Defense Acquisitions: The Army's Future Combat Systems' Features, Risks, and Alternatives
Published: 2004-04-01T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: To become a more responsive and dominant combat force, the U.S. Army is changing its strategy from bigger and stronger weapons to faster and more agile ones. The Future Combat Systems (FCS)--which the Army calls the "greatest technology and integration challenge ever undertaken"--is expected to meet the Army's transformational objectives. Forming FCS' backbone is an information network that links 18 systems. Not only is FCS to play a pivotal role in the Army's military operations, FCS and its future iterations are expected to eventually replace all Army forces. For FCS' first developmental increment, the Army has set aside a 5 1/2-year timetable from program start (May 2003) until the initial production decision (November 2008). GAO was asked to testify about FCS' key features, whether the program carries any risks, and, if so, whether there are alternatives for developing FCS capabilities with fewer risks.
section_title: What GAO Found
paragraphs: The FCS concept is a new generation of manned and unmanned ground vehicles, air vehicles, and munitions, each of which taps into a secure network of superior combat information. These weapon systems are to be a fraction of the weight of current weapons yet as lethal and survivable. FCS' lightweight and small size are critical to meeting the Army's goals of deploying faster and being more transportable for big or small military operations. Rather than rely on heavy armor to withstand an enemy attack, FCS' systems will depend on superior communications to kill the enemy before being detected. One of FCS' key advantages is that it provides an architecture within which individual systems will be designed--an improvement over designing systems independently and making them interoperable after the fact. Another merit is that FCS is being acquired and developed with the full cooperation of the Army's program managers, contractors, and the warfighter community. FCS is at significant risk for not delivering required capability within budgeted resources. Three-fourths of FCS' needed technologies were still immature when the program started. The first prototypes of FCS will not be delivered until just before the production decision. Full demonstration of FCS' ability to work as an overarching system will not occur until after production has begun. This demonstration assumes complete success-- including delivery and integration of numerous complementary systems that are not inherently a part of FCS but are essential for FCS to work as a whole. When taking into account the lessons learned from commercial best practices and the experiences of past programs, the FCS strategy is likely to result in cost and schedule consequences if problems are discovered late in development. Because it is promising to deliver unprecedented performance capabilities to the warfighter community, the Army has little choice but to meet a very high standard and has limited flexibility in cutting FCS requirements. Because the cost already dominates its investment budget, the Army may find it difficult to find other programs to cut in order to further fund FCS. To avoid unanticipated cost and schedule problems late in development, several alternatives can be considered: (1) add time to FCS' acquisition schedule to reduce concurrent development; (2) take the time to develop and demonstrate the most critical capabilities first, such as the FCS network, then proceed with an acquisition program; and (3) focus on maturing the most critical technologies first, then bundle them in demonstrations of capabilities, and ensure that decision makers have attained the knowledge they need at critical junctures before moving forward.

section_title: Letter
paragraphs: I am pleased to be here today to discuss the Department of the Army’s  Future Combat Systems (FCS), a networked suite of weapons and other  systems. FCS is the centerpiece of the Army’s plan to transform to a  lighter, more agile, and more capable force. The Army plans to develop  and field FCS in increments, but has only defined the first increment at  this time. Increment 1 of FCS began system development and  demonstration in May 2003. The production decision is currently planned  for November 2008 and initial operational capability is slated for  December 2010. This first increment will equip 15 brigade-sized Units of  Action by 2020—about one third of the active force. Total costs to develop  and produce Increment 1 are estimated at $92 billion, in then year dollars.  The fiscal year 2004 budget provides $1.7 billon in research and  development funds for FCS; the fiscal year 2005 budget requests a  substantial increase to $3.2 billion.
Today I would like to cover (1) the features of the FCS concept, (2) the  prospects for delivering a capable FCS within budgeted cost and schedule,  and (3) whether alternatives to the current FCS strategy are worth  considering.
subsections: section_title: Army Transformation and the FCS Program
paragraphs: The Army plans to develop and acquire FCS in at least two increments but,  according to program officials, only the first one has been defined at this  point. The first increment is an information network linking a new  generation of 18 manned and unmanned ground vehicles, air vehicles,  sensors, and munitions. The manned ground vehicles are to be a fraction  of the weight of current weapons such as the Abrams tank and Bradley  Fighting Vehicle, yet are to be as lethal and survivable. At a fundamental  level, the FCS concept is replacing mass with superior information; that is,  to see and hit the enemy first, rather than to rely on heavy armor to  withstand attack. The ability to make this leap depends on (1) the ability  of the network to collect, process, and deliver vast amounts of information  such as imagery and communications and (2) the performance of the  individual systems themselves. The concept has a number of progressive  features. For example, it provides an architecture within which individual  systems will be designed—an improvement over designing systems  independently and making them interoperable after the fact.
subsections: section_title: Army Transformation
paragraphs: A decade after the cold war ended, the Army recognized that its combat  force was not well suited to perform the operations it faces today and is  likely to face in the future. The Army’s heavy forces had the necessary  firepower but required extensive support and too much time to deploy.  Its light forces could deploy rapidly but lacked firepower. To address this  mismatch, the Army decided to radically transform itself into a new  “Future Force.”
The Army expects the Future Force to be organized, manned, equipped,  and trained for prompt and sustained land combat, requiring a responsive,  technologically advanced, and versatile force. These qualities are intended  to ensure the Future Force’s long-term dominance over evolving,  sophisticated threats. The Future Force will be offensively oriented and  will employ revolutionary operational concepts, enabled by new  technology. This force will fight very differently than the Army has in the  past, using easily transportable lightweight vehicles, rather than traditional  heavily armored vehicles. A key characteristic of this force is agility. Agile  forces would possess the ability to seamlessly and quickly transition  among various types of operations from support operations to warfighting  and back again. They would adapt faster than the enemy, thereby denying  it the initiative. In an agile force, commanders of small units may not have  the time to wait on higher command levels; they must have the authority  and high quality information at their level to act quickly to respond to  dynamic situations.
Thus, to be successful, the transformation must include more than new  weapons. The transformation is extensive, encompassing tactics and  doctrine, as well as the very culture and organization of the Army.
Against that backdrop, today, I will focus primarily on the equipment  element of the transformation, represented by FCS.
section_title: The FCS Solution
paragraphs: FCS will provide the majority of weapons and sensor platforms that  comprise the new brigade-like modular units of the Future Force known  as Units of Action. Each unit is to be a rapidly deployable fighting  organization about the size of a current Army brigade but with the combat  power and lethality of a current (larger) division. The Army also expects  FCS-equipped Units of Action to provide significant war-fighting  capabilities to the Joint Force.
The first FCS increment will ultimately be comprised of an information  network and 18 various systems—which can be characterized as manned  ground systems, unmanned ground systems, and unmanned air vehicles.  While some systems will play a larger role in the network than others, the  network will reside in all 18 systems, providing information to them as  well as taking information from them. Figure 1 shows FCS Increment 1.
The Joint Tactical Radio System and the Warfighter Information  Network-Tactical are two programs outside of FCS that integrate all the  various systems and soldiers together. As such, their development is  crucial to the FCS network. The communications backbone of the Unit of  Action will be a multi-layered mobile network centered on the Joint  Tactical Radio System. According to program officials, all soldiers and  FCS vehicles, including the unmanned vehicles, will employ these radios.  Beyond being the primary communications component within the unit, the  Joint Tactical Radio System also will assist with communications beyond  the unit, to assets at higher echelons. Communications with those  echelons will be enabled through the Warfighter Information  Network-Tactical, which provides the overarching network background  for the FCS network and is expected to conform to DOD’s interoperability  and network architecture directives.
Increment 1 began system development and demonstration in May 2003.  Currently, only the network and 14 systems are funded. The remaining  4 systems will be introduced as funding becomes available. Current  estimates are for the acquisition of Increment 1 to cost $92 billion (then- year dollars) and to achieve an initial operational capability by the end of  2010. Although the Under Secretary of Defense approved the Army’s  request to begin the system development and demonstration phase, he  directed the Army to prepare for a full program review in November 2004.  Increment 1 is expected to replace roughly one-third of the active force  through about 2020, when the first 15 Units of Action are fielded.
According to program officials, the Army has not yet defined future FCS  increments. However, it is important to note that the Army expects to  eventually replace most of its current forces with the FCS. Much of the  current Army heavy force is expected to remain in the inventory—needing  to be maintained and upgraded—through at least 2020. We recently  reported that costs of maintaining legacy systems would be significant,  but funding is likely to be extremely limited, particularly given competition  for funds from transformation efforts. We concluded that maintaining  legacy equipment will likely be a major challenge, necessitating funding  priorities to be more clearly linked to needed capability and to long-range  program strategies.
The Army intends to employ a single Lead Systems Integrator throughout  the completion of Increment 1. The Lead System Integrator will be the  single accountable, responsible contractor to integrate FCS on time and  within budget. It will act on behalf of the Army throughout the life of the  program to optimize the FCS capability, maximize competition, ensure  interoperability, and maintain commonality in order to reduce life-cycle  cost. In order to quickly transition into system development and  demonstration and to manage the multitude of tasks associated with FCS  acquisition, the Army chose the Lead System Integrator approach to  capitalize on industry’s flexibility.
section_title: The Requirements Challenge
paragraphs: The Army wants the FCS-equipped Unit of Action to have a number of  features. These can be described in four characteristics: lethality,  survivability, responsiveness, and sustainability. The Unit of Action is to  be as lethal as the current heavy force. It must have the capability to  address the combat situation, set conditions, maneuver to positions of  advantage, and close with and destroy enemy formations at longer ranges  and greater precision than the current force. To provide this level of  lethality and reduce the risk of detection, FCS must provide high  single-shot effectiveness. To be as survivable as the current heavy force,  the Unit of Action is primarily dependent upon the ability to kill the enemy  before being detected. This depends on unit’s ability to see first,  understand first, act first, and finish decisively. The individual FCS  systems will also rely on a layered system of protection involving several  technologies that lowers the chances of a vehicle or other system being  seen by the enemy; if seen, lowers the chances of being acquired; if  acquired, lowers the chances of being hit; if hit, lowers the chances of  being penetrated; and finally, if penetrated, increases the chances of  surviving. To be responsive, Units of Action must be able to rapidly deploy  anywhere in the world, be rapidly transportable via various transport  modes, and be ready to fight upon arrival. To facilitate rapid  transportability, FCS vehicles are being designed to match the weight and  size constraints of the C-130 aircraft. The Unit of Action is to be capable  of sustaining itself for periods of 3 to 7 days depending on the level of  conflict. This sustainability requires subsystems with high reliability and  low maintenance, reduced demand for fuel and water, highly effective  offensive weapons, and a fuel-efficient engine.
Meeting all these requirements will be a difficult challenge because the  solution to meet one requirement may work against another requirement.  For example, the FCS vehicles’ small size and lighter weight are factors  that improve agility, responsiveness, and deployability. However, their  lighter weight precludes the use of the traditional means to achieve  survivability—heavy armor. Instead, the FCS program must use  cutting-edge technology to develop systems, such as an active protection  system, to achieve survivability. Yet such technology cannot be adopted if  it impairs the new systems’ reliability and maintainability. Weight,  survivability, and reliability will have to be kept in balance.
section_title: Merits of the Concept
paragraphs: The essence of the FCS concept itself—to provide the lethality and  survivability of the current heavy force with the sustainability and  deployability of a force that weighs a fraction as much—has the intrinsic  attraction of doing more with less. The concept has a number of merits,  which demonstrate the Army’s desire to be proactive in its approach to  preparing for potential future conflicts and its willingness to break with  tradition in developing an appropriate response to the changing scope of  modern warfare.
If successful, the architecture the program is developing will leverage  individual capabilities of weapons and platforms and will facilitate  interoperability and open systems. This architecture is a significant  improvement over the traditional approach of building superior individual  weapons that must be netted together after the fact. Also, the system of  systems network and weapons could give acquisition managers the  flexibility to make best value trade-offs across traditional program lines.
This transformation of the Army, both in terms of operations and in  equipment, is underway with the full cooperation of the Army warfighter  community. In fact, the development and acquisition of FCS are being  done using a collaborative relationship between the developer (program  manager), the contractor, and the warfighter community. For example, the  developer and the warfighter are using a disciplined approach to  decompose the Unit of Action Organizational and Operational Plan and the  FCS Operational Requirements Document into detailed specifications.  This work is defining in detail the requirements for a Unit of Action to  operate in a network-centric environment. This approach is in line with  best practices to ensure that specific technical issues are understood  before significant design work is done.
The Army has established sustainability as a design characteristic equal to  lethality and survivability. This is an improvement over past programs,  such as the Apache helicopter and the Abrams tank. These programs did  not emphasize sustainability, to less than desirable results, including  costly maintenance problems and low readiness rates, which persisted  even after the systems were fielded. FCS’ approach of emphasizing  sustainability from the outset should allow operating and support costs  and readiness to be evaluated early in development, when there is a  greater chance to affect those costs positively. This approach is also in line  with best practices.
section_title: FCS at Significant Risk of Not Delivering Required Capability Within Estimated Resources
paragraphs: The FCS program has yet to—and will not—demonstrate high levels of  knowledge at key decision points. It thus carries significant risks for  execution. At conflict are the program’s technical challenges and limited  time frame. The Army began system development and demonstration in  May 2003 and plans to make its initial FCS production decision in  November 2008—a schedule of about 5 ½ years. Seventy-five percent of  the technologies were immature at the start of system development and  demonstration and some will not be proven mature until after the  scheduled initial production decision. First prototypes for all 14 funded  systems and the network will not be demonstrated together until after the  production decision and will serve both as technology demonstrators  and system prototypes. They will represent the highest level of FCS  demonstration before production units are delivered, as no production- representative prototypes are planned. Even this level of demonstration  assumes complete success in maturing the technologies, developing the  software, and integrating the systems—as well as the delivery and  integration of the complementary systems outside of FCS. While the Army  is embarking on an impressive array of modeling, simulation, emulation,  and other demonstration techniques, actual demonstration of end items is  the real proof, particularly for a revolutionary advance, such as FCS.
If the lessons learned from best practices and the experiences of past  programs have any bearing, the FCS strategy is susceptible to “late cycle  churn,” a phrase used by private industry to describe the discovery of  significant problems late in development and the attendant search for fixes  when costs are high and time is short. FCS is susceptible to this kind of  experience as the demonstration of multiple technologies, individual  systems, the network, and the system of systems will all culminate late in  development and early production.
subsections: section_title: FCS Is an Unprecedented Technical Challenge
paragraphs: In the Army’s own words, FCS is “the greatest technology and integration  challenge the Army has ever undertaken.” It intends to develop a complex,  family of systems–an extensive information network and 14 major weapon  systems—in less time than is typically taken to develop, demonstrate, and  field a single system. The FCS Acquisition Strategy Report describes this  scenario as a “dramatically reduced program schedule (which) introduces  an unprecedented level of concurrency.” Underscoring that assessment is  the sheer scope of the technological leap required for the FCS. For  example:    A first-of-a-kind network will have to be developed.    The 14 major weapon systems or platforms have to be designed and  integrated simultaneously and within strict size and weight limitations.
At least 53 technologies that are considered critical to achieving critical  performance capabilities will need to be matured and integrated into the  system of systems.
The development, demonstration, and production of as many as  157 complementary systems will need to be synchronized with FCS  content and schedule. This will also involve developing about 100 network  interfaces so the FCS can be interoperable with other Army and joint  forces.
An estimated 34 million lines of software code will need to be generated  (5 times that of the Joint Strike Fighter, which had been the largest  defense undertaking in terms of software to be developed).
Some of these technical challenges are discussed below.
subsections: section_title: Network Development Challenges
paragraphs: The overall FCS capabilities are heavily dependent on a high quality of  service—good information, delivered fast and reliable—from the network.  However, the Army is proceeding with development of the entire FCS  system of systems before demonstrating that the network will deliver as  expected. Many developmental efforts will need to be successful for the  network to perform as expected. For each effort, a product—whether  software or hardware—must first be delivered and then demonstrated  individually and collectively. The success of these efforts is essential to the  high quality of service the network must provide to each Unit of Action. In  some cases, an individual technology may be a linchpin—that is, if it does  not work, the network’s performance may be unacceptable. In other cases,  lower than expected performance across a number of individual  technologies could collectively degrade network performance below  acceptable levels. Some key challenges are highlighted below:    System of Systems Common Operating Environment is a software layer  that enables interoperability with external systems and manages the  distribution of information and software applications across the  distributed network of FCS systems. According to program officials, the  System of Systems Common Operating Environment is on the critical path  for most FCS software development efforts.
The Joint Tactical Radio System and the Warfighter Information  Network-Tactical, and several new wideband waveforms—all in  development—are essential to the operation of the FCS network. It is vital  that these complementary developments be available in a timely manner  for the currently planned demonstrations of the network.
The information-centric nature of FCS operations will require a great deal  of bandwidth to allow large amounts of information to be transmitted  across the wireless network. However, the radio frequency spectrum is a  finite resource, and there is a great deal of competition and demand for it.  An internal study revealed that FCS bandwidth demand was 10 times  greater than what was actually available. As a result, the program initiated  a series of trade studies to examine and reassess bandwidth requirements  of various FCS assets. The results of these studies may have a dramatic  effect on the FCS network. The Army has already made a number of  changes to the network design to use available bandwidth more efficiently  and to reduce bandwidth demand.
After determining that Unmanned Aerial Vehicle (UAV) sensor missions  would constitute the largest consumption of network bandwidth, the Army  started a new wideband waveform development effort, using the higher  frequency bands. This effort will also require new updated Joint Tactical  Radio System hardware and new antennas in addition to a new waveform.
Sophisticated attackers could compromise the security of the FCS  network, which is critical to the success of the system of systems concept.  Such an attack could degrade the systems’ war-fighting ability and  jeopardize the security of Army soldiers. The Army is developing  specialized protection techniques as there is only limited commercial or  government software currently available that will adequately protect a  mobile network like the one proposed for FCS.
section_title: UAV Development Challenges
paragraphs: FCS Increment 1 includes four classes of UAVs that cover increasing areas  of responsibility. According to program officials, two of the UAV classes  are currently unfunded and are currently not being developed. The Army  plans to develop, produce and field them if funding becomes available.  Within the FCS concept, UAV roles include reconnaissance, target  acquisition and designation, mine detection, and wide-band  communications relay. The required UAVs will need to be designed,  developed, and demonstrated within the 5½-year period prior to the initial  FCS production decision. As we recently testified, DOD’s experiences  show that it is very difficult to field UAVs. Over the last 5 years, only three  systems have matured to the point that they were able to use procurement  funding.
section_title: Manned Ground Vehicle Development Challenges
paragraphs: FCS Increment 1 includes eight manned ground systems, however, one— the maintenance and recovery vehicle—is unfunded. The Army plans to  use the Heavy Expanded Mobility Tactical Truck-Wrecker in its place in  the Unit of Action. The remaining seven manned ground systems require  critical individual and common technologies to meet required capabilities.  For example, the Mounted Combat System will require, among other new  technologies, a newly developed lightweight weapon for lethality; a hybrid  electric drive system and a high-density engine for mobility; advanced  armors, an active protection system, and advanced signature management  systems for survivability; a Joint Tactical Radio System with the  wideband waveform for communications and network connection; a  computer-generated force system for training; and a water generation  system for sustainability.
Under other circumstances, each of the seven manned ground systems  would be a major acquisition program on par with the Army’s past major  ground systems such as the Abrams tank, the Bradley Fighting Vehicle,  and the Crusader Artillery System. As such, each requires a major effort to  develop, design, and demonstrate the individual vehicles. Recognizing that  a number of subsystems will be common among the vehicles, meeting the  Army’s schedule will be a challenge as this effort must take place within  the 5½-year period prior to the initial FCS production decision.
section_title: High Levels of Demonstrated Knowledge Are Key to Getting Desired Outcomes
paragraphs: We have found for a program to deliver a successful product within  identified resources, managers should build high levels of demonstrated  knowledge before significant commitments are made. Figure 2 depicts the  key elements for building knowledge.
This knowledge build, which takes place over the course of a program, can  be broken down into three knowledge points to be attained at key  junctures in the program:    At knowledge point 1, the customer’s needs should match the developer’s  available resources—mature technologies, time, and funding. This is  indicated by the demonstrated maturity of the technologies needed to  meet customer needs.
At knowledge point 2, the product’s design is stable and has demonstrated  that it is capable of meeting performance requirements. This is indicated  by the number of engineering drawings that are releasable to  manufacturing.
At knowledge point 3, the product must be producible within cost,  schedule, and quality targets and have demonstrated its reliability. It is  also the point at which the design must demonstrate that it performs as  needed. Indicators include the number of production processes in  statistical control.
The three knowledge points are related, in that a delay in attaining  one delays those that follow. Thus, if the technologies needed to meet  requirements are not mature, design and production maturity will be  delayed. For this reason, the first knowledge point is the most important.  DOD’s acquisition policy has adopted the knowledge-based approach to  acquisitions. Translating this approach to DOD’s acquisition policy, a  weapon system following best practices would achieve knowledge point 1  by the start of system development and demonstration, knowledge point 2  at critical design review (about halfway through development), and  knowledge point 3 by the start of production.
For the most part, all three knowledge points are eventually attained on a  completed product. The difference between highly successful product  developments—those that deliver superior products within cost and  schedule projections—and problematic product developments is how  this knowledge is built and how early in the development cycle each  knowledge point is attained. If a program is attaining the desired levels of  knowledge, it has less risk—but not zero risk—of future problems.  Likewise, if a program shows a gap between demonstrated knowledge and  best practices, it indicates an increased risk—not a guarantee—of future  problems. Typically, these problems cost more money than has been  identified and take more time than has been planned.
DOD programs that have not attained these levels of knowledge have  experienced cost increases and schedule delays. We have recently  reported on such experiences with the F/A-22, the Advanced SEAL  Delivery System, the Airborne Laser, and the Space Based Infrared System  High. For example, the technology and design matured late in the F/A-22  program and have contributed to numerous problems. Avionics have  experienced major development problems and have driven large cost  increases and caused testing delays.
section_title: Even Assuming Success, FCS Strategy Will Not Demonstrate High Levels of Knowledge
paragraphs: The FCS program started system development and demonstration with  significantly less knowledge than called for by best practices. This  knowledge deficit is likely to delay the demonstration of subsequent  design and production knowledge at later junctures and puts the program  at risk of cost growth, schedule delays, and performance shortfalls. Two  factors contributed to not having a match between resources and  requirements at the start of system development and demonstration:  75 percent of critical technologies were not mature and requirements were  not well defined. Later in the program, when the initial production  decision is made, a knowledge gap will still exist even if the program  proceeds on schedule. For example, prototypes of all 14 funded systems,  the network, and the software version needed for initial operational  capability will not be brought together and tested for the first time until  after the production decision. Further, as production-representative  prototypes will not be built, it does not appear that much demonstration of  production process maturity can occur before the production decision.
subsections: section_title: Knowledge Gap at Start of System Development and Demonstration
paragraphs: Using best practices, at the start of system development and  demonstration, a program’s critical technologies should be demonstrated  to a technology readiness level of 7. This means the technology should be  in the form, fit, and function needed for the intended product and should  be demonstrated in a realistic environment, such as on a surrogate  platform. While DOD’s policy states a preference for a technology  readiness level of 7, it accepts a minimum of a level 6. According to  program officials, technologies were accepted for FCS if they were at level  6 or if the Army determined that the technologies would reach a readiness  level of 6 before the July 2006 critical design review. To put this discussion  of technology maturity in perspective, the difficulties the F/A-22 fighter are  currently experiencing with its avionics system are, in essence, the  consequence of not demonstrating a technology readiness level of 7 until  late in the program.
Consequently, the Army started FCS system development and  demonstration phase with about 75 percent of its critical technologies  below level 7, with many at level 5 and several at levels 3 and 4. Since then,  progress has been made, but the Army expects that, by the full program  review in November 2004, only 58 percent of the program’s critical  technologies would be matured to a technology readiness level of 6 or  higher. The Army estimates that 95 percent of the technologies will reach  level 6 by the critical design review. The program does not expect all FCS  critical technologies to be demonstrated to level 7 until mid-2009, after the  initial production decision and about 6 years after the start of system  development and demonstration.
The second factor keeping the Army from matching resources with  customer’s needs before starting the system development and  demonstration phase was that it did not have an adequate definition of the  FCS requirements. The program continues to work on defining the  requirements for the FCS system of systems and the individual systems.  System requirements may not be completely defined until at least the  preliminary design review in April 2005 and, perhaps, as late as the critical  design review in July 2006. The program still has a number of key design  decisions to be made that will have major impacts on the FCS  requirements and the conceptual design of FCS Increment 1. Currently,  the program has 129 trade studies underway including 5 studies that are  critical and due to be completed soon. For example, a critical study with  great potential impact is determining the upper weight limit of the  individual FCS manned platforms. This determination could affect the FCS  transportability, lethality, survivability, sustainability, and responsiveness  capabilities. These and other open questions on the FCS requirements will  need to be answered in order for the detailed design work to proceed and  ultimately to be stabilized at the critical design review.
section_title: Demonstrated Knowledge Will Be Low at Production Decision
paragraphs: To go from system development and demonstration to production in  5 ½ years, the FCS program depends on a highly concurrent approach to  developing technology, as well as to designing, building, testing, and  producing systems. This level of concurrency resulted from the Army’s  establishment of 2010 as its target for initial operating capability for the  first FCS Unit of Action. Army officials acknowledge that this is an  ambitious date and that the program was not really ready for system  development and demonstration when it was approved. However, the  officials believe it was necessary to create “irreversible momentum” for  the program. Army leaders viewed such momentum as necessary to  change Army culture. The result is an accelerated schedule-driven  program, as depicted in figure 3, rather than an event-driven program.
Even if the program successfully completes this schedule, it will yield  lower levels of demonstrated knowledge than suggested by best practices  and DOD’s acquisition policy. Significant commitments will thus be made  to FCS production before requisite knowledge is available. For example:    Technology development is expected to continue through the production  decision.
At the design readiness review (critical design review) in July 2006,  technology development will still be ongoing, putting at risk the stability of  ongoing system integration work.  In December 2007, while technology development and system integration  are continuing and first prototypes are being delivered, the Army plans to  begin long lead item procurement and to begin funding for the production  facilities.  In November 2008, the initial production decision is expected to be made.  However, program officials said that some technologies will not have  reached level 7 by that time, and the system of systems demonstration will  remain to be done.  In early 2010, as production deliveries have started, the Army plans to  finish Integrated System Development and Demonstration Test Phase 5.1,  the first full demonstration of all FCS components as an integrated system.  Testing and demonstration will continue until the full rate production  decision in mid-2013.
The initial operational capability is planned for December 2010.
With the FCS concurrent strategy, much demonstration of knowledge will  occur late in development and early in production, as technologies mature,  prototypes are delivered, and the network and systems are brought  together as a system of systems. This makes the program susceptible to  “late cycle churn,” a condition that we reported on in 2000. Late cycle  churn is a phrase private industry has used to describe the efforts to fix a  significant problem that is discovered late in a product’s development.  Often, it is a test that reveals the problem. The churn refers to the  additional—and unanticipated—time, money, and effort that must be  invested to overcome the problem. Problems are most devastating when  they delay product delivery, increase product cost, or “escape” to  the customer.
The discovery of problems in testing conducted late in development is a  fairly common occurrence on DOD programs, as is the attendant late cycle  churn. Often, tests of a full system, such as launching a missile or flying an  aircraft, become the vehicles for discovering problems that could have  been found earlier and corrected less expensively. When significant  problems are revealed late in a weapon system’s development, the  reaction—or churn—can take several forms: extending schedules to  increase the investment in more prototypes and testing, terminating the  program, or redesigning and modifying weapons that have already made it  to the field. Over the years, we have reported numerous instances in which  weapon system problems were discovered late in the development cycle.
The Army has embarked on an impressive plan to mitigate risk using  modeling, simulation, emulation, hardware in the loop, and system  integration laboratories throughout FCS development. This is a laudable  approach designed to reduce the dependence on late testing to gain  valuable information about design progress. However, on a first-of-a-kind  system like FCS that represents a radical departure from current systems,  actual testing of all the components integrated together is the final proof  that the system works both as predicted and as needed.
If the FCS strategy does not deliver the system of systems as planned, the  Army is still prepared to go forward with production and fielding. The  Army’s Acquisition Strategy Report states that at the Initial Production  Decision, all elements of the FCS may not be ready for initial production  and will require a continuation of system development and demonstration  efforts to complete integration and testing in accordance with the  program–tailoring plan. For those that need more time, FCS program  manager will present to the Milestone Decision Authority a path forward,  with supporting analysis. In addition, the Army will accept existing  systems in lieu of actual FCS systems to reach initial operational  capability.
section_title: Alternatives to FCS Strategy Merit Consideration
paragraphs: We have reported on options that warrant consideration as alternatives for  developing FCS capabilities with less risk. Alternatives are still viable and  worth considering, particularly before major funding and programmatic  commitments are made. If the FCS program proceeds as planned and does  experience problems later in development, it may pose a real dilemma for  decision makers. Typically, performance, schedule, and cost problems on  weapon system programs are accommodated by lowering requirements  and increasing funding. If the FCS program proceeds on its current path  until problems occur in demonstration, traditional solutions may not be  available because of the significant role it must fulfill and its financial  magnitude.
subsections: section_title: Alternatives Featuring Lowering FCS Performance or Increasing Funds May Be Difficult
paragraphs: While there is a significant amount of potential flexibility among the  various FCS systems and technologies, collectively the system of systems  has to meet a very high standard. It has to be as lethal and survivable as  the current force and its combat vehicles have to be a fraction of the  weight of current vehicles to be air transportable on the C-130 aircraft.  These “must haves” constrain the flexibility in relaxing requirements for  the FCS system of systems.
The opportunity for increasing funds to cover cost increases poses a  challenge because FCS already dominates the Army’s investment budget.  It might be difficult to find enough other programs to cut or defer to offset  FCS increases. Assuming the Army’s acquisition cost estimates are  accurate and the program will succeed according to plan, the FCS  investment for even the first increment is huge—$92 billion (in then-year  dollars). These assumptions are optimistic as risks make problems likely,  the cost estimate was based on an immature program, and budget  forecasts have already forced deferral of four FCS systems. As estimated,  FCS will command a significant share of the Army’s acquisition budget,  particularly that of ground combat vehicles, for the foreseeable future.  In fiscal year 2005, the FCS budget request of $3.2 billion accounts for  52 percent of the Army’s proposed research, development, test and  evaluation spending on programs in system development and  demonstration and 31 percent of that expected for all Army research,  development, test, and evaluation activities. See figure 4 for FCS costs  through 2016.
The ramp up in FCS research and development funding is very steep, going  from $157 million in fiscal 2003 to $1.7 billion in fiscal 2004 to a projected  $3.2 billion in fiscal years 2005 and topping out at about $4.3 billion in  fiscal 2006. FCS procurement funding is projected to start in fiscal 2007 at  $750 million and ramp up to an average of about $3.2 billion in fiscal years  2008 and 2009. In late development (2008-2009) the total FCS costs will run  about $5 billion per year. After 2008, FCS will command nearly 100 percent  of the funding for procurement of Army ground combat vehicles. After  2011, FCS costs will run nearly $9 billion annually to procure enough FCS  equipment for two Units of Action per year. According to Army officials, it  is not yet clear that the Army can afford this level of annual procurement  funding for FCS. The consequences of even modest cost increases and  schedule delays for FCS would be dramatic. For example, we believe that  a 1-year delay late in FCS development, not an uncommon occurrence for  other DOD programs, could cost $4 billion to $5 billion. A modest  10 percent increase in production cost would amount to over $7 billion.
In a broader context, any discussion of DOD’s sizeable investment that  remains in the FCS program must also be viewed within the context of the  fiscal imbalance facing the nation within the next 10 years. There are  important competing priorities, both within and external to DOD’s budget,  that require a sound and sustainable business case for DOD’s acquisition  programs based on clear priorities, comprehensive needs assessments,  and a thorough analysis of available resources. Funding specific program  or activities will undoubtedly create shortfalls in others.
section_title: Alternatives for Proceeding
paragraphs: Alternatives to developing FCS capabilities that do not follow a concurrent  strategy are feasible, if acted upon early enough. Alternatives should have  the common elements of building more knowledge before making program  commitments; preserving the advantages of the FCS concept, such as  defining an architecture before individual systems are developed; and  spinning off mature technologies to systems already fielded. Alternatives  that would allow for building such knowledge include:    Adding more time to the FCS program with its scope intact to reduce  concurrency would lower risk. However, until technologies are mature  and more is known about whether the FCS concept will work, there still  would not be a sound basis for estimating how much time will be needed  to build the knowledge needed to complete system development and  demonstration.
Focus on the development and demonstration of its most critical  capabilities first, such as the network. This could be done by conducting  one or more advanced technology demonstrations to reduce technical  and integration risks in critical areas, then proceed with an acquisition  program. This would take more time than if the current FCS schedule  were successfully carried out.
Focus on maturing the most critical technologies first, then bundle them in  demonstrations of capabilities, such as Advanced Concept Technology  Demonstrations, then proceed with an acquisition program that would  attain sufficient knowledge at the right acquisition junctures. This would  also take more time than if the current FCS schedule were successfully  carried out.
section_title: Objectives, Scope, and Methodology
paragraphs: To develop the information on whether the FCS program was following a  knowledge-based acquisition strategy and the current status of that  strategy, we contacted, interviewed, and obtained documents from  officials of the Offices of the Under Secretary of Defense (Acquisition,  Technology, and Logistics); the Secretary of Defense Cost Analysis  Improvement Group; the Assistant Secretary of the Army (Acquisition,  Logistics, and Technology); the Program Executive Officer for Ground  Combat Systems; the Program Manager for Future Combat Systems; and  the Future Combat Systems Lead Systems Integrator. We reviewed, among  other documents, the Objective Force Operational and Organizational Plan  for Maneuver Unit of Action and the Future Combat Systems’ Operational  Requirements Document; the Acquisition Strategy Report, the Baseline  Cost Report, the Critical Technology Assessment and Technology Risk  Mitigation Plans, and the Integrated Master Schedule. We attended the  FCS Business Management Quarterly Meetings, Management Quarterly  Review Meetings, and Directors Quarterly Review Meetings.
In our assessment of the FCS, we used the knowledge-based acquisition  practices drawn from our large body of past work, as well as DOD’s  acquisition policy and the experiences of other programs. We discussed  the issues presented in this statement with officials from the Army and the  Secretary of Defense, and made several changes as a result. We performed  our review from July 2003 to March 2004 in accordance with generally  accepted auditing standards.
Mr. Chairman, this concludes my prepared statement. I would be happy to  answer any questions that you or members of the subcommittee may have.
section_title: Contacts and Staff Acknowledgments
paragraphs: For future questions about this statement, please contact me at  (202) 512-4841. Individuals making key contributions to this statement  include Lily J. Chin, Marcus C. Ferguson, Lawrence Gaston, Jr., William R.  Graveline, W. Stan Lipscomb, John P. Swain, and Carrie R. Wilson.
This is a work of the U.S. government and is not subject to copyright protection in the  United States. It may be reproduced and distributed in its entirety without further  permission from GAO. However, because this work may contain copyrighted images or  other material, permission from the copyright holder may be necessary if you wish to  reproduce this material separately.