The FCS concept is designed to be part of the Army’s Future Force, which is intended to transform the Army into a more rapidly deployable and responsive force that differs substantially from the large division-centric structure of the past. The Army is reorganizing its current forces into modular brigade combat teams, each of which is expected to be highly survivable and the most lethal brigade-sized unit the Army has ever fielded. The Army expects FCS-equipped brigade combat teams to provide significant warfighting capabilities to DOD’s overall joint military operations. The Army is implementing its transformation plans at a time when current U.S. ground forces continue to play a critical role in the ongoing conflicts in Iraq and Afghanistan. The Army has instituted plans to spin out selected FCS technologies and systems to current Army forces throughout the program’s system development and demonstration phase. As we were preparing this report, the Army made a number of adjustments to its plans for the FCS program. The revised program will no longer include all 18 systems as originally planned. The FCS family of weapons is now expected to include 14 manned and unmanned ground vehicles, air vehicles, sensors, and munitions that will be linked by an advanced information network. The systems include eight new types of manned ground vehicles to replace current tanks, infantry carriers, and self-propelled howitzers; two classes of unmanned aerial vehicles; several unmanned ground vehicles; and an attack missile. Fundamentally, the FCS concept is to replace mass with superior information—allowing soldiers to see and hit the enemy first rather than to rely on heavy armor to withstand a hit. This solution attempts to address a mismatch that has posed a dilemma to the Army for decades: the Army’s heavy forces had the necessary firepower needed to win but required extensive support and too much time to deploy while its light forces could deploy rapidly but lacked firepower. If the Future Force becomes a reality, then the Army would be better organized, staffed, equipped, and trained for prompt and sustained land combat, qualities intended to ensure that it would dominate over evolving, sophisticated threats. The Future Force is to be offensively oriented and will employ revolutionary concepts of operations, enabled by new technology. The Army envisions a new way of fighting that depends on networking the force, which involves linking people, platforms, weapons, and sensors seamlessly together in a system-of-systems. If successful, the FCS system-of-systems concept will integrate individual capabilities of weapons and platforms, thus facilitating interoperability and open system designs. This would represent significant improvement over the traditional approach of building superior individual weapons that must be retrofitted and netted together after the fact. This transformation, in terms of both operations and equipment, is under way with the full cooperation of the Army warfighter community. In fact, the development and acquisition of FCS is being accomplished using a uniquely collaborative relationship among the Army’s developers, the participating contractors, and the warfighter community. The Army has employed a management approach for FCS that centers on a lead systems integrator to provide significant management services to help the Army define and develop FCS and reach across traditional Army mission areas. Because of its partner-like relationship with the Army, the lead systems integrator’s responsibilities include requirements development, design, and selection of major system and subsystem subcontractors. The team of Boeing and Science Applications International Corporation is the lead systems integrator for the FCS system development and demonstration phase of acquisition, which is expected to extend until 2017. The FCS lead systems integrator acts on behalf of the Army to optimize the FCS capability, maximize competition, ensure interoperability, and maintain commonality in order to reduce life- cycle costs. Boeing also acts as an FCS supplier in that it is responsible for developing two important software subsystems. The Army advised us that it did not believe it had the resources or flexibility to use its traditional acquisition process to field a program as complex as FCS under the aggressive timeline established by the then-Army Chief of Staff. The Army will maintain oversight and final approval of the lead systems integrator’s subcontracting and competition plans. The FCS lead systems integrator originally operated under a contractual instrument called an “other transaction agreement.” In 2006, the Army completed the conversion of that instrument to a more typical contract based on the Federal Acquisition Regulation. As required by section 115 of the John Warner National Defense Authorization Act for Fiscal Year 2007, we are reviewing the contractual relationship between the Army and the lead systems integrator and will be reporting on that work separately. We have frequently reported on the wisdom of using a solid, executable business case before committing resources to a new product development effort. In the case of DOD, a business case should be based on DOD acquisition policy and lessons learned from leading commercial firms and successful DOD programs. The business case in its simplest form is demonstrated evidence that (1) the warfighter’s needs are valid and that they can best be met with the chosen concept, and (2) the chosen concept can be developed and produced within existing resources—that is, proven technologies, design knowledge, adequate funding, adequate time, and management capacity to deliver the product when it is needed. A program should not go forward into product development unless a sound business case can be made. If the business case measures up, the organization commits to the product development, including making the financial investment. At the heart of a business case is a knowledge-based approach to product development that is both a best practice among leading commercial firms and the approach preferred by DOD in its acquisition policies. For a program to deliver a successful product within available resources, managers should demonstrate high levels of knowledge before significant commitments are made. In essence, knowledge supplants risk over time. This building of knowledge can be described as three levels or points that should be attained over the course of a program. First, at program start, the customer’s needs should match the developer’s available resources—mature technologies, time, funding, and management capacity. An indication of this match is the demonstrated maturity of the technologies needed to meet customer needs. The ability of the government acquisition workforce to properly manage the effort should also be an important consideration at program start. Second, about midway through development, the product’s design should be stable and demonstrate that it is capable of meeting performance requirements. The critical design review is the vehicle for making this determination and generally signifies the point at which the program is ready to start building production- representative prototypes. Third, by the time of the production decision, the product must be shown able to be manufactured 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 expected through realistic system-level testing. A delay in attaining any one of these levels delays the points that follow. If the technologies needed to meet requirements are not mature, design and production maturity will be delayed. In successful commercial and defense programs that we have reviewed, managers were careful to develop technology separately from and ahead of the development of the product. For this reason, the first knowledge level is the most important for improving the chances of developing a weapon system within cost and schedule estimates. DOD’s acquisition policy has adopted the knowledge- based approach to acquisitions. DOD policy requires program managers to demonstrate knowledge about key aspects of a system at key points in the acquisition process. Program managers are also required to reduce integration risk and demonstrate product design prior to the design readiness review and to reduce manufacturing risk and demonstrate producibility prior to full-rate production. The FCS program is about one-third of the way into its scheduled product development. At this stage, the program should have attained knowledge point one, with a strategy for attaining knowledge points two and three. Accordingly, we analyzed the FCS business case first as it pertains to firming requirements and maturing technologies, which indicate progress against the first knowledge point. We then analyzed FCS’s strategy for attaining design and production maturity. Finally, we analyzed the costs and funding estimates made to execute the FCS business case. In our previous report on the FCS program, released in March 2006, we reported that the program entered the development phase in 2003 without reaching the level of knowledge it should have attained in the pre- development phase. The elements of a sound business case were not reasonably present, and we noted that the Army would continue building basic knowledge in areas such as requirements and technologies for several more years. We concluded that in order for the FCS program to be successful, an improved business case was needed. The Defense Acquisition Board met in May 2006 to review the FCS program. That review approved the Army approach to spin out certain FCS technologies to current Army forces in 2008 and directed the Army to continue with yearly in-process reviews and a Defense Acquisition Board meeting in the late 2008 timeframe. Performance expectations were also established for the review. During the meeting, it was noted that significant cost and schedule risk remains for the program and that reductions in scope and more flexibility in schedule are needed to stay within current funding constraints. Also in 2006, Congress mandated that the Secretary of Defense conduct a milestone review for the FCS program, following the preliminary design review scheduled for early 2009. Congress stated that the review should include an assessment of whether (1) the needs are valid and can be best met with the FCS concept, (2) the FCS program can be developed and produced within existing resources, and (3) the program should continue as currently structured, be restructured, or be terminated. The Congress required the Secretary of Defense to review specific aspects of the program, including the maturity of critical technologies, program risks, demonstrations of the FCS concept and software, and a cost estimate and affordability assessment and to submit a report of the findings and conclusions of the review to Congress.