity of the requirements. Cost

type contracts are typically used at this stage of development in most acquisition

programs. The EFV program negotiated Cost Plus Award Fee (CPAF) type contracts

(maximum base fee of 3%, maximum award fee negotiable), rather than Cost Plus

Fixed Fee (CPFF) contracts (maximum total fee of 10%), to provide a greater incentive to the contractor to prove out advanced technological design solutions and to

give the government greater control over fee paid to the contractor. The maximum

fee possible on any of the GD CPAF contracts awarded to date is 11.5%, with 3%

allocated to base fee and 8.5% allocated to award fee. Of the 11.5% fee available,

GD has earned 8.1 %, appreciably less than the 10% the Contractor could have received for a CPFF contract.

The EFV program office recently restructured the current SDD contract award fee

provisions. This incorporated objective criteria for cost, schedule and performance

based on the program restructure. Specifically, in June 2007, the EFV program successfully renegotiated the award fee provisions for the SDD contract to tie available

award fee pools to the successful execution of Systems Engineering reviews and to

replace existing, subjective criteria with well-defined objective targets for cost,

schedule and technical performance, including demonstration of the ability to

achieve the reliability requirement. A multiple-incentive structure was implemented

whereby General Dynamics must earn a fee in each category or forgo the fee entirely. This new structure promotes a balanced approach so that no one category is

favored to the detriment of the overall performance of the EFV.

Mr. FORBES. Do you believe that General Dynamics performance justifies the $82

million the company earned in award fees? I understand that the contractor did win

a large percentage of the incentive award fees, so I would be interested to know

what objectives were met to warrant the fees? To put it in a forward looking context,

how is the new award fees structured to ensure that we are not providing financial

awards when the overall performance clearly falls short of expectations?

Mr. SMITH. From 1996 to 2007, the EFV program’s prime contractor, General Dynamics (GD) was paid approximately $1.7B for contract efforts performed during the

developmental phases of the program. Approximately $125M of the total has been

paid in fees ($43M in base fee and $82M in award fee), representing approximately

8.1% of the total contract costs incurred to date ($1.53B). GD was entitled to the

fee earned in accordance with the stated terms and conditions of each legally-binding contract, negotiated in the mid-1990s. However, the earned award fee was specifically subject to government evaluation of performance in accordance with estabVerDate 22-MAR-2001 12:38 Dec 09, 2008 Jkt 037981 PO 00000 Frm 00067 Fmt 6601 Sfmt 6621 C:\DOCS\110-65\177280.000 HAS2 PsN: HAS2
64

lished criteria at the beginning of each performance period. The criteria varied with

each period to target key risk areas particular to that phase of the program. When

performance was less than required, award fee was denied. To date, GD has been

denied $21M in award fee (they have received $82M of a total $103M available to

earn, an average of 79%).

Although EFV reliability performance fell short of the plan for this stage of the

program, resulting in an extended development period, all other vehicle performance

capabilities have been demonstrated at their required values due to the significant

amount of effort performed during the development phase. These capabilities include firepower, water speed, land speed, carrying capacity, and interoperability performance. Reliability was not achieved since the performance parameters could not

be demonstrated consistently through out testing.

The development period included highly complex GD engineering and design efforts associated with developing a combat vehicle that can not only match the M1A1

tank’s land speed but can also launch from naval ships 25 nautical miles offshore

and transition to the shore within one hour (at approximately 20 knots). In comparison, the currently-fielded vehicle, the Assault Amphibian Vehicle (AAV) launches

from ships approximately two nautical miles offshore and has a peak water speed

of approximately five knots. Accordingly, the EFV program determined cost type

contracts were appropriate due to the risk associated with the complexity of the requirements. Cost type contracts are typically used at this stage of development in

most acquisition programs. The EFV program negotiated Cost Plus Award Fee

(CPAF) type contracts (maximum base fee of 3%, maximum award fee negotiable),

rather than Cost Plus Fixed Fee (CPFF) contracts (maximum total fee of 10%), to

provide a greater incentive to the contractor to prove out advanced technological design solutions and to give the government greater control over fee paid to the contractor. The maximum fee possible on any of the GD CPAF contracts awarded to

date is 11.5%, with 3% allocated to base fee and 8.5% allocated to award fee. Of

the 11.5% fee available, GD has earned 8.1%, appreciably less than the 10% the

Contractor could have received for a CPFF contract.

The EFV program office recently restructured the current SDD contract award fee

provisions. The newly restructured contract incorporates objective criteria for cost,

schedule and performance based on the program restructure. Specifically, in June

2007, the EFV program successfully renegotiated the award fee provisions for the

SDD contract to tie available award fee pools to the successful execution of Systems

Engineering reviews and to replace existing, subjective criteria with well-defined objective targets for cost, schedule and technical performance, including demonstration

of the ability to achieve the reliability requirement. A multiple-incentive structure

was implemented whereby General Dynamics must earn a fee in each category or

forgo the fee entirely. This new structure promotes a balanced approach so that no

one category is favored to the detriment of the overall performance of the EFV.

Mr. FORBES. How can the Secretary of the Navy certify to Congress that no alternatives exist to the program as required by a Nunn-McCurdy certification, while

also requiring the Marine Corps to develop a plan for an alternative program should

the risk mitigation plan fail?

General GARDNER. The Nunn-McCurdy certification pertained to the context of existing alternatives, based on the Joint Requirements Oversight Committee (JROC)

affirmation of the need for a high-speed amphibious assault capability. Secretary

Krieg’s decision to certify that no alternatives exist included careful consideration

for the element of time. That is, he found that no alternative program could deliver

the same capability in a reasonable time, compared to the EFV program. For example, the restructured EFV Program is scheduled to reach Initial Operating Capability (IOC) in 2015; the earliest estimate for an alternative program is 2022. Consequently, under scrutiny, the EFV Program was certified and restructured to mitigate the risk in acquiring the defined capability. As a prudent initiative to further

address the potential program risks, despite the newly proposed timeframe and

available resources, the Acquisition Decision Memorandum ADM directed the development of an ‘‘alternative way ahead’’—a contingency plan in order to have an option ‘‘if the risk burn-down plan for EFV is not successful.’’

Mr. FORBES. How can the Secretary certify to Congress that no alternatives exist

to the program, while also requiring the Marine Corps to develop a plan for an alternative program should the risk mitigation plan fail?

Mr. SMITH. A Nunn-McCurdy certification pertains to the context of existing alternatives. Based on the Joint Requirements Oversight Committee’s affirmation of the

need for a high-speed amphibious assault capability, Secretary Krieg’s decision to

certify that no alternatives exist included careful consideration of the element of

time. That is, no alternative program could be executed and deliver the same capability in a reasonable time, compared to the current EFV program. The restructured

65

EFV Program is scheduled to reach Initial Operating Capability in 2015; the earliest estimate for an alternative program is 2022. Consequently, under scrutiny, the

EFV Program was certified and restructured to mitigate the risk in acquiring the

defined capability. As a prudent initiative to further address the potential program

risks, the Acquisition Decision Memorandum directed the development of an ‘‘alternative way ahead’’ in order to have an option if the risk mitigation plan for EFV

is not successful. Note that the alternative does not propose a completely new vehicle, since much of the design has proven to be sound, but addresses the higher risk

parts of the program.

Mr. FORBES. How have the wars in Iraq and Afghanistan changed the Marines

Corps’ plan for providing mobility once Marines get ashore? How is the Marine

Corps’ balancing its two missions of amphibious assaults and participation in longterm, irregular warfare?

General GARDNER. Lessons learned from operations in Iraq and Afghanistan, past

Marine Corps operations, and operations conducted by other services and nations,

combined with the 2006 Strategic Planning Guidance (SPG) tasking the Marine

Corps to ‘‘consider an appropriate mix of vehicles to support irregular operations’’

have shaped our tactical ground mobility portfolio. Mobility for Marines ashore will

continue to be provided by the Marine Air Ground Task Force through air and

ground systems; however the most significant change in our plan for providing future ground mobility stems from force protection requirements generated by the current Improvised Explosive Device threat. Force protection, amphibious lift and

range, night vision, speed, adequate firepower, strong reliability, and ease of maintenance have always been key characteristics of Marine Corps ground mobility, but

the level of armored protection required in all future ground mobility systems is

now a main component driving both operational and acquisition planning.

Amphibious forcible entry operations are maneuver operations where lethality

and survivability are measured to some extent by our ability to disperse or concentrate forces. While ability to maneuver remains a factor in irregular operations,

two other facets have forced a change in requirements placed on Marines and their

equipment. First is the necessity to maintain proximity with the population. Second,

maneuver is constrained when Marine forces move into more populated areas where

their activities, tactics, and vulnerabilities can be discretely observed by an enemy

who specializes in blending with the population. Faced with this new limited ability

to maneuver, we found a need to adopt tactics and subsequently, reevaluated our

vehicle requirements. The Marine Corps is balancing our two missions of amphibious assaults and participation in long-term, irregular warfare by shifting from a

largely singular focus on amphibious forcible entry to a mix of platforms that have

application across the range of military operations. We have tailored our Expeditionary Fighting Vehicle investment to be consistent with the SPG and have initiated

the Marine Personnel Carrier and the Joint Light Tactical Vehicle programs, both

of which seek improved performance and payload while providing vehicle occupants

with enhanced protection against the ubiquitous threats of mines and IEDs that

characterize operations where constrained maneuver forces us to operate in areas

in spite of the known hazards.

We will continue to pursue a balance of vehicles that will enable our Navy-Marine

Corps team to increasingly provide a persistent and flexible forward presence, both

afloat and ashore, to meet combatant commanders’ growing requirements for general purpose forces. Our future mobility systems will enable us to more effectively

engage in low-end shaping, deterrence, and security missions while also positioning

us to respond to high-end combat and forcible entry amphibious operations.

Mr. FORBES. How have the wars in Iraq and Afghanistan changes the Marines

Corps’ plan for providing mobility once Marines get ashore? How is the Marine

Corps’ balancing its two missions of amphibious assaults and participation in longterm, irregular warfare?

Colonel TAYLOR. Mobility for Marines ashore will continue to be provided by the

Marine Air Ground Task Force through air and ground systems. The 2006 Strategic

Planning Guidance (SPG) tasked the Marine Corps to ‘‘consider an appropriate mix

of vehicles to support irregular operations.’’ It is that task, combined with lessons

learned from operations in Iraq and Afghanistan, as well as lessons learned by past

Marine Corps operations and operations conducted by other services and nations,

that has served to shape our tactical ground mobility portfolio. The largest change

in the Marine Corps’ plan for providing future ground mobility stems from the force

protection requirements generated by the current Improvised Explosive Device

threat. Force protection, amphibious lift and range, night vision, speed, adequate

firepower, strong reliability, and ease of maintenance have always been key characteristics of Marine Corps ground mobility; but the level of armored protection reVerDate 22-MAR-2001 12:38 Dec 09, 2008 Jkt 037981 PO 00000 Frm 00069 Fmt 6601 Sfmt 6621 C:\DOCS\110-65\177280.000 HAS2 PsN: HAS2
66

quired in all future ground mobility systems is now a main component driving both

operational and acquisition planning.

Amphibious forcible entry operations are maneuver operations where lethality

and survivability are both measured to some extent by our ability to disperse or concentrate our forces. While the ability to maneuver remains a factor in irregular operations, two other factors influence these operations and force a change in the requirements placed on the Marines and their equipment. The first is the necessity

of proximity. Positively influencing populations require that our Marines remain

close to that population. In doing so, the second factor, constrained maneuver, is introduced. Marine forces move into urban areas, or at least those areas that are more

populated. In doing so, their activities, their tactics, and their vulnerabilities can be

discretely observed by an enemy who specializes in blending with the population.

Faced with a limited ability to maneuver, tactics must be adopted to changing situations and equipment developed and fielded to support forcible entry operations, particularly from the sea, may become less suitable when faced with constrained maneuver. It is these conditions that caused the Marine Corps to reevaluate its vehicle

requirements and ultimately caused a shift from a largely singular focus on amphibious forcible entry to a mix of platforms that have application across the range of

military operations. We have tailored our Expeditionary Fighting Vehicle investment to be consistent with the SPG and we have initiated the Marine Personnel

Carrier and the Joint Light Tactical Vehicle programs, both of which seek improved

performance and payload and are planned to provide vehicle occupants with enhanced protection against the ubiquitous threats of mines and IEDs that characterize operations where constrained maneuver, forces us to operate in areas in spite

of the known hazards.

In order to ensure the Marine Corps remains the most ready when the nation is

least ready, our weapons, vehicles, and aircraft—the tools of our trade—must be sufficiently flexible to support operations across a wide spectrum of conflict. In the case

of ground mobility systems, we will continue to pursue a balance of vehicles that

will enable our Navy-Marine Corps team to increasingly provide a persistent and

flexible forward presence, both afloat and ashore, to meet the combatant commanders’ growing requirements for general purpose forces. Our future mobility systems

will enable us to more effectively engage in both low-end shaping, deterrence, and

security missions while also positioning us to respond to high-end combat and forcible entry amphibious operations.

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