Unmanned Carrier-Based Aircraft System: Navy Needs to Demonstrate Match between Its Requirements and Available Resources
Published: 2015-05-04T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Navy expects to have invested at least $3 billion through fiscal year 2020 in the development of the UCLASS system, which includes air system, aircraft carrier, and control system and connectivity segments. It is expected to enhance the intelligence, surveillance, reconnaissance, targeting, and strike capabilities of the Navy's aircraft carrier fleet. In August 2013, the Navy awarded contracts worth $15 million each to four competing contractors to develop and deliver preliminary designs for the air system, which were assessed by the Navy in May 2014. The next anticipated steps for the program will be to solicit proposals and award the contract for air system development.
The National Defense Authorization Act for Fiscal Year 2014 included a provision that GAO review the status of the UCLASS acquisition program annually. This report assesses (1) the current status of the program, and (2) the extent to which the Navy has the knowledge about resources it needs to develop the UCLASS system. GAO applied best practice standards, analyzed program documentation, and interviewed Department of Defense (DOD) and contractor officials.
section_title: What GAO Found
paragraphs: Since our last review in September 2013, the intended mission and required capabilities of the Navy's Unmanned Carrier-Launched Airborne Surveillance and Strike (UCLASS) system have come into question. Ongoing debate about whether the primary role of the UCLASS system should be mainly surveillance with limited strike or mainly strike with limited surveillance has delayed the program, as shown in the figure. Requirements emphasizing a strike role with limited surveillance could be more demanding and costly.
a Early operational capability is currently not anticipated before fiscal year 2022 and could occur as late as fiscal year 2023.
The knowledge the Navy has obtained about the resources needed to develop the UCLASS system may no longer be applicable depending on what requirements are finally chosen. GAO's prior best practices work has found that before initiating system development, a program should present an executable business case that demonstrates that it has a high level of knowledge and a match between requirements and available resources. If the final UCLASS requirements emphasize a strike role with limited surveillance, the Navy will likely need to revisit its understanding of available resources in the areas of design knowledge, funding, and technologies before awarding an air system development contract.
section_title: What GAO Recommends
paragraphs: GAO recommends that before committing significant resources the Navy should ensure that it has an executable business case for UCLASS development that matches available resources to required capabilities. On behalf of DOD, the Navy generally agreed with the recommendation.

section_title: Letter
paragraphs: The Navy expects to have invested at least $3 billion through fiscal year  2020 in the development of the Unmanned Carrier-Launched Airborne  Surveillance and Strike (UCLASS) system. The system, which is  expected to enhance the intelligence, surveillance, reconnaissance,  targeting, and strike capabilities of the Navy’s aircraft carrier fleet, is  comprised of three segments: (1) air system, (2) aircraft carrier, and (3)  control system and connectivity. In August 2013, the Navy awarded  contracts worth $15 million each to four competing contractors to develop  and deliver preliminary designs for the air system. The contractors  delivered their preliminary designs, and the Navy completed its  assessment of their maturity in May 2014. The next anticipated steps for  the UCLASS program will be to solicit proposals and award the contract  for development, design, fabrication, test, and delivery of the air system.
The National Defense Authorization Act for Fiscal Year 2014 included a  provision that GAO review the status of the UCLASS acquisition program  annually. program, and (2) the extent to which the Navy has the knowledge about  resources it needs to develop the UCLASS system.
Pub. L. No. 113-66, § 213(d) (2013).
Chiefs of Staff, and organizations within the Office of the Secretary of  Defense including the Office of Cost Assessment and Program  Evaluation, the Director of Operational Test and Evaluation, the Deputy  Assistant Secretary of Defense for Systems Engineering, the Deputy  Assistant Secretary of Defense for Developmental Test and Evaluation,  and the Under Secretary of Defense for Acquisition, Technology and  Logistics. To assess the extent to which the Navy has the knowledge  about resources it needs to develop the UCLASS system, we applied  best practice standards developed by GAO for using key product  knowledge to support program investment decisions, and identified and  reviewed relevant legislation such as the Weapon Systems Acquisition  Reform Act of 2009. We reviewed Department of Defense (DOD)  acquisition policy including DOD Instruction 5000.02 and recent Better  Buying Power memorandums. We analyzed requirements documents  including the initial capabilities document, the draft capability  development document, and relevant Joint Requirements Oversight  Council (JROC) memorandums. We analyzed carrier availability  schedules to identify potential testing schedule challenges. We also  visited the four contractors who were awarded air system preliminary  design review contracts—The Boeing Company, General Atomics  Aeronautical Systems Inc., Lockheed Martin Corporation, and Northrop  Grumman Systems Corporation—to discuss their work related to the  program.
We conducted this performance audit from June 2014 to May 2015 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: In 2011 the Navy received approval from DOD to begin planning for a  UCLASS acquisition program to address a capability gap in sea-based  surveillance and to enhance the Navy’s ability to operate in highly  contested environments defended by measures such as integrated air  defenses or anti-ship missiles. The Navy analyzed the potential of several  alternative systems to provide these capabilities. In 2012 the JROC—the  requirements validation authority for major defense acquisition  programs—issued a memorandum providing direction and guidance for  the Navy to focus its efforts on delivering a timely, affordable system to  meet the sea-based surveillance requirements. At that time the systems  that would be needed to operate in a highly contested environment were  deemed unaffordable. As a result, the Navy updated its analysis of  alternatives to include more affordable and feasible systems. Navy  leadership approved a draft set of requirements in April 2013 that  emphasized affordability, timely fielding, and endurance, while  deemphasizing the need to operate in highly contested environments.  DOD policy provides that the JROC, as the validation authority for major  defense acquisition programs, will validate the requirements document— known as the capability development document—prior to releasing  requests for proposals for development contracts and the decision review  that initiates a system development program, known as a Milestone B  review. The JROC has not yet validated these requirements.
In September 2013, we found that the Navy had taken some positive  steps to scale back requirements to match available resources. Our  primary concern at the time was that the program planned to develop,  manufacture and field operational UCLASS systems before holding a  Milestone B review, which would defer key oversight mechanisms, such  as the establishment of an acquisition program baseline, for these  program activities until after they were over. Without a baseline and  regular reporting on progress, it would be difficult for Congress to hold the  Navy accountable for achieving cost, schedule, and performance goals.  As a result, we recommended that the Navy hold a Milestone B review  sooner than its then-scheduled fiscal year 2020 date in order to provide  for increased oversight and accountability. At the time, the Navy  disagreed, believing that its approved strategy was compliant with  acquisition regulations and laws. Congress subsequently placed  limitations on the number of UCLASS air vehicles that DOD could acquire  prior to receiving Milestone B approval.acquisition strategy was otherwise consistent with the DOD acquisition  process that applies to most weapon system programs, as well as with a  knowledge-based acquisition approach.
section_title: UCLASS Program Has Been Delayed As Requirements Debate Continues
paragraphs: Since our last review in September 2013, the system’s intended mission  and required capabilities have come into question, delaying the Navy’s  UCLASS schedule. DOD has decided to conduct a review of its airborne  surveillance systems and the future of the carrier air wing, and has as a  result adjusted the program’s schedule. The Navy’s fiscal year 2016  budget documents reflect these changes, with award of the air system  contract now expected to occur in fiscal year 2017, a delay of around 3  years. In addition the Navy now expects to achieve early operational  capability—a UCLASS system on at least one aircraft carrier—no earlier  than fiscal year 2022, a delay of around 2 years. Figure 1 shows delays in  dates for several other key program events.
Congress, DOD, and the Navy continue to debate the primary role of the  UCLASS system. The main options are a largely surveillance role with  limited strike operating in less contested environments, or a largely strike  role with limited surveillance operating in highly contested environments.  Congress has raised concerns about whether UCLASS will be armed and  survivable enough to support U.S. power projection in areas in which  access and freedom to operate are challenged. In addition, Congress has  heard testimony from former DOD and Navy officials expressing concerns  about the ability of UCLASS to help counter the defenses of adversaries  trying to deny U.S. access. Congress has also directed the Navy to  confirm that the program’s key performance parameters—that is, its most  critical requirements—have been validated by the JROC before issuing  the UCLASS development request for proposals, and prohibited the air  system development contract award until after DOD completes a  requirements review.program while DOD conducts airborne surveillance systems and carrier  air wing reviews further indicates that the anticipated role of UCLASS is  not yet settled.
section_title: Knowledge about Needed Resources Depends on Final UCLASS Requirements
paragraphs: The resolution of the debate over UCLASS requirements could have  significant design and cost implications, which will determine the  resources the Navy needs and how much knowledge from the Navy’s  previous assessments and estimates can still be applied. In September  2013, we concluded that the UCLASS program should demonstrate that it  has an executable business case that reflects high levels of knowledge  and a match between requirements and available resources before  holding a Milestone B review, establishing an acquisition program  baseline, and initiating system development. Our past work has found  that while a match is eventually achieved on most weapon system  programs, a key distinction between successful programs—which perform  as expected and are developed within estimated resources—and  problematic programs is when this match is achieved. When the match  occurs before system development begins, the weapon system is more  likely to meet objectives.
The current uncertainty about UCLASS requirements underscores the  need for the program to demonstrate an executable business case,  establish an acquisition program baseline, and hold a Milestone B review,  prior to starting a system development program. At this point, if more  demanding requirements add technical risk, the Navy would likely need to  conduct additional systems engineering work before it could establish an  executable business case and a program baseline. As such, the Navy  would need to revisit its understanding of available resources in the areas  of design knowledge, funding, and technologies as detailed below:
Knowledge gained through preliminary design reviews may no  longer be applicable: During the four preliminary design reviews that  ended in May 2014, the Navy evaluated contractor designs against a  set of performance specifications issued in July 2013. Those  specifications reflected the requirements that had been approved by  Navy leadership just three months earlier and focused on the need to  conduct mainly surveillance missions in less contested environments  while emphasizing affordability, timely fielding, and endurance. If the  program pursues and the JROC validates requirements that focus on  a strike role and emphasize the need for the air system to operate in  highly contested environments, increase internal weapons payload  capacity, or change how long the air system needs to remain airborne  without refueling, the contractors may have to adjust or redesign their  proposals. This would increase design risk since no preliminary  design reviews have been completed based on these potentially more  demanding requirements. As a result, the Navy may need to conduct  more systems engineering work and update or repeat entirely the  preliminary design review process.
Program cost estimates and funding needs depend on final  requirements: We found in September 2013, that UCLASS  development cost estimates were varied and uncertain, even at a time  when requirements had been scaled back and appeared to be  relatively stable. As the debate about requirements has progressed,  the uncertainty about the program’s cost has increased. DOD and  contractor officials have noted that if requirements become more  demanding, for example increasing the air system’s weapons payload  or the need for it to operate in a highly contested environment, then  the estimated development costs could increase significantly. Until  requirements are firm, the Navy will not have the knowledge it needs  to develop and present an executable business case or program  baseline containing reliable cost and funding estimates. Because  requirements are still under debate, the Navy reduced the UCLASS  fiscal year 2016 budget from almost $670 million to $135 million.  Despite this near term reduction, annual development funding levels  are projected to reach nearly $850 million in fiscal year 2020, as  shown in figure 2. The projected funding, however, does not reflect  the level of funding that may be needed if the program pursues more  demanding requirements, which some officials in the Office of the  Secretary of Defense believe could be substantially higher.
Program may need to develop and mature additional  technologies: If the program pursues and the JROC validates a more  demanding set of requirements the contractors may need to develop  and mature additional technologies. Navy officials believe that the  critical technologies for UCLASS are mature based on their  experience with a demonstration program for a carrier-launched  unmanned aircraft, known as the Unmanned Combat Air System  Demonstration. However, if the validated program requirements lead  to the need for new technologies, then the program will likely need  additional time to mature those technologies before beginning system  development. Scheduling for UCLASS is particularly complicated as  the program needs to synchronize its test planning with availability of  aircraft carriers that have had UCLASS modifications installed.  Carriers are periodically unavailable due to scheduled maintenance  needs, and thus air system schedule delays could cause the program  to miss opportunities for testing. The Navy also has the opportunity to  decide whether to add requirements and technologies in a single step  or to add them incrementally using an evolutionary acquisition  approach.
section_title: Conclusions
paragraphs: Firm and achievable requirements should form the basis of a business  case for any major weapon system investment. A substantive debate  about the intended mission and required capabilities of UCLASS is taking  place before DOD makes a major resource commitment and holds a  Milestone B review to formally initiate a system development program.  This is a good development, because it will likely help ensure that the  Navy’s UCLASS business case provides a sound foundation for an  acquisition program baseline that is rooted in firm and achievable  requirements at the outset.
DOD policy requires the Navy to finalize UCLASS requirements, with  validation by the JROC, before issuing the request for proposals for the  development contract. Once the requirements are finalized and before a  development contract is signed, the Navy will need to demonstrate that it  has adequate resources—including design knowledge, funding, and  technologies—available to meet those requirements. Unsettled  requirements will hinder the Navy’s ability to develop and present a  business case with realistic cost and schedule estimates, and establish  an acquisition program baseline. The final requirements and how similar  or different they are to those used for the past preliminary design reviews,  will determine the extent to which the knowledge the Navy gained is still  applicable at this key juncture in the program.
section_title: Recommendation for Executive Action
paragraphs: Once the JROC has validated UCLASS requirements, and in order to  ensure that the Navy has a sound and executable business case and  establishes an acquisition program baseline before awarding a  development contract and committing significant resources, we  recommend that the Secretary of Defense direct the Secretary of the  Navy to provide a report to the congressional defense committees and  the Secretary of Defense demonstrating that the Navy has the resources  available and a strategy to deliver those required UCLASS capabilities. At  a minimum this report should include:
An updated cost estimate;
A schedule for holding a Milestone B review and establishing an  acquisition program baseline before initiating system development;
Plans for new preliminary design reviews and technology maturation if  more demanding requirements are validated; and
What consideration is being given to adopting an evolutionary  acquisition approach.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this product to DOD for comment. On behalf of  DOD, the Navy partially agreed with our recommendation. The Navy’s  written comments are reproduced in appendix I. The Navy also provided  technical comments that were incorporated, as appropriate.
The Navy agreed that if the JROC validates a more demanding set of  requirements, it will be necessary to revisit the UCLASS schedule to allow  for potential development and maturation of new technologies, in addition  to planning of preliminary design reviews. However, the Navy also  expressed concerns that the content of the recommended report would  duplicate elements of existing statutory provisions such as certifications  associated with milestone reviews and reporting requirements contained  in the Carl Levin and Howard P. “Buck” McKeon National Defense  Authorization Act for Fiscal Year 2015.
If the Navy holds a Milestone B review before awarding the development  contract for the UCLASS air system and receives the certifications  required by statute and DOD policy at that point in time, as well as  meeting the reporting requirements in the National Defense Authorization  Act for Fiscal Year 2015, we agree that it will satisfy the basic intent of our  recommendation, and thus no separate report would be required.  However, the current UCLASS schedule does not include a Milestone B  review prior to the air system development contract award. If a Milestone  B is not held prior to the contract award—thus not triggering the requisite  statutory certification requirements—the Navy should still be required to  provide assurance that it has a sound, executable business case and  establish an acquisition program baseline before committing significant  resources. In this case, we believe that providing the recommended  report would address this need.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense, and the Secretary of the Navy. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.
If you have any questions about this report or need additional information,  please contact me at (202) 512-4841 or sullivanm@gao.gov. Contact  points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this report. Key contributors to this report are  listed in appendix II.
section_title: Appendix I: Comments from the Department of Defense
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, key contributors to this report  were Travis J. Masters, Assistant Director; Scott M. Bruckner; Robert P.  Bullock; Laura Greifner; Marie P. Ahearn; Timothy M. Persons; and  Roxanna T. Sun.