UAVs are pilotless aircraft, controlled remotely or by preprogrammed on-board equipment. The Outrider system consists of four air vehicles, ground control equipment, one remote video terminal, four modular mission payloads, communications devices, a means of launch and recovery, and one mobile maintenance facility for every three Outrider systems (see fig. 1). The Outrider ACTD grew out of the Joint Tactical UAV program. The original concept of the Joint Tactical UAV program was to acquire (1) a 50-kilometer UAV system, the Maneuver, to satisfy reconnaissance and surveillance needs of Army brigade and Marine Corps regimental commanders and (2) a 200-kilometer UAV system, the Hunter, to satisfy the reconnaissance and surveillance needs of Army corps and division commanders and Navy task force commanders. The Joint Tactical UAV program was restructured in fiscal year 1996. The Hunter portion was canceled and the Maneuver portion was reconstituted as the Outrider ACTD to evaluate one UAV system’s ability to perform both the Hunter and Maneuver missions. To streamline the acquisition process, DOD designated Outrider an ACTD in December 1995 and awarded a contract for a 2-year ACTD in May 1996. During this period, DOD will acquire 6 nondevelopmental Outrider systems with 24 air vehicles at a cost of approximately $57 million. DOD can procure more systems during the ACTD using low-rate production options built into the contract and, according to an Outrider program official, has requested $30 million for fiscal year 1998 to do so. According to DOD, the purpose of the Outrider ACTD is to evaluate the utility of the system through a series of operational demonstrations. The Army, the Navy, and the Marine Corps will prepare assessments of the system’s military utility based on the operational demonstrations. At the end of the ACTD, Defense Acquisition Board executives will review the service assessments and determine if the ACTD should become a formal acquisition program. If DOD approves transition to the formal acquisition process, program officials must prepare documentation identical to that required of traditional acquisition programs. Prior to beginning the Outrider ACTD, DOD acquired three other nondevelopmental tactical UAV systems: Pioneer, Hunter, and Predator. Each of these UAV programs provided DOD with important lessons about acquisition strategies, system integration, and logistic supportability. However, DOD is not applying these lessons to the Outrider ACTD. DOD’s acquisition strategy for the Outrider closely resembles the acquisition strategy used for the Hunter program. After a user demonstration, DOD awarded a low-rate production contract for 7 Hunter systems with 56 aircraft before demonstrating through operational testing that the system was potentially operationally effective and suitable.Testing of the low-rate production Hunter systems revealed numerous problems, and eventually DOD terminated the Hunter program. Similarly, according to an Outrider program official, DOD plans to exercise a contract option for low-rate production of three to six additional Outrider systems in April 1998 before conducting realistic operational testing. The program official stated that user demonstrations conducted prior to April 1998 as part of the ACTD will provide a sufficient basis for making a low-rate production decision. These user demonstrations, however, will not provide the same level of assurance for justifying a low-rate production commitment as would operational testing since such testing involves meeting minimally acceptable thresholds for key performance parameters. Outrider as an ACTD system has neither key parameters nor thresholds, and DOD is not required to establish them for the demonstrations. Lessons learned from prior UAV programs illustrate that nondevelopmental UAV systems should be operationally tested in realistic environments before beginning low-rate production. Our past work has shown that production of nondevelopmental UAV systems before operational testing can result in adverse consequences. DOD started producing two nondevelopmental UAVs—the Pioneer and, more recently, the Hunter—before subjecting either to any operational testing. The problems DOD has experienced with these systems clearly illustrate the adverse consequences of beginning production without having adequate assurance of satisfactory system performance. Specifically, in 1990, we reported that lack of Pioneer operational testing led the Navy to costly and time-consuming trial and error while trying to adapt the system for shipboard use. Ultimately, DOD spent about $50 million redesigning and modifying Pioneer systems initially acquired for $56 million. Undeterred by the experience with Pioneer, DOD then started production of the Hunter without subjecting it to operational testing. In 1992, we reported that DOD should not award a production contract for the Hunter based on limited testing in unrealistic environments. Nevertheless, DOD awarded a contract for seven Hunter systems. These systems were unable to meet requirements, and the program was terminated in 1995 after an investment of over $757 million. Integrating nondevelopmental components into a fieldable Outrider system is proving more challenging than DOD anticipated. According to program officials, integrating components necessary to satisfy the naval requirements, such as electromagnetic interference shielding and stronger landing gear, delayed Outrider’s first flight from November 1996 to March 1997. Because the Outrider ACTD has a 2-year time limit, schedule delays result in less time available for the users to assess the system’s military utility. These nondevelopmental UAV integration lessons are not new to DOD. The Hunter and Pioneer were both procured by DOD as nondevelopmental systems. Both systems required the expenditure of unexpected development time and money in retroactive attempts to solve integration problems. For example, we stated in our September 28, 1990, report, that the Pioneer system required substantial development to integrate the system into a shipboard environment. In addition, in 1995, DOD concurred with us that the complexity of the Hunter subsystem integration was significantly underestimated by both the government and the contractor. An independent DOD team that reviewed the Hunter UAV in 1995 reported that using nondevelopmental subsystems misled many into believing that integrating nondevelopmental subsystems would not require substantial development. The team recommended that the services should consider and reevaluate the advantage of attempting to procure nondevelopmental subsystems without allowing for some developmental effort needed to integrate them into the overall system. DOD plans to award a low-rate production contract for up to six Outrider systems without demonstrating a critical component of military utility—whether the system is user-supportable. The ACTD’s operational demonstrations will not realistically address the user-supportability of the Outrider system. According to an Outrider program official, the user will perform only basic maintenance during the operational demonstrations, while the contractor will perform all other maintenance. Furthermore, the Outrider ACTD will not include a logistics demonstration to show that the system is user-supportable without contractor assistance. UAV lessons learned show that procuring nondevelopmental systems without assurance that they are user-supportable results in cost growth and program delays. For example, a logistics demonstration conducted after DOD procured seven low-rate production Hunter systems revealed the system was not user sustainable. DOD analysts reported that the perception in the Hunter program was that logistics would be easy to add to a nondevelopmental system. In reality, adding military logistics to a nondevelopmental system proved a significant challenge. The analysts noted that an expensive, time-consuming developmental effort was needed to acquire the logistics support for Hunter. In addition, while ACTD unit cost may be low, militarizing capabilities and adding logistics support increases program costs. For example, while a Predator ACTD system cost about $15 million, a Predator combat-ready production system, with configuration changes, added subsystems, and full integrated logistics support provisions, costs about twice that amount. The Outrider system may not satisfy user needs unless problems associated with meeting joint requirements are resolved and interoperability with other DOD systems can be achieved. Design changes necessary to increase Outrider’s range to 200 kilometers have delayed the program and have increased the weight of the air vehicle to the point it may not be suitable for shipboard operations. Furthermore, developing an air vehicle engine suitable for naval use has proven problematic. In addition, the Outrider analog datalink is not compliant with DOD’s communications interoperability standards for reconnaissance assets and provides limited payload growth options. The Outrider system is encountering technical problems that must be resolved before the system can meet user needs. First flight of the Outrider system was delayed 4 months because of these problems. According to program officials, these problems arose from modifying the Outrider to satisfy joint requirements. The Outrider system was originally designed to satisfy the 50 kilometer, land-based, Army maneuver UAV requirement. Under the ACTD, Outrider’s joint range requirement is 200 kilometers and includes operation from amphibious ships. Modifications to satisfy joint requirements have necessitated several changes to the air vehicle design. These changes, such as adding electromagnetic interference shielding for shipboard operations and increasing air vehicle size to satisfy the range requirement, have added a large amount of weight to the air vehicle. Since DOD awarded the ACTD contract in May 1996, the weight of the fueled air vehicle has grown from the proposed 385 pounds to an actual of 578 pounds. The added weight increases the distance necessary to launch and recover the air vehicle. According to an Outrider oversight official, this could necessitate the use of arresting cables or barrier nets on the deck of a ship. According to Navy officials, the Navy is reluctant to use cables or nets to recover the Outrider because of the impact on other shipboard flight operations. The Navy has previously expressed concerns about the adverse impact of arresting cables and barrier nets on the normal flight operations of amphibious assault ships. In December 1995, we reported that Navy fleet officials opposed fielding the Hunter UAV on Navy ships because erecting barrier nets would adversely impact other flight operations from their amphibious assault ships. Additionally, Outrider’s joint requirements include a heavy fuel engine. Naval use requires a heavy fuel engine because the automotive gasoline currently used by the Outrider is considered too combustible for safe use on ships. DOD research officials estimate it may ultimately cost $100 million to develop a heavy fuel engine that is small enough to power the Outrider. Without a heavy fuel engine, the system will not satisfy naval users. A senior program official acknowledged the heavy fuel engine development is not proceeding as successfully as planned, and the current gasoline engine is not performing adequately. Consequently, 1 year into the ACTD, DOD now plans to acquire another gasoline engine. DOD is not capitalizing on opportunities to demonstrate that Outrider will be interoperable with other DOD systems during the ACTD period. DOD will not be demonstrating the Outrider with the Army and the Navy’s standardized computer workstations or with the software being designed to control all tactical UAVs, including the Predator UAV system, which is already in production. Nor will DOD be demonstrating the Outrider with a DOD-compliant Common Data Link (CDL) that would allow information from the Outrider to be more easily transferred to other DOD systems. DOD is developing a tactical control system that will control all tactical UAVs. The current Outrider and Predator control systems are incompatible and do not meet standards for communications compatibility with DOD’s other airborne reconnaissance systems. Although the Outrider will be required to work with the tactical control system, according to an Outrider program official, DOD will attempt to demonstrate interoperability on only one occasion during the ACTD. A potentially serious interoperability issue may arise if the Outrider development schedule is not aligned with the tactical control system program schedule. The tactical control system is primarily software designed to perform common mission planning and control for all tactical UAVs, including the Outrider, and it will be installed on computers already used by the services, such as the Navy’s TAC-4 and the Army’s Sunspark Systems. However, during the ACTD, DOD is allowing the Outrider contractor the option of using either (1) Outrider-specific hardware and software that is supposed to be interoperable with the tactical control system or (2) the tactical control system. According to the Outrider Demonstration Manager, the contractor has opted to use the Outrider-specific equipment, and only one demonstration of interoperability between the Outrider equipment and the tactical control system is planned for the ACTD. If the actual tactical control system and service computers are not used during the ACTD, the services’ overall assessments of military utility will not be based on actual system performance. DOD acknowledges the risk their plan creates of not achieving the required interoperability between the Outrider and the tactical control system. The Outrider datalink is not compliant with the CDL, DOD’s standard for communications interoperability for all airborne reconnaissance and surveillance missions, including those missions performed by the Outrider. The CDL requires a digital data link, whereas the Outrider employs an analog data link. According to officials from the Defense Airborne Reconnaissance Office, which is responsible for airborne reconnaissance and intelligence communications interoperability, the analog data link has no growth options and operates in the same widely used band of the microwave spectrum as European and Korean television. These officials noted that a CDL-compliant digital data link would offer the Outrider program several advantages over the current analog link. For example, a digital data link would (1) be less susceptible to distortion and interference, (2) minimize a system’s signature, (3) provide anti-jam capabilities, and (4) offer encrypted communications. The digital data link also provides for greater capability, including (1) a means to upgrade to all-weather payloads, such as the synthetic aperture and millimeter wave radars and (2) computer processing of gathered imagery. A Defense Airborne Reconnaissance Office study indicates that a short development effort could result in a CDL-compliant digital data link for the Outrider at an acceptable cost. However, Outrider officials maintain that a CDL-compliant digital data link would be too expensive given Outrider’s post-ACTD cost limit of $350,000 for the 33rd air vehicle and sensor. Because DOD’s strategy for acquiring the nondevelopmental Outrider system will not provide assurance of successful performance and interoperability before DOD’s planned low-rate production decision, and to avoid repeating the mistakes of prior UAV programs, we recommend that the Secretary of Defense delay low-rate production of the Outrider system until the results of operational testing of available systems demonstrate it is potentially operationally effective and operationally suitable for all intended users. DOD reviewed a draft of this report. DOD disagreed with most of our findings. It partially concurred with our recommendation. Specifically, DOD disagreed that it had not learned from problems in past programs and stated these problems in part led it to initiate the Outrider ACTD. DOD also disagreed that Outrider may not satisfy user needs unless it meets the Navy’s shipboard requirements and is interoperable with the tactical control system. It stated that the ACTD responds to an approved joint requirement and does not identify service unique requirements, but will address the effect of weight and engine type. DOD also noted that it has formed an integrated team between the Outrider and tactical control system programs and taken other measures to ensure interoperability. We recognize that DOD is aware of problems with past UAV programs and agree that an ACTD can provide useful insights. However, we remain concerned about DOD’s strategy for the Outrider because the planned demonstrations of military utility that will precede DOD’s low-rate production decision are (1) limited in scope; (2) will not be complete before the decision; and (3) may not identify and resolve serious system deficiencies, such as compatibility with joint requirements, and interoperability with the tactical control system. As detailed in this report, similar acquisition strategies for the Hunter and Pioneer programs resulted in the acquisition of additional systems that required costly modifications in order to meet user needs. DOD has the opportunity to operationally test the Outrider’s performance without risking commitment to additional unproven systems under low-rate production. DOD is acquiring 6 Outrider systems with 24 aircraft under the original contract. If the Outrider is assessed positively during the ACTD, DOD could modify the ACTD hardware to the production representative design for operational tests. If the required changes are so significant that the ACTD systems cannot be made production representative, DOD guidance on transitioning ACTDs to formal acquisition indicates that a new competition should be conducted. In responding to our recommendation, DOD concurred that Outrider should not enter production until the results of operational testing demonstrate its effectiveness and suitability. DOD noted that completing operational test and evaluation is a statutory requirement for formal acquisition programs entering production. DOD added, however, that this statute does not apply to ACTDs entering low-rate production. We recognize that full operational testing is not a statutory requirement for ACTDs entering low-rate production. However, our past work shows that awarding low-rate initial production contracts without any operational testing has resulted in the procurement of substantial inventories of unsatisfactory weapons requiring costly modifications to achieve satisfactory performance and, in some cases, deployment of substandard systems to combat forces. To determine whether DOD is applying lessons learned from prior UAV lessons learned to this program, and whether the Outrider would meet user needs, we reviewed program plans, test schedules, performance documents, and other records relating to the Outrider ACTD and examined DOD guidance related to systems acquisition, acquisition streamlining and reform, and ACTDs. We also interviewed and obtained information from knowledgeable officials of the Joint Chiefs of Staff; the Office of the Secretary of Defense; Defense Airborne Reconnaissance Office; Chief of Naval Operations; Department of the Navy, Program Executive Office for Cruise Missiles and UAV Joint Project; Department of the Army, Operational Test and Evaluation Command; and the Department of the Air Force, Deputy Chief of Staff Plans and Operations. All of these officials are located in the greater Washington, D.C., metropolitan area. Furthermore, we interviewed and obtained information from representatives of the Commander in Chief, U.S. Atlantic Fleet, Norfolk, Virginia; the Department of the Navy, Operational Test and Evaluation Forces Command, Norfolk, Virginia; the Joint Tactical UAV Project Office, Huntsville, Alabama; Defense Contract Audit Agency, Hopkins, Minnesota; Defense Contract Management Command, Hopkins, Minnesota; and the Outrider ACTD contractor, Alliant TechSystems, Hopkins, Minnesota. We performed our work from July 1996 to June 1997 in accordance with generally accepted government auditing standards. This report contains a recommendation to you. As you know, 31 U.S.C. 720 requires the head of a federal agency to submit a written statement on actions taken on our recommendations to the Senate Committee on Governmental Affairs and the House Committee on Government Reform and Oversight not later than 60 days after the date of the report. A written statement also must be submitted to the Senate and House Committees on Appropriations with an agency’s first request for appropriations made more than 60 days after the date of the report. We are sending copies of this report to appropriate congressional committees; the Secretaries of the Army and the Navy; and the Office of Management and Budget. We will make copies available to others on request. Please contact me at (202) 512-4841, if you or your staff have any questions concerning this report. Major contributors to this report were Tana Davis, John Warren, and Charles Ward. The following are GAO’s comments to the Department of Defense’s (DOD) letter, dated July 9, 1997. 1. We understand that the purpose of the Outrider Advanced Concept Technology Demonstration (ACTD) is to assess the utility of the Outrider system and note that DOD is acquiring 6 Outrider systems with 24 air vehicles under the original ACTD contract. If the Outrider is assessed positively, these could be used instead of building production representative systems under low-rate production. Specifically, DOD could modify the ACTD systems to create a production representative system that could be operationally tested prior to low-rate production. If required changes are so significant that the ACTD system cannot be successfully modified, DOD ACTD guidance indicates that a new competition should be conducted. 2. We agree that ACTDs should be based on mature technologies. However, DOD officials have acknowledged the Outrider system is not mature. We therefore continue to believe that DOD should resolve the integration challenges for Outrider before proceeding to a low-rate production decision. 3. Although DOD maintains that the development of Outrider is event rather than schedule driven, we note that DOD has not slipped the planned low-rate production decision or ACTD completion date in response to delays to the Outrider test schedule. 4. DOD states that it will demonstrate supportability prior to the full system acquisition. DOD ACTD guidance states that the full range of support areas must be considered if the plan for an ACTD is to transition to low-rate production. We believe that committing to further Outrider production without taking advantage of the opportunity to demonstrate supportability adds unnecessary risk to the planned acquisition program. 5. Our report specifically identifies the differences in the cost of a Predator ACTD system compared with a Predator production system. 6. We modified the text to clarify that the Outrider ACTD is based on joint requirements. 7. ACTD guidance points out that overall systems engineering efforts performed during the ACTD should include actions ensuring connectivity, compatibility, and synchronization of ACTD products with systems these products will operate with on the battlefield. Receipt of secondary imagery from the Outrider ground control station (level 1) does not provide any evidence that the tactical control system will be able to control or receive information directly from the Outrider air vehicle (levels 2 and 3). DOD’s plan to demonstrate Outrider’s compliance with tactical control system’s interoperability standards during the ACTD is not the same as demonstrating that levels 2 and 3 can be achieved in the field. 8. DOD’s response indicates a tactical Common Data Link (CDL) may be available for use in Outrider in less than 2 years. The ACTD is scheduled for completion in May 1998. 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Summary: GAO reviewed the Department of Defense's (DOD) acquisition of the Outrider, an unmanned aerial vehicle (UAV) system, through a streamlined acquisition process known as the Advanced Concept Technology Demonstration (ACTD), focusing on whether: (1) DOD is applying lessons learned from prior UAV programs to the Outrider; and (2) the Outrider is likely to meet user needs. GAO noted that: (1) DOD is not applying lessons learned from prior UAV programs to the Outrider ACTD; (2) for example, despite problems with the Pioneer and Hunter stemming from DOD's decision to award further production contracts without conducting operational testing or demonstrating that the system is user-supportable, DOD is pursuing the same strategy for the Outrider; (3) in addition, DOD has underestimated, as it did for the Pioneer and Hunter programs, the time and effort necessary to integrate nondevelopmental items into Outrider; (4) moreover, the Outrider system may not satisfy user needs unless problems associated with meeting joint requirements are resolved and interoperability with other DOD systems is ensured; and (5) consequently, DOD will not have assurance that the Outrider will meet user needs by the time of the planned fiscal year 1998 low-rate production decision.