Defense Acquisitions: The Army's Future Combat Systems' Features,
Risks, and Alternatives (01-APR-04, GAO-04-635T).		 
                                                                 
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.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-635T					        
    ACCNO:   A09643						        
  TITLE:     Defense Acquisitions: The Army's Future Combat Systems'  
Features, Risks, and Alternatives				 
     DATE:   04/01/2004 
  SUBJECT:   Army procurement					 
	     Combat readiness					 
	     Computer networks					 
	     Defense capabilities				 
	     Defense cost control				 
	     Procurement planning				 
	     Strategic mobility forces				 
	     Strategic planning 				 
	     Weapons research and development			 
	     Weapons systems					 
	     Interoperability					 
	     Army Future Combat Systems 			 

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GAO-04-635T

United States General Accounting Office

GAO Testimony

Before the Subcommittee on Tactical Air and Land Forces, Committee on
Armed Services, House of Representatives

For Release on Delivery

Expected at 1:00 p.m. EST DEFENSE ACQUISITIONS

Thursday, April 1, 2004

      The Army's Future Combat Systems' Features, Risks, and Alternatives

Statement of Paul L. Francis, Director, Acquisition and Sourcing Management

GAO-04-635T

Highlights of GAO-04-635T, a testimony before the Subcommittee on Tactical
Air and Land Forces, Committee on Armed Services, House of Representatives

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 most of the 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.

www.gao.gov/cgi-bin/getrpt?GAO-04-635T.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Paul L. Francis at (202)
512-4841 or [email protected].

April 1, 2004

DEFENSE ACQUISITIONS

The Army's Future Combat Systems' Features, Risks, and Alternatives

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:

o  	add time to FCS' acquisition schedule to reduce concurrent
development;

o  	take the time to develop and demonstrate the most critical
capabilities first, such as the FCS network, then proceed with an
acquisition program; and

o  	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.

Mr. Chairman and Members of the Subcommittee:

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.

Summary 	FCS is an information network linking a suite of 18 new manned
and unmanned ground vehicles, air vehicles, sensors, and munitions. They
are to be a fraction of the weight of current weapons, yet are to be as
lethal and survivable. Their lightweight and small size are critical to
meeting the other goals of the Army's future force: better responsiveness
and enhanced sustainability. 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 an 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. This concept has a number of progressive features. It provides
an architecture within which individual systems will be designed-an
improvement over designing systems independently and making them
interoperable after the fact. It includes sustainability as a design
characteristic versus an afterthought. It has galvanized relationships
between users and developers. It also shows a willingness on the part of
Army leaders not to be bound by tradition.

FCS is at significant risk for not delivering required capability within
budgeted resources. At conflict are the program's unprecedented technical
challenges and time. At a top level, the technical challenges are:
development of a first-of-a-kind network, 18 advanced systems, 53 critical
technologies, 157 complementary systems, and 34 million lines of software
code. From a time standpoint, the Army allows only 5  1/2 years between
program start and the production decision. This is faster than it has
taken to develop a single major system, and FCS has several systems
including the network, an Abrams replacement, a Bradley replacement, and a
Crusader replacement. To meet this timetable, FCS is proceeding on a
highly concurrent strategy that started with over 75 percent of critical
technologies immature. Assuming everything goes as planned, the FCS
program will begin production before all of its systems have been
demonstrated. If all FCS elements are not ready at the production
decision, Army plans still call for going forward with production and
fielding. Based on the lessons learned from best practices and the
experiences of past programs, FCS is susceptible to discovering costly
problems in late development and early production, as the demonstration of
multiple technologies, individual systems, the network, and the system of
systems will all culminate.

Alternatives to the current FCS strategy are worth considering in light of
these risks. The tools normally employed to accommodate problems in weapon
systems-relaxing performance requirements and adding funds-may not be
available to the FCS program. The opportunity for making performance
trade-offs on FCS is limited by the fact that it must be transportable by
the C-130 aircraft yet be as lethal and survivable as the current force.
On the funding side, the $92 billion cost estimate only allows for 14 of
the 18 systems to be acquired, despite being based on an immature program
and assuming full success in development. A modest delay late in
development could cost $5 billion; a similarly modest 10percent increase
in production cost would amount to $7 billion. Providing more money on
this scale after problems have occurred may not be feasible given the
fiscal pressures the government in general-and DOD in particular-faces.
Several alternatives that would enable a less concurrent-and more
predictable-strategy are possible, if acted upon early. Alternatives
should have several things in common: building more knowledge before
commitments like production are made; preserving the advantages of the FCS
concept, such as defining an architecture to guide the design of
individual systems; and the ability to spin off mature technologies to
existing systems.

  Army Transformation
  and the FCS Program

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.

                              Army Transformation

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.1 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

1 As an interim step toward transformation, the Army is organizing medium
weight, rapidly deployable brigades around 19-ton Stryker armored
vehicles.

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.

                                The FCS Solution

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.

Figure 1: Basic Composition of 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 (thenyear
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 reported2
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

2 See U.S. General Accounting Office, Military Readiness: DOD Needs to
Reassess Program Strategy, Funding Priorities, and Risks for Selected
Equipment, GAO-04-112 (Washington, D.C.: Dec. 19, 2003).

acquisition, the Army chose the Lead System Integrator approach to
capitalize on industry's flexibility.

The Requirements Challenge

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.

Merits of the Concept

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.

o  	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.

o  	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.3

o  	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

3 Over the past 8 years, we have completed a number of reviews of best
practices for managing new product developments. For a broader discussion
on best practices in relation to user or warfighter involvement, see U.S.
General Accounting Office, Best Practices: Better Matching of Needs and
Resources Will Lead to Better Weapon System Outcomes, GAO-01-288
(Washington, D.C.: Mar. 8, 2001).

  FCS at Significant Risk of Not Delivering Required Capability Within Estimated
  Resources

greater chance to affect those costs positively. This approach is also in
line with best practices.4

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  1/2 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
productionrepresentative 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.

FCS Is an Unprecedented In the Army's own words, FCS is "the greatest
technology and integration Technical Challenge challenge the Army has ever
undertaken." It intends to develop a complex,

4 See U.S. General Accounting Office, Best Practices: Setting Requirements
Differently Could Reduce Weapon Systems' Total Ownership Costs, GAO-03-57
(Washington, D.C.: Feb. 11, 2003).

Network Development Challenges

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:

o  A first-of-a-kind network will have to be developed.

o  	The 14 major weapon systems or platforms have to be designed and
integrated simultaneously and within strict size and weight limitations.

o  	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.

o  	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.

o  	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.

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:

o  	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.

o  	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.

o  	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.

o  	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.

o  Sophisticated attackers could compromise the security of the FCS

                           UAV Development Challenges

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.

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 5 1/2-year period prior to the initial

                  Manned Ground Vehicle Development Challenges

FCS production decision. As we recently testified,5 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.

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 5 1/2-year period prior to the initial FCS production decision.

5 See U.S. General Accounting Office, Unmanned Aerial Vehicles: Major
Management Issues Facing DOD's Development and Fielding Efforts,
GAO-04-530T (Washington, D.C.: Mar. 17, 2004).

High Levels of We have found for a program to deliver a successful product
within Demonstrated Knowledge identified resources, managers should build
high levels of demonstrated Are Key to Getting Desired knowledge before
significant commitments are made.6 Figure 2 depicts the Outcomes key
elements for building knowledge.

Figure 2: Best Practices Model Focuses on Three Critical Knowledge Points

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:

o  	At knowledge point 1, the customer's needs should match the
developer's available resources-mature technologies, time, and funding.
This is

6See U.S. General Accounting Office, Best Practices: Capturing Design and
Manufacturing Knowledge Early Improves Acquisition Outcomes, GAO-02-701
(Washington, D.C.: July 15, 2002); Best Practices: Better Management of
Technology Development Can Improve Weapon System Outcome, GAO/NSIAD-99-162
(Washington, D.C.: July 30, 1999); and Best Practices: Successful
Application to Weapon Acquisition Requires Changes in DOD's Environment,
GAO/NSIAD-98-56 (Washington, D.C.: Feb. 24, 1998).

      indicated by the demonstrated maturity of the technologies needed to

7

meet customer needs.

o  	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.

o  	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

7 Technology readiness levels are a way to measure the maturity of
technology. Technology is considered sufficiently mature to start a
program when it reaches a readiness level of 7. This involves a system
prototype demonstration in an operational environment. The prototype is
near or at the planned operational system.

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.

Even Assuming Success, FCS Strategy Will Not Demonstrate High Levels of
Knowledge

Knowledge Gap at Start of System Development and Demonstration

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.

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,

           Demonstrated Knowledge Will Be Low at Production Decision

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.

To go from system development and demonstration to production in 5  1/2
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.

Figure 3: The FCS Acquisition Schedule Includes Periods of Concurrent
Development

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:

o  	Technology development is expected to continue through the production
decision.

o  	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.

o  	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 procurement8 and to begin funding for the production
facilities.

o  	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.

o  	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.

o  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 reported9 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

8 Long lead items are those components or a system or piece of equipment
for which the times to design and fabricate are the longest, and
therefore, to which an early commitment of funds may be desirable in order
to meet the earliest possible date of system completion.

9 See U.S. General Accounting Office, Best Practices: A More Constructive
Approach is Key to Better Weapon System Outcomes, GAO/NSIAD-00-199
(Washington, D.C.: July 31, 2000).

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.

We have reported on options that warrant consideration as alternatives for
developing FCS capabilities with less risk.10 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.

10 See U.S. General Accounting Office, Issues Facing the Army's Future
Combat Systems Program, GAO-03-1010R (Washington, D.C.: Aug. 13, 2003).

  Alternatives to FCS Strategy Merit Consideration

Alternatives Featuring Lowering FCS Performance or Increasing Funds May Be
Difficult

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.

Figure 4: FCS Funding Climbs, Then Levels Off at Nearly $9 Billion
Annually

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.

Alternatives for Proceeding

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:

o  	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.

o  	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 demonstrations11 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.

o  	Focus on maturing the most critical technologies first, then bundle
them in demonstrations of capabilities, such as Advanced Concept
Technology Demonstrations,12 then proceed with an acquisition program that
would

attain sufficient knowledge at the right acquisition junctures. This would

11 Advanced technology demonstrations are used to demonstrate the maturity
and potential of advanced technologies for enhanced military operational
capability or cost-effectiveness and reduce technical risks and
uncertainties at the relatively low costs of informal processes.

12 An Advanced Concept Technology Demonstration is a demonstration of the
military utility of a significant new capability and an assessment to
clearly establish operational utility and system integrity.

  Objectives, Scope,
  and Methodology

also take more time than if the current FCS schedule were successfully
carried out.

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.

Contacts and Staff For future questions about this statement, please
contact me at (202) 512-4841. Individuals making key contributions to this
statement Acknowledgments include Lily J. Chin, Marcus C. Ferguson,
Lawrence Gaston, Jr., William R. Graveline, W. Stan Lipscomb, John P.
Swain, and Carrie R. Wilson.

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