Defense Acquisition: Army Transformation Faces Weapon Systems	 
Challenges (21-MAY-01, GAO-01-311).				 
								 
Changes in the character and conduct of warfighting and in the	 
range and nature of missions call for an Army force that is more 
responsive and dominant across the full spectrum of operations	 
and requires much less in-theater logistics support. The Army is 
seeking to meet these new demands by initiating a transformation 
that calls for the development of a series of systems that will  
rely on technology advances to make them lighter, but just as	 
lethal and survivable as today's heavy force systems. The Army's 
transformation effort will face a number of challenges--primarily
related to funding and technology readiness. First, the 	 
transformation will place additional funding demands on the	 
defense budget. Second, the Army's plans for the transformation  
assume weapons systems and equipment can be developed and	 
acquired in much shorter time frames than in the past. Third, the
Army needs to update current acquisition plans to reflect	 
transformation priorities and schedules. A key to meeting these  
challenges will be the Army's ability to manage transformation	 
acquisition efforts as successful commercial firms do. By	 
following the best practices established by the commercial	 
sector, the Army can better match its needs with its resources.  
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-311 					        
    ACCNO:   A01016						        
  TITLE:     Defense Acquisition: Army Transformation Faces Weapon    
             Systems Challenges                                               
     DATE:   05/21/2001 
  SUBJECT:   Combat readiness					 
	     Logistics						 
	     Weapons systems					 
	     Defense capabilities				 
	     Mobilization					 
	     Army procurement					 
	     Federal agency reorganization			 
	     Private sector practices				 
	     Abrams Tank					 
	     AH-64D Helicopter					 
	     C-130 Aircraft					 
	     Army Future Combat Systems 			 
	     RAH-66 Helicopter					 
	     UH-60 Helicopter					 

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GAO-01-311
     
Report to Congressional Committees

United States General Accounting Office

GAO

May 2001 DEFENSE ACQUISITION

Army Transformation Faces Weapon Systems Challenges

GAO- 01- 311

Page 1 GAO- 01- 311 Army Transformation

May 21, 2001 Congressional Committees A decade after the Cold War, the Army
recognizes that its combat force is not well suited to perform the
operations it must face today and must plan for in the future. The Army?s
light force can deploy rapidly, but it lacks the firepower, survivability,
tactical mobility, and capability for sustained operations against the full
range of potential enemy capabilities. Conversely, its heavy force- the
force that includes tanks and other armored vehicles- possesses significant
firepower, survivability, tactical mobility, and capability for sustained
operations, but it, also, requires too much time to deploy and needs
extensive materiel support.

To address this mismatch, the Army has decided to radically transform its
current Cold War organization. When the transformation is completed, the
Army expects to have established a full- spectrum force- a strategically
responsive force that provides decisive combat power to operate in the full
range of military operations. The Army expects this force to have the
lethality, survivability, and tactical mobility of today?s heavy force and
the responsiveness and deployability of today?s light force. Further, it
will be more sustainable by requiring less in- theater logistic support than
either today?s heavy or light forces.

The Army envisions its transformation as a comprehensive change that will
affect all aspects of its organizations, training, doctrine, leadership, and
strategic plans as well as the types of equipment and technology being
acquired by the Army. According to Army staff officials, the transformation
will be the most comprehensive change in the Army in over a century. The
Army expects the transformation to be a 30- year process and has not
estimated its full cost. It is undertaking an aggressive science and
technology program to develop future force capabilities. In April 2003, it
plans to decide on which enabling technologies can be incorporated into the
future force after which it believes that the cost of the transformation can
be more accurately estimated. The House Appropriations Committee reported
that the Army?s transformation could cost at least $70 billion over the next
12 to 15 years.

Given the magnitude of the transformation effort and its potential costs, we
reviewed the Army?s plans for transforming its current forces to identify
major acquisition challenges that need to be addressed in order to
successfully execute the Army?s transformation plans. This report is part

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 01- 311 Army Transformation

of a planned series of reports on the Army?s transformation efforts. In a
related review, GAO is assessing the Army?s transformation campaign plan.

Changes in the character and conduct of warfighting and in the range and
nature of missions call for an Army force that is more responsive and
dominant across the full spectrum of operations and requires much less
intheater logistics support. The Army is seeking to meet these new demands
by initiating a transformation that calls for the development of a series of
systems- vehicles and weapons, called Future Combat Systems- that will rely
on technology advances to make them lighter, but just as lethal and
survivable as today?s heavy force systems. The Army expects that the future
combat systems will have networked communications links to other systems
throughout the battlespace to allow for the rapid and decisive engagement of
targets at significantly longer distances. The Army plans to begin equipping
its first future or ?objective? force units with such systems in fiscal year
2008.

To meet its immediate needs for a more responsive force, the Army plans to
acquire new interim combat vehicles and form five to eight interim brigade
combat teams through fiscal year 2010. These vehicles are expected to be
significantly lighter and more transportable than existing tanks and armored
vehicles. Also, the Army plans to acquire new legacy systems and upgrade and
rebuild some of its existing systems to maintain combat overmatch
capabilities during the transformation.

The Army?s transformation effort will face a number of challenges- primarily
related to funding and technology readiness. First, the transformation will
place additional funding demands on the defense budget. As such, the Army
will be required to balance the demands of maintaining and modernizing its
current inventory of weapon systems while developing and acquiring new
systems for interim and future forces.

Second, the Army?s plans for the transformation assume weapons systems and
equipment can be developed and acquired in much shorter time frames than in
the past. These systems will include sophisticated communications, robotics,
and other advanced technologies. However, some of these advanced
technologies have not yet been developed and others have already experienced
developmental delays.

Third, the Army needs to update current acquisition plans to reflect
transformation priorities and schedules. Doing so is particularly important
Results In Brief

Page 3 GAO- 01- 311 Army Transformation

since trade- off decisions will likely need to be made during the
transformation.

A key to meeting these challenges will be the Army?s ability to manage
transformation acquisition efforts as successful commercial firms do.
Commercial firms (1) ensure that they have the right knowledge at the right
decision points for making trade- offs, especially with respect to the
readiness of technology, the maturity of system designs, the realism of cost
and schedule estimates, and the availability of funding; (2) keep
requirements flexible prior to the start of a program so that its
requirements match resources and available technology; and (3) provide top
down guidance to ensure that decisions focus on achieving the overall
program goals. The Army has already made trade- off decisions to fund its
near- term transformation efforts and, in view of risks associated with its
tight acquisition schedules, has made adjustments in its plans to procure
new interim combat vehicles.

Because the Army is in the early stages of planning for its transformation
and recognizes the challenges identified in this report, GAO is not making
recommendations.

The Department of Defense generally agreed with the report. It agreed that
there are significant challenges in balancing the desired schedule, the
required resources, and the necessary maturation of technology to accomplish
the Army?s transformation goals.

Since the end of the Cold War, the pace and type of Army deployments has
dramatically shifted toward more frequent, small- scale contingency
operations. In the 40 years prior to 1990, the Army had 55 operational
deployments, including the Korean Conflict and the Vietnam War. Since 1989,
the Army has had 53 operational deployments with a majority being small-
scale contingency operations such as Somalia, Bosnia, and Kosovo.
Nevertheless, the National Military Strategy requires the services to be
prepared for major regional conflicts. Therefore, the Army must maintain
forces appropriate for these larger conflicts as well as for smaller
contingencies.

On October 12, 1999, the Secretary of the Army and the Chief of Staff of the
Army announced plans to radically transform the Army into a lighter, but
lethal and survivable, force that can respond to a broad range of
operations- from peacekeeping, to regional conflicts, to major theater wars.
Specifically, the goal of the Army?s transformation plan is to build
Background

Page 4 GAO- 01- 311 Army Transformation

the objective force. This force includes advanced command, control,
communications, computers, intelligence, surveillance, and reconnaissance
capabilities; future reconnaissance, attack, and lift aircraft; and
revolutionary weapon systems- called Future Combat Systems- that are
expected to be as lethal and survivable as the current heavy weapon systems
and light enough to be transported in a C- 130- type aircraft. 1 Objective
force units using these systems would be able to engage in the full spectrum
of conflicts ranging from various small- scale contingencies to major
theater wars.

While transitioning to the objective force, the Army believes that it needs
to improve the capabilities of its existing force so that it can better
respond to small- scale contingencies. As a result, the Army?s
transformation plans include improving portions of its current force by
transforming from five to eight units into Interim Brigade Combat Teams and
equipping them with new vehicles that are expected to make the teams more
lethal, mobile, and survivable than current light forces while maintaining
the current light force?s responsiveness and deployability capabilities. The
Army calls this force the ?interim force? because it is designed to fill a
near- term capabilities gap between today?s heavy and light forces. The Army
intends to phase out the interim force as it fields its objective force.

Also, while it is developing the objective force and establishing the
interim force, the Army plans to sustain, recapitalize (upgrade and
rebuild), and modernize selected portions of its current heavy force to
maintain the force?s overmatch capability. The Army calls its current force
the ?legacy

force? in its transformation plan. It expects to phase out the legacy force
as it fields the objective force. Figure 1 graphically depicts the Army?s
approach to its transformation.

1 The Army?s deployment goals for the objective force is to transport a
combat brigade anywhere in the world in 96 hours, a combat division on the
ground in 120 hours, and five divisions in 30 days. The Army will need air
and sea strategic lift to meet these goals.

Page 5 GAO- 01- 311 Army Transformation

Figure 1: The Army?s Approach to Its Transformation

Source: GAO analysis of Army information.

Building the objective force will require the Army to first identify and
develop the technologies required to produce systems that are as lethal and
survivable as the current heavy weapon systems and light enough to be
transported in a C- 130- type aircraft and then to develop the actual
systems. Objective force units using these future combat systems would be
able to engage and be successful in the full spectrum of conflicts.

The Army and the Defense Advanced Research Projects Agency (DARPA) have
entered into a 6- year collaborative program to explore, design, and test
the new and revolutionary technologies that are vital to meeting the
requirements of the objective force. Such technologies include robotics,
Objective Force

Mature technology and develop concepts Demonstrate

technology Develop

and produce systems Equip objective

force 2000 2003 2006 2008 2024 2032

Form initial brigade combat teams Equip and sustain interim brigade combat
teams

Transition to objective force

Sustain, recapitalize, and modernize Transition to objective force
Transition to objective force Fiscal year Obj ecti ve

Force Interim Force

Legacy Force

O b

j e c

t I v e

F o

r c e

Page 6 GAO- 01- 311 Army Transformation

sensors, new fuel and power systems, advanced armor, and command and control
networks.

DARPA?s concept for the Future Combat Systems is a ?system of systems? in
which a manned command and control vehicle is expected to be networked with
and control unmanned ground and airborne reconnaissance vehicles and
unmanned weapon delivery vehicles. The unmanned vehicles could be equipped
with such weapons as direct- and indirect- fire guns, non- line- of- sight
rockets, and antitank missiles. In addition, the manned command and control
vehicle would be networked with other reconnaissance systems not under its
direct control including other airborne and spaceborne systems. The
resulting configuration is expected to allow the commander of the command
and control vehicle to operate from a position of concealment and, using the
data received from the reconnaissance systems, to

 be aware of the tactical situation,

 identify and target opponent systems,

 select the engagement position and method that best assures success, and

 send unmanned weapon systems to carry out the engagement and destroy the
opponent?s systems.

This concept?s success depends upon mature technologies to allow the Army to
design secure networks that cannot be jammed or taken over by the opponent;
robotic vehicles that would make some decisions on their own; smaller
weapons delivery platforms; and a command and control vehicle that escapes
detection.

The Future Combat Systems program is in its initial 2- year concept design
phase. On May 9, 2000, DARPA and the Army selected four contractor teams to
develop Future Combat Systems design concepts to provide the required
objective force deployability, lethality, and survivability. Each team is to
develop two design concepts- one based on DARPA?s concept for the Future
Combat Systems and the other based on its own concept. DARPA and the Army
plan to evaluate the concepts using computer modeling and simulations.

In April 2003, DARPA and the Army plan to conduct a program review to
determine whether the required technologies are mature enough to proceed to
the next level of development. They plan to rely on technology readiness
levels as an analytic tool to make this judgment. If they decide to
continue, they plan to choose one or more of the concept designs for a

Page 7 GAO- 01- 311 Army Transformation

3- year development phase including construction of a technology carrier to
demonstrate the Future Combat Systems? principles.

The Army plans for the program to be transferred to Army control and enter
the system development and demonstration phase in fiscal year 2006. 2 It
would like to start fielding Future Combat Systems in fiscal year 2008 with
the first unit reaching its full capabilities in fiscal year 2010. The
entire transformation is not expected to be completed until about fiscal
year 2032. By that time, the objective force will have replaced both the
interim and legacy forces.

The interim force will bridge the gap between the capabilities of today?s
force and the objective force. The Army intends that this interim force will
provide the foundation for the objective force. The Army?s new interim force
will be made up of five to eight more easily deployable Brigade Combat Teams
that are expected to be trained, organized, and equipped to conduct small-
scale contingency operations. During a major war, the Army does not expect
the Interim Brigade Combat Teams to directly replace heavy combat units for
all missions, but rather to perform a broad range of missions suitable to
their capabilities and characteristics, thereby supplementing the
specialized capabilities of heavy units with their own specialized features
and assets when appropriate.

The Army plans to establish the new teams in two phases. Over the next 2
years, the Army plans to form two Initial Brigade Combat Teams using light
armored surrogate vehicles on loan from Canada and other countries and other
Army vehicles. These brigades are expected to use these vehicles to develop
operational and organizational concepts, training needs, and doctrine. In
January 2000, the Army began forming the first Initial Brigade Combat Team
at Fort Lewis, Washington.

In the second phase, the Army plans to procure ?off- the- shelf? vehicles,
called the Family of Interim Armored Vehicles, which are to be capable of
being transported in C- 130- type of aircraft. The Family of Interim Armored
Vehicles are required to be no more than 19 tons- about 50 tons lighter than
the current Abrams tank- and are to include an infantry carrier with

2 The purpose of the system development and demonstration phase of the
acquisition cycle is to develop the system; reduce program risk; design for
producibility; ensure operational supportability, affordability, and
protection of critical program information; and demonstrate system
integration, interoperability, and utility. Interim Force

Page 8 GAO- 01- 311 Army Transformation

eight variants and a mobile gun system vehicle. The Army plans also called
for a self- propelled howitzer to be part of the family of interim vehicles;
however, due to other funding priorities, the Army is not planning to
procure the self- propelled howitzer and plans to use a towed howitzer in
its place. Once acquired, the Army plans to modify the vehicles with its
most advanced digital communications and information systems. The Army plans
to replace the borrowed vehicles in the Initial Brigade Combat Teams with
interim armored vehicles once they are available and transform them into
Interim Brigade Combat Teams.

On April 6, 2000, the Army issued a request for proposal for the interim
armored vehicles. On November 16, 2000, the Army awarded a 6- year contract
for the development and production of a wheeled Family of Interim Armored
Vehicles. Under the contract all but three of the interim vehicles will go
directly into production. The three vehicles requiring development are the
fire support, armored gun system, and nuclear, chemical, biological, and
chemical reconnaissance vehicles. The contract is worth nearly $4 billion if
all the options are exercised. The Army originally had planned to equip the
first Interim Brigade Combat Team with interim vehicles by March 2001 and
reach initial operational capability with that team by December 2001. After
that and continuing through fiscal year 2010, the Army plans to equip from
five to eight interim Brigade Combat Teams with these vehicles. According to
Army Staff officials, this could be from 2,131 to 2,791 interim armored
vehicles depending on the number of brigades the Army equips.

To ensure near- term warfighting readiness and improve existing warfighting
capabilities, the Army has concluded that it must sustain and selectively
modernize and recapitalize the legacy force. The Army plans to enhance key
armored and aviation systems in both Active and Reserve components. Legacy
force systems include those weapon systems that the Army has fielded such as
the Abrams tank or Bradley Fighting Vehicle and that were under development
before the transformation was announced such as the Crusader artillery
system. The Army?s transformation plans include legacy force investments to
ensure that heavy combat systems can maintain their superiority over
potential enemy systems during the transformation period. As the objective
force units are equipped, the Army plans to phase out the legacy force units
and then the interim force units. Legacy Force

Page 9 GAO- 01- 311 Army Transformation

As noted earlier, the House Appropriations Committee reported that the
transformation would require at least $70 billion over the next 12 to 15
years. A major challenge facing the Army is balancing its transformation
plans within the defense budget. The Army has made some difficult tradeoff
decisions on programs that will and will not be funded and transformation
efforts that will and will not be immediately undertaken in order to fit its
near- term transformation efforts within available funding. As the
transformation proceeds, the Army will likely need to make more trade- offs.

Defense?s planned procurement spending has been projected to be considerably
less than estimated to sustain its current force- even before transformation
plans were announced. In April 1999, the Congressional Budget Office
estimated that it would take an average procurement budget of about $90
billion a year to sustain DOD?s current force structure. However, DOD?s
procurement spending is projected to average a little over $63 billion over
the 2001 to 2005 period- about $27 billion per year below the Congressional
Budget Office?s estimated funding requirements. In addition, we recently
reported that DOD based its funding projections for fiscal years 2001 to
2005 on optimistic assumptions about operation, maintenance, and procurement
costs; as a result DOD?s plans require more funding than currently
projected. 3 The Army?s transformation plans were not included in either of
these projections; therefore, the Army?s transformation plans may only
further increase the gap between funding requirements and available funding.

To date, the Army has not submitted a budget that fully reflects its
transformation plans. However, in funding near- term transformationrelated
efforts, the Army has had to make trade- off decisions in terms of
restructuring current programs and delaying some transformation- related
activities.

The Army?s October 1999 transformation announcement was made after fiscal
year 2000 had started. As a result, the transformation was not incorporated
in the Army?s fiscal year 2000 budget. However, about a month after the Army
Chief of Staff?s transformation announcement, the

3 Future Years Defense Program: Risks in Operation and Maintenance and
Procurement Programs (GAO- 01- 33, Oct. 5, 2000). Funding Challenges

Procurement Funds Are Limited

Army Has Already Made Trade- off Decisions

Page 10 GAO- 01- 311 Army Transformation

Congress, on November 29, 1999, added $100 million to the Army?s fiscal year
2000 appropriations to meet readiness needs including funding to initiate
the fielding and equipping of two Initial Brigade Combat Teams. 4

The October 1999 transformation announcement was also too late to be fully
reflected in the Army?s fiscal year 2001 budget request. However, the Army
provided room for its transformation plans within the request by terminating
and restructuring ongoing weapon system programs. The Under Secretary of
Defense (Comptroller) approved these changes to the Army?s budget request on
December 27, 1999. The Congress added a total of $864.5 million to the
Army?s request for transformation funding, increasing the Army?s fiscal year
2001 appropriations to (1) $259.3 million in research and development funds
for the Family of Interim Armored Vehicles, (2) $937 million in procurement
for the Family of Interim Armored Vehicles, (3) $156.9 million in research
and development funds for the Future Combat Systems, and (4) $268.6 million
in procurement funds for other equipment needed for the transformation.

Because of funding constraints, the Army has also changed some of its
transformation plans. For example, the Army has reduced the number of units
it planned to transform into Interim Brigade Combat Teams from two per year
to one per year. Also, it has decided not to procure the planned self-
propelled howitzer for the interim force. Further, according to Army Staff
officials, the Army has cancelled seven major legacy programs and
restructured two others. For example, the Army reduced the planned
procurement quantities of the Crusader artillery system from 1,138 to 480
systems.

The first budget request to fully include the transformation will be the
Army?s fiscal year 2002 budget request. The Army is currently preparing this
budget request. It does not plan to release the documents associated with
the fiscal year 2002 budget request until the President submits it to the
Congress.

Over the long term, the Army may have to make more trade- off decisions
because it must continue to balance investments in research and development
of objective force systems with investments in legacy and

4 Section 218 of title II of appendix E of the Consolidated Appropriations
Act of Fiscal Year 2000 (P. L. 106- 113, Nov. 29, 1999). More Trade- off
Decisions

Are Likely

Page 11 GAO- 01- 311 Army Transformation

interim systems. Because legacy and interim systems will ultimately be
replaced by future systems, the schedule for such replacements will be
critical in making funding trade- offs between legacy, interim, and future
combat systems.

The legacy systems will require substantial investment to sustain and
modernize. On September 6, 2000, the Assistant Secretary of the Army
(Acquisition, Logistics and Technology) said that the Army required $23
billion to modernize its legacy force in fiscal years 2002 to 2007, but
projected that it will only have about $15.5 billion for that purpose, a
$7.5 billion shortfall. 5

Additionally, some of the improved legacy systems are scheduled to enter the
force about the time the Army plans the Future Combat Systems to begin
entering the force in fiscal year 2008. For example:

 The Army currently plans to acquire the Crusader artillery system, which
consists of two vehicles that are projected to weigh about 40 tons each when
developed. At this weight, the Crusader system will not be transportable in
a C130- type aircraft- a key requirement for the Army?s interim and
objective forces. The Crusader program is currently in its program
definition and risk reduction phase and is not scheduled to be fielded until
April 2008. 6 This is the same year that the Army plans to field the Future
Combat Systems to its first unit. According to the Crusader project manager,
the Army needs to spend over $2.9 billion in research and development funds
from fiscal year 2001 to fiscal year 2008 to redesign and develop the
Crusader system. The Army expects to replace the Crusader system with an
indirect fire system that is expected to be part of the Future Combat
Systems. According to Army officials, Crusader artillery systems will remain
in the legacy force until the Army?s conversion to its objective force is
complete in 2032 under current plans.

 As part of the modernization of its legacy systems, the Army is also
planning to develop a new, more efficient engine for its Abrams tanks. The
new engine is needed to reduce the high costs of operating and

5 The cost of the Crusader program was not included in these amounts. 6 The
primary objectives of the program definition and risk reduction phase of the
acquisition cycle are to define the program as one or more concepts or
design approaches; assess the advantages and disadvantages of those concepts
or design approaches; and through prototyping, demonstrations, and early
operational assessments show that technology, manufacturing, and support
risks are well in hand.

Page 12 GAO- 01- 311 Army Transformation

maintaining the current Abrams tank engine. This engine also would be used
in the Crusader system. Like the Crusader, the Abrams tank is expected to be
replaced once Future Combat Systems are deployed. The total cost of this
common engine program has been reported as nearly $3 billion. On September
20, 2000, the Army awarded a $195.7 million contract for the development and
testing of the common engine. The contract is to continue through March 31,
2004. The Army expects to award a production contract in fiscal year 2003
for 2,845 engines for the Abrams tanks and one in fiscal year 2006 for 755
engines for the Crusader vehicles. According to Army Staff officials,
deliveries of engines to support the Crusader low- rate initial production
are planned to begin in February 2006.

 The Army plans to procure and use interim armored vehicles until they are
replaced by the Future Combat Systems. The actual time the Army will use
these systems will depend upon how quickly it develops and fields the Future
Combat Systems. It could cost as much as $5.2 billion to obtain the interim
armored vehicles needed to equip eight Interim Brigade Combat Teams.

Although the legacy and interim systems will be replaced, the Army believes
it needs to continue investing in some legacy systems to ensure that its
heavy combat forces can maintain their superiority over potential enemy
systems through the transformation period. Likewise, it believes that the
interim systems are required to improve the current light force?s ability to
respond to current small- scale contingencies until the Future Combat
Systems are fielded. Given the magnitude of the Army?s plans to both sustain
and transform its forces, the Army could be challenged to make investment
trade- offs for its legacy, interim, and objective forces.

In order to transform itself as quickly as possible, the Army has set
aggressive and challenging schedules for developing and acquiring interim
and future combat systems. Its goal is to set the conditions for

?irreversible momentum? by 2003 and to fix conditions for achieving the
initial operational capability of the objective force this decade. It is
unlikely that the Army can meet its schedule for fielding the interim
vehicles and will have to adjust milestones and/ or priorities. Given the
uncertainties associated with the effort to build future systems, it is
likely that the Army will need to continue making adjustments. According to
Army Staff officials, the Army?s Transformation Campaign Plan should provide
needed flexibility to make changes as conditions change. The campaign plan
is a mechanism for integrating and synchronizing the Army?s overall
transformation efforts. Scheduling

Challenges

Page 13 GAO- 01- 311 Army Transformation

The Army originally planned an aggressive interim vehicle acquisition
schedule with contract award in August 2000 and the first unit being
equipped with 312 interim vehicles by March 2001. The first Interim Brigade
Combat Team was to reach its initial operational capability in December
2001. The Army recognized that such a tight schedule would be difficult to
meet and took actions to mitigate this risk.

First, it sought to meet the schedule by postponing some interim vehicle
requirements. It decided to meet some of the operational requirements
through the initial interim vehicle contract and other requirements through
a series of follow- on contracts.

Second, the Army identified four key requirements and decided to accept
interim vehicles from the contractor as long as they meet the applicable key
requirements. All interim vehicle variants have to be (1) transportable on a
C- 130- type aircraft and (2) capable of effectively integrating existing
and planned Army command, control, communications, computers, intelligence,
surveillance, and reconnaissance systems. The infantry carrier vehicle also
has to be able to carry an infantry squad with its equipment, and the mobile
gun system?s main gun also has to be able to create an opening in a double
reinforced concrete wall.

The Army plans to field substitute vehicles for those variants of the
interim vehicles that are not ready in time. While this approach will make
it more likely that the Army would meet its fielding schedule, the unit may
not meet all of its full operational capability requirements because it may
not have all variants of the interim armored vehicles.

Even with these actions, the Army likely will not meet its original interim
vehicle acquisition schedule. The November 16, 2000, contract award was
about 3 months behind schedule. In the news conference announcing the award
of the contract, the Director of the Army Acquisition Corps stated that the
Army might have to add up to 16 months to the interim vehicle schedule. The
start of work under that contract was delayed until April 9, 2001, by a
formal bid protest. 7 Although the Army has not formally changed its March
2001 date for equipping the first interim brigade, the date has passed and
the Army did not direct the contractor to produce

7 On December 4, 2000, a losing bidder filed a formal protest with the
General Accounting Office and the contract performance was suspended pending
the outcome of the protest, which was denied on April 9, 2001. Interim
Systems

Page 14 GAO- 01- 311 Army Transformation

interim vehicles until after the protest was resolved. According to Army
staff officials, the date for equipping the first interim brigade will
likely slip to sometime in calendar year 2002 and the date for achieving its
initial operational capability will likely slip to sometime in calendar year
2003.

Meeting acquisition and fielding schedules for the interim force will
continue to be a challenge for the Army, especially if planned capabilities
and/ or technologies are not available to support the Army?s desired
timetable.

The Army?s foremost challenge in the transformation is to design and equip
an objective force with the Future Combat Systems that have the
deployability of its current light force and the lethality and survivability
of its current heavy force. Developing the revolutionary Future Combat
Systems is expected to require a number of significant advances in science
and technology. It is uncertain whether the required technologies will
mature enough to enable the Army to develop the Future Combat Systems as
envisioned or whether they will mature in time to meet the transformation
schedule. Army officials agree that maturing the technology required for the
Future Combat Systems is high risk and that the Army may not achieve the
objective force capabilities as envisioned within the time scheduled.

Specifically, the Army plans to mature technology, develop the Future Combat
Systems concepts, design the systems, and field them over an 8year period.
In addition, under the current Army schedule, the Future Combat Systems
enter the system development and demonstration phase in fiscal year 2006.
The Army plans to equip the first unit with the Future Combat Systems in
fiscal year 2008, 2 years later. To meet these dates, the Army projects that
in April 2003 it will need to make a decision on whether the key
technologies required for the Future Combat Systems will be mature enough to
enter systems development in fiscal year 2006. Some of these advanced
technologies have not been developed and others have experienced
developmental delays. However, in June 2000, the Army Science Board
identified 32 key technologies needed for the Future Combat Systems. The
Board considered nine of these technologies key pacing technologies. They
rated 16 technologies, including the 9 key pacing technologies, as feasible
prior to 2006; 13 technologies as feasible between 2010 and 2015; and 3
technologies- autonomous robotics, electromagnetic rail gun, and emulation
training- as unavailable until after 2015. Future Combat Systems

Page 15 GAO- 01- 311 Army Transformation

Historically, DOD has not been able to develop high technology systems
within 8 years as is planned for the Future Combat Systems. DOD?s average
acquisition cycle for all systems has been from 10 to 15 years to develop
and produce the system. For the Future Combat Systems, the Army is planning
to mature the technologies, develop the systems? concepts, design the
systems, and produce them in 8 years. The acquisition cycle for systems
requiring advances in technology, like the Future Combat Systems, is likely
to be longer than the average. For example, both the Comanche helicopter and
Crusader self- propelled artillery system are systems that required
significant advances in technology to develop the systems as originally
envisioned. The technology did not mature as planned for either system. The
Comanche helicopter will be in development for about 23 years and the
Crusader system will be in development for over 16 years before their
planned fielding dates. 8

A critical requirement for both interim vehicles and Future Combat Systems
is the ability to see and understand the battlespace. However, the Army is
already facing challenges in developing technologies needed in this area.

The battlefield survivability of both the Family of Interim Armored Vehicles
and the Future Combat Systems depends upon situational understanding- that
is, the capability to ?see? and understand the battlespace in all its
dimensions, precisely locate and track critical targets, conduct operations
with lethal and non- lethal means, recognize and protect friendly forces,
and provide a common operational picture of the situation. Situational
understanding is critical to the survivability of the vehicle or system
because at 20- tons or less neither the vehicles nor systems would be able
to survive a direct confrontation with a main battle tank. They need to know
where the enemy is and either hide or select a mode of attack that does not
needlessly expose the system to enemy counterfire. This level of situational
understanding requires advanced command, control, communications, computers,
intelligence, surveillance, and reconnaissance systems.

8 We included the interval between the date the Comanche and Crusader
programs entered their individual concept development phases and the
projected dates for equipping the first unit to calculate the time each
program was ?in development.? We used this definition only to obtain a level
of effort for the two programs comparable to that planned for the Future
Combat Systems during its planned 8- year acquisition cycle. Digitizing the
Force

Page 16 GAO- 01- 311 Army Transformation

The key to situational understanding is the application of information
technologies to acquire, exchange, and employ timely information on the
battlefield. The Army?s modernization plans call for the integration of
information technologies into the Army force; the Army refers to this as
digitization. The Army plans to implement digitization through the
development, production, and fielding of over 100 individual systems. In
particular, the Army plans to field 16 high- priority systems, generally
command, control, and communications systems, and as many as possible of 56
lower priority systems to a corps in December 2004.

Our reviews have shown that the Army is having difficulty developing and
fielding these systems as planned. Specifically, in July 1999, we reported
that many of the 16 high priority systems would not be fully operationally
tested when they were scheduled to be fielded to the digitized division. 9
Therefore, while the Army may have outfitted the digitized division, its
operational capability will not have been demonstrated. The most critical of
these systems is the Force XXI Battle Command Brigade and Below, which
represents an entirely new capability that is intended to accomplish an
important digitization objective of sharing battlefield information with
thousands of soldiers operating outside of the tactical operations centers.
In July 2000, we also reported that by December 2004, 20 percent of the 56
lower priority digitization systems will not be ready for fielding and
another 50 percent of them may not be ready. 10

Most of the Army?s eight combat branches, such as armor and artillery, have
yet to issue detailed plans for the transformation. This presents a
formidable challenge in the early stages of the transformation because such
plans are needed to enable the Army to flesh out its transformation
requirements and to prioritize funding for individual system development and
modernization efforts.

The branches are responsible for identifying deficiencies in their
individual mission areas and methods to correct those deficiencies,
including improvements to weapon systems. In doing so, the branches normally
develop annual modernization plans. The Army normally

9 Battlefield Automation: Performance Uncertainties Are Likely When Army
Fields Its First Digitized Division (GAO/ NSIAD- 99- 150, July 27, 1999). 10
Battlefield Automation: Army Needs to Update Fielding Plan for First
Digitized Corps

(GAO/ NSIAD- 00- 167, July 25, 2000). Planning Challenges

Page 17 GAO- 01- 311 Army Transformation

publishes annually an Army modernization plan. However, the Army did not
publish an Army modernization plan in fiscal year 1999. Instead, in October
1999, the Army announced its transformation. The annual Army modernization
plan was, likewise, not published in fiscal year 2000 due to the
transformation planning underway within the Army. However, a shorter version
of the plan, entitled ?The Army Force Modernization and Investment Strategy
for the 21st Century- An Assessment,? was provided to the Congress in March
2000.

As a result, most of the individual Army branches have not yet updated their
modernization plans to reflect the Army?s transformation plan. For example,
the most recent combat maneuver modernization plan, which includes armored
and engineering systems, was issued in fiscal year 1998. It has not been
updated to reflect the Army?s plans to spend nearly $4 billion over the next
5 years to develop and acquire interim armored vehicles, which are an
integral part of the Interim Brigade Combat Teams. Similarly, the Army?s
current digitization plan has not been updated to link current and planned
investments in command, control, communications, computers, intelligence,
surveillance, and reconnaissance capabilities to the transformation plan.

The Army?s aviation branch?s modernization plan, issued to the Congress in
April 2000, considers only some aspects of the transformation. Under the
plan, the Army would establish a new force structure for aviation. The new
structure would be comprised of multi- function aviation units that include
10 RAH- 66 Comanche, 10 AH- 64D Longbow Apache, and 10 UH- 60 Black Hawk
helicopters and could be easily combined and configured to meet the full
range of contingencies, including major wars. The aviation plan also calls
for retiring obsolete helicopters that are located mainly in the reserve
components earlier than previously planned and eliminating plans to develop
and acquire a new Light Utility Helicopter. Black Hawk helicopters would be
used for all utility or general purpose missions.

The plan contains one new aircraft development- a new high- technology
transport aircraft known as the Future Transport Rotorcraft. This aircraft
is expected to have the capability of carrying a C- 130 equivalent payload
and could be a tiltrotor aircraft or a large conventional helicopter. It is
projected to be phased into the Army fleet in the 2020 timeframe and would
be used for tactical mobility for the Future Combat Systems on the
battlefield. Other new aircraft in the aviation modernization plan include
potential replacements for the Apache and Black Hawk helicopters as well as
several fixed- wing transport aircraft.

Page 18 GAO- 01- 311 Army Transformation

The aviation modernization plan does not fully address the funding necessary
to execute this plan. The Army recognizes that the aviation plan?s details
have not been fully analyzed in regard to its transformation plans;
therefore, it expects to make changes not only to the plan itself, but also
to the projected funding levels contained in the fiscal year 2002 budget
request.

Neither the updated aviation modernization plan nor the current combat
maneuver modernization plan addresses the emerging and expanding role of
unmanned vehicles in the Army?s transformation plans. The fiscal year 2001
Defense Authorization Act establishes a goal for the armed services that
one- third of their operational deep strike aircraft be unmanned by 2010 and
one- third of their operational ground combat vehicles be unmanned by 2015.
11

The Army?s ability to meet its transformation goals will largely hinge on
its ability to manage transformation acquisition efforts as successful
commercial firms do. Our best practice reviews show that a commercial firm?s
success in developing new systems depends a great deal on balancing
requirements against available resources and having the right knowledge at
the right decision points for making trade- offs. Such knowledge would
include the readiness of technology, accurate cost estimates, and the
availability of funding.

Specifically, our report on incorporating new technologies into programs
indicated commercial firms that demonstrate a high level of maturity before
new technologies are incorporated into product development programs puts
those programs into a better position to succeed. 12 Key to the Army?s
implementation of this best practice to develop and acquire objective force
weapon systems during its transformation will be its ability to identify the
key enabling technologies, determine the current maturity of each key
technology, and develop a plan to develop the key technologies and
demonstrate that they are at a high level of maturity before entering
systems development. If all the key enabling technologies do not reach a
high level of maturity when the Army needs to start

11 Section 220 of the Floyd D. Spence National Defense Authorization Act for
Fiscal Year 2001 (P. L. 106- 398, Oct. 30, 2000). 12 Best Practices: Better
Management of Technology Development Can Improve Weapon System Outcomes
(GAO/ NSIAD- 99- 162, July 30, 1999). Following Best

Practices Will Be Critical To The Army?s Success

Page 19 GAO- 01- 311 Army Transformation

developing the objective force systems, it may have to consider reaching the
planned objective force capabilities in stages. This strategy could provide
worthwhile capability increases, but it may also require the Army to
continue with its legacy and interim forces longer than anticipated.

Additionally, our report on setting requirements for new products indicated
that commercial firms that keep the product?s requirements flexible prior to
the start of the program enables the matching of the requirements with the
user?s needs and the developer?s resources making it more likely that the
product will be successfully developed- products that are delivered within
predicted costs and time frames and that meet the needs of the customers. 13
Key to the Army?s implementation of this best practice is maintaining
flexibility in requirements and schedule to enable it to make needed trade-
offs. Also, the Army should be in a better position to make those trade-
offs if it prioritizes requirements among and within the three forces and
determines the importance of meeting the various force schedules within
available transformation resources.

Given the complexity of its organization and its current planning processes,
the Army?s chance of successfully implementing best practices will be
increased if components are provided service- wide guidance that will ensure
that decisions focus on achieving overall transformation acquisition goals.
According to Army Staff officials, the Army has recognized the complexity of
the task and has begun managing the transformation with the Transformation
Campaign Plan. The Plan is a comprehensive approach to ensure integration
and synchronization of efforts toward the development and fielding of the
objective force.

Lastly, the Army recognizes and is addressing many of the risks related to
these challenges by making trade- off decisions. As such we are not making
recommendations in this report. However, it will be important for the
Congress to carefully study the Army?s efforts and assess its transformation
progress and priorities when deliberating future budget requests and to
ensure that the Army is following a knowledge- based approach in making
acquisition decisions.

13 Best Practices: Better Matching of Needs and Resources Will Lead to
Better Weapon System Outcomes (GAO- 01- 288, Mar. 8, 2001).

Page 20 GAO- 01- 311 Army Transformation

The Department of Defense generally agreed with the report. It agreed that
there are significant challenges in balancing the desired schedule, the
required resources, and the necessary maturation of technology to accomplish
the Army?s transformation goals. The Department?s comments are presented in
their entirety in appendix I.

We assessed the Army?s plans for obtaining the weapon systems and other
equipment needed for its transformation to a new combat force and developed
our observations as to the risks inherent in those plans. To do this, we
reviewed assessments of the future threat including, reports of the U. S.
Commission on National Security/ 21st Century and the National Defense
Panel, the National Security Strategy, and the National Military Strategy;
documents providing guidance to the Army planners such as the Joint Vision
2020, the Army Vision 2010, the Army Plan, and the Army Chief of Staff
statements and planning guidance; documents associated with the acquisition
of the Family of Interim Armored Vehicle including the Acquisition Strategy
Report, Operational Requirements Document, Request for Proposals, and the
Brigade Combat Team Organizational and Operational Concept, and budget
documents; documents associated with modernizing the legacy force including
program budget decision memorandums and other budget documents, previous
Army modernization plans, Army Science Board report on Tank Modernization,
and the report to Congressional Defense Committees on the Crusader program;
and documents associated with the Future Combat Systems development
including the concept design solicitation and letter of agreement between
the Army and the Defense Advanced Research Projects Agency.

In performing our work, we obtained documents and interviewed officials
involved in planning the Army?s transition in the Offices of the Deputy
Chief of Army Staff for Operations and Plans, Washington, D. C.; U. S. Army
Materiel Command, Alexandria, Virginia; U. S. Army Training and Doctrine
Command, Fort Monroe, Virginia; U. S. Army Tank- automotive and Armaments
Command and the Program Executive Office, Ground Combat and Combat Support
Systems, Warren, Michigan; U. S. Army Aviation Center and School, Fort
Rucker, Alabama; U. S. Army Field Artillery School and Center, Fort Sill,
Oklahoma; and the Defense Advanced Research Projects Agency, Arlington,
Virginia. Agency Comments

Scope and Methodology

Page 21 GAO- 01- 311 Army Transformation

We conducted our review between October 1999 and April 2001 in accordance
with generally accepted government auditing standards.

We are sending copies of this report to the Honorable Donald H. Rumsfeld,
Secretary of Defense; the Honorable Joseph W. Westphal, Acting Secretary of
the Army; and the Honorable Mitchell E. Daniels, Jr., Director, Office of
Management and Budget. We will make copies available to others on request.

If you or your staff have any questions concerning this report, please call
me on (202) 512- 4841. This report was prepared under the direction of James
F. Wiggins, Director, Acquisition and Sourcing Management, and Carol
Schuster, Director, Defense Capabilities and Management. Major contributors
to this report are Robert J. Stolba, Lawrence D. Gaston, John P. Swain, and
Stephanie J. May.

Jack L. Brock, Jr., Managing Director Acquisitions and Sourcing Management

Henry L. Hinton, Jr., Managing Director Defense Capabilities and Management

Page 22 GAO- 01- 311 Army Transformation

List of Addressees The Honorable John W. Warner, Chairman The Honorable Carl
Levin, Ranking Member Committee on Armed Services United States Senate

The Honorable Ted Stevens, Chairman The Honorable Robert C. Byrd, Ranking
Member Committee on Appropriations United States Senate

The Honorable Ted Stevens, Chairman The Honorable Daniel K. Inouye, Ranking
Member Subcommittee on Defense Committee on Appropriations United States
Senate

The Honorable Bob Stump, Chairman The Honorable Ike Skelton, Ranking
Minority Member Committee on Armed Services House of Representatives

The Honorable C. W. Bill Young, Chairman The Honorable David R. Obey,
Ranking Minority Member Committee on Appropriations House of Representatives

The Honorable Jerry Lewis, Chairman The Honorable John P. Murtha, Ranking
Minority Member Subcommittee on Defense Committee on Appropriations House of
Representatives

Appendix I: Comments From the Department of Defense

Page 23 GAO- 01- 311 Army Transformation

Appendix I: Comments From the Department of Defense

(707563)

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