Defense Acquisitions: Key Decisions to Be Made on Future Combat  
System (15-MAR-07, GAO-07-376). 				 
                                                                 
The Future Combat System (FCS) is central to Army transformation 
efforts, comprising 14 integrated weapon systems and an advanced 
information network. In previous work, GAO found that the	 
elements of a sound business case--firm requirements, mature	 
technologies, a knowledge-based acquisition strategy, a realistic
cost estimate, and sufficient funding--were not present. As a	 
result, FCS is considered high risk and in need of special	 
oversight and review. Congress has mandated that the Department  
of Defense (DOD) decide in early 2009 whether FCS should	 
continue. GAO is required to review the program annually. In this
report, GAO analyzes FCS development, including its requirements 
definition; status of critical technologies, software		 
development, and complementary programs; soundness of its	 
acquisition strategy related to design, production and spin-out  
of capabilities to current forces; and reasonableness of costs	 
and sufficiency of funding.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-376 					        
    ACCNO:   A66929						        
  TITLE:     Defense Acquisitions: Key Decisions to Be Made on Future 
Combat System							 
     DATE:   03/15/2007 
  SUBJECT:   Cost analysis					 
	     Critical technologies				 
	     Defense capabilities				 
	     Defense procurement				 
	     Developmental testing				 
	     Information technology				 
	     Operational testing				 
	     Procurement planning				 
	     Program evaluation 				 
	     Reporting requirements				 
	     Research and development				 
	     Risk assessment					 
	     Strategic planning 				 
	     Systems design					 
	     Unmanned aerial systems				 
	     Weapons systems					 
	     Cost estimates					 
	     Army Future Combat Systems 			 
	     Army Warfighter Information Network		 
	     C-130 Aircraft					 
	     DOD Joint Tactical Radio System			 

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GAO-07-376

   

     * [1]Results in Brief
     * [2]Background

          * [3]Elements of a Business Case
          * [4]Agency and Congressional Actions Since Our Last Report

     * [5]Despite Progress, FCS Requirements Must Still Prove Technica

          * [6]Army Has Made Progress in Defining System-Level Requirements

               * [7]Some Key Requirements and Design Trade-offs Have Been
                 Made

          * [8]Technical Feasibility of System-Level Requirements Based on

               * [9]Technical Feasibility Dependent on Addressing Some High
                 Leve

                    * [10]Network
                    * [11]Weight and Reliability
                    * [12]System-Specific Risks

               * [13]Cost Could Force Additional Requirements Trade-offs

          * [14]Considerations for the 2009 FCS Milestone Review

     * [15]Army Reports Significant Progress, but Major Technological C

          * [16]FCS Critical Technologies Are Maturing Faster Than Predicted

               * [17]Active Protection System
               * [18]Lightweight Hull and Vehicle Armor
               * [19]Technology Maturity Must Be Seen in a Broader Context

          * [20]Army Reassessing Complementary Programs

               * [21]JTRS
               * [22]WIN-T

          * [23]Army Is Devoting Considerable Attention to Software Developm
          * [24]Disciplined Approach Needed to Manage Unprecedented Amount o

               * [25]Considerable Risks Remain with Software Development

          * [26]Considerations for the 2009 FCS Milestone Review

     * [27]Concurrent Acquisition Strategy Will Provide for Late Demons

          * [28]Acquisition Strategy Will Demonstrate Design Maturity after
          * [29]System-Level Testing Compressed into Late Development and Ea
          * [30]Spin-Outs Support the Current Force but Place More Demands o
          * [31]Considerations for the 2009 FCS Milestone Review

     * [32]Likely Growth of FCS Costs Increases Tension between Program

          * [33]New Independent Estimates Indicate Higher FCS Acquisition Co

               * [34]Soft Knowledge Base for Cost Estimates Portends Future
                 Cost
               * [35]Army Steps to Control FCS Program Costs
               * [36]Funding Constraints Have Forced the Army to Restructure
                 Its

          * [37]Considerations for the 2009 FCS Milestone Review

     * [38]Conclusions

          * [39]Recommendations for Executive Action

     * [40]Agency Comments and Our Evaluation
     * [41]GAO's Mission
     * [42]Obtaining Copies of GAO Reports and Testimony

          * [43]Order by Mail or Phone

     * [44]To Report Fraud, Waste, and Abuse in Federal Programs
     * [45]Congressional Relations
     * [46]Public Affairs

Report to Congressional Committees

United States Government Accountability Office

GAO

March 2007

DEFENSE ACQUISITIONS

Key Decisions to Be Made on Future Combat System

GAO-07-376

Contents

Letter 1

Results in Brief 2
Background 3
Despite Progress, FCS Requirements Must Still Prove Technically Feasible
and Affordable 10
Army Reports Significant Progress, but Major Technological Challenges
Remain 18
Concurrent Acquisition Strategy Will Provide for Late Demonstration of FCS
Capabilities 30
Likely Growth of FCS Costs Increases Tension between Program Scope and
Available Funds 40
Conclusions 47
Agency Comments and Our Evaluation 49
Appendix I Scope and Methodology 52
Appendix II Comments from the Department of Defense 53
Appendix III Technology Readiness Levels 56
Appendix IV Technology Readiness Level Ratings 58
Related GAO Products 60

Tables

Table 1: FCS Software Blocks, Percentage of Completion, and Delivery Dates
28
Table 2: Key FCS Test Event Schedule 35
Table 3: Comparison of the Original Cost Estimate and Recent Cost
Estimates for the FCS Program (in billions of dollars) 41
Table 4: Annual and Cumulative FCS Funding and Planned Events and
Achievements 43
Table 5: Technology Readiness Level Descriptions 56

Figures

Figure 1: FCS's Core Systems 5
Figure 2: Flow of FCS's Overarching Requirements to System-Level
Requirements 11
Figure 3: TRL 6 Projections over Time 19
Figure 4: FCS Projected Software Lines of Code (in thousands) 27
Figure 5: Acquisition Compared with Commercial Best Practices 32

Abbreviations

DOD Department of Defense
FCS Future Combat System
JTRS Joint Tactical Radio System
TG Terminal Guidance
TRL Technology Readiness Level
WIN-T Warfighter Information Network-Tactical

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separately.

United States Government Accountability Office

Washington, DC 20548

March 15, 2007

Congressional Committees

As the centerpiece of the Army's transformation to a lighter, more agile,
and more capable combat force, the Future Combat System (FCS)
program--which comprises 14 integrated weapon systems and an advanced
information network needed for a brigade combat team--is considered to be,
according to the Army, the greatest technology and integration challenge
it has ever undertaken. The Army started its FCS program in May 2003
without fulfilling the basic elements of a business case--that is,
determining if the program's requirements and concept were valid and that
the concept could be successfully developed with existing resources
including proven technologies, stable design, adequate funding, and
adequate time. The Army projects the FCS program will cost $163.7 billion,
which has been adjusted for inflation, but does not include key
complementary programs. As a result, the program is recognized as being
high risk and in need of special oversight and review. In 2006, Congress
mandated that the Department of Defense (DOD) hold an FCS milestone
review, essentially a "go/no-go" decision, following its preliminary
design review, which is now scheduled for early 2009.

Given its cost, scope, and technical challenges, section 211 of the
National Defense Authorization Act for Fiscal Year 2006 requires GAO to
report annually on the FCS program.1 The specific objectives of this
report are to assess FCS progress in terms of (1) definition of
requirements; (2) status of critical technologies, software development,
and complementary programs; (3) the soundness of the acquisition strategy
as it relates to design and production as well as the spin-out of
capabilities to current forces; and (4) reasonableness of program costs
and whether funds have been committed to complete the program as planned.

In conducting our work, we have contacted numerous DOD and Army offices.
We reviewed documents pertaining to the FCS program, attended meetings at
which DOD and Army officials reviewed program progress, and held
discussions with key DOD and Army officials on various aspects of the
program. Officials from DOD and the Army have provided us access to
sufficient information to make informed judgments on the matters in this
report. In addition, we drew from our body of past work on weapon systems
acquisition practices. We performed our work from March 2006 to March 2007
in accordance with generally accepted government auditing standards.
Appendix I further discusses our scope and methodology.

1Pub. L. No. 109-163, S 211.

Results in Brief

To date, the FCS program has spent about $8 billion despite having
significantly less knowledge--and less assurance of success--than required
by best practices or DOD policy. By early 2009, enough knowledge should be
available about the key elements of the FCS business case to make a
well-informed decision on whether and how to proceed with the program. If
significant doubts remain regarding the program's executability, DOD will
have to consider alternatives to proceeding with the program as planned.
Central to the go/no-go decision will be demonstrable soundness of the FCS
business case in the areas of requirements, technology, acquisition
strategy, and finances. Our assessment of these elements today is as
follows:

Requirements: Progress has been made in defining requirements in greater
detail, and some difficult trade-offs have been made. The Army believes
that the FCS requirements are feasible, but that will not be certain until
key assumptions about the performance of immature technologies and other
technical risks are proven. Replacing these assumptions with knowledge is
essential for completing the requirements process for the individual FCS
systems, as additional performance trade-offs may be necessary.

Technology: The Army has made progress in maturing technologies in the
past year, but major challenges remain. It assesses about 80 percent of
FCS technologies to be mature--double last year's number. The Army uses a
lower standard for maturity than what GAO has found to be a best practice.
The current assessment was not done independently as last year's had been.
A sound business case would require FCS to have had all technologies
mature in 2003 when the program began. It will still take several more
years to mature key technologies to that point. Current estimates of FCS
software--the most in any weapon system program--are double initial
estimates. The Army is attempting to incorporate a number of best
practices into its development effort, and some initial increments of
software have been delivered on time.

Acquisition Strategy: Even if all goes as planned, the FCS strategy will
provide for late demonstration of performance. Similar to technologies,
design reviews of FCS systems will be done quite late in the program and
key testing will not begin until just prior to the initial production
decision. Relative to best practices, maturity of design and production
will not be demonstrated until after the production decision. The Army has
started to implement its plans to spin out some early FCS technologies and
systems to current Army forces and that effort is expected to place more
demands on FCS test resources.

Program Costs: FCS costs are likely to grow, which will increase the
tension between the program's scope and available funds. While the Army
has only slightly changed its cost estimate of $160.7 billion since last
year, independent cost estimates put costs at between $203 billion to
nearly $234 billion. The tension between program scope and available funds
has led to the Army's recent announcement to buy fewer systems and slow
production rates. This will be the second restructuring in 4 years. These
changes will affect program costs, but full details are not yet available.

Anticipating that further changes will need to be made to the program, we
are making several recommendations to the Secretary of Defense on specific
criteria that should be considered during the 2009 milestone review and
the need to analyze alternatives to the program should the FCS fail to
deliver needed capabilities within reasonable time frames and expected
funding. In commenting on a draft of this report, DOD concurred with our
recommendations.

Background

The FCS concept is designed to be part of the Army's Future Force, which
is intended to transform the Army into a more rapidly deployable and
responsive force that differs substantially from the large
division-centric structure of the past. The Army is reorganizing its
current forces into modular brigade combat teams, each of which is
expected to be highly survivable and the most lethal brigade-sized unit
the Army has ever fielded. The Army expects FCS-equipped brigade combat
teams to provide significant warfighting capabilities to DOD's overall
joint military operations. The Army is implementing its transformation
plans at a time when current U.S. ground forces continue to play a
critical role in the ongoing conflicts in Iraq and Afghanistan. The Army
has instituted plans to spin out selected FCS technologies and systems to
current Army forces throughout the program's system development and
demonstration phase.

As we were preparing this report, the Army made a number of adjustments to
its plans for the FCS program. The revised program will no longer include
all 18 systems as originally planned. The FCS family of weapons is now
expected to include 14 manned and unmanned ground vehicles, air vehicles,
sensors, and munitions that will be linked by an advanced information
network. The systems include

           o eight new types of manned ground vehicles to replace current
           tanks, infantry carriers, and self-propelled howitzers;
           o two classes of unmanned aerial vehicles;
           o several unmanned ground vehicles; and
           o an attack missile.

Fundamentally, the FCS concept is to replace mass with superior
information--allowing soldiers to see and hit the enemy first rather than
to rely on heavy armor to withstand a hit. This solution attempts to
address a mismatch that has posed a dilemma to the Army for decades: the
Army's heavy forces had the necessary firepower needed to win but required
extensive support and too much time to deploy while its light forces could
deploy rapidly but lacked firepower. If the Future Force becomes a
reality, then the Army would be better organized, staffed, equipped, and
trained for prompt and sustained land combat, qualities intended to ensure
that it would dominate over evolving, sophisticated threats. The Future
Force is to be offensively oriented and will employ revolutionary concepts
of operations, enabled by new technology. The Army envisions a new way of
fighting that depends on networking the force, which involves linking
people, platforms, weapons, and sensors seamlessly together in a
system-of-systems.

Figure 1: FCS's Core Systems

If successful, the FCS system-of-systems concept will integrate individual
capabilities of weapons and platforms, thus facilitating interoperability
and open system designs. This would represent significant improvement over
the traditional approach of building superior individual weapons that must
be retrofitted and netted together after the fact. This transformation, in
terms of both operations and equipment, is under way with the full
cooperation of the Army warfighter community. In fact, the development and
acquisition of FCS is being accomplished using a uniquely collaborative
relationship among the Army's developers, the participating contractors,
and the warfighter community.

The Army has employed a management approach for FCS that centers on a lead
systems integrator to provide significant management services to help the
Army define and develop FCS and reach across traditional Army mission
areas. Because of its partner-like relationship with the Army, the lead
systems integrator's responsibilities include requirements development,
design, and selection of major system and subsystem subcontractors. The
team of Boeing and Science Applications International Corporation is the
lead systems integrator for the FCS system development and demonstration
phase of acquisition, which is expected to extend until 2017. The FCS lead
systems integrator acts on behalf of the Army to optimize the FCS
capability, maximize competition, ensure interoperability, and maintain
commonality in order to reduce life-cycle costs. Boeing also acts as an
FCS supplier in that it is responsible for developing two important
software subsystems. The Army advised us that it did not believe it had
the resources or flexibility to use its traditional acquisition process to
field a program as complex as FCS under the aggressive timeline
established by the then-Army Chief of Staff. The Army will maintain
oversight and final approval of the lead systems integrator's
subcontracting and competition plans. The FCS lead systems integrator
originally operated under a contractual instrument called an "other
transaction agreement." In 2006, the Army completed the conversion of that
instrument to a more typical contract based on the Federal Acquisition
Regulation. As required by section 115 of the John Warner National Defense
Authorization Act for Fiscal Year 2007, we are reviewing the contractual
relationship between the Army and the lead systems integrator and will be
reporting on that work separately.2

Elements of a Business Case

We have frequently reported on the wisdom of using a solid, executable
business case before committing resources to a new product development
effort. In the case of DOD, a business case should be based on DOD
acquisition policy and lessons learned from leading commercial firms and
successful DOD programs. The business case in its simplest form is
demonstrated evidence that (1) the warfighter's needs are valid and that
they can best be met with the chosen concept, and (2) the chosen concept
can be developed and produced within existing resources--that is, proven
technologies, design knowledge, adequate funding, adequate time, and
management capacity to deliver the product when it is needed. A program
should not go forward into product development unless a sound business
case can be made. If the business case measures up, the organization
commits to the product development, including making the financial
investment.

2Pub. L. No. 109-364, S 115 (2006).

At the heart of a business case is a knowledge-based approach to product
development that is both a best practice among leading commercial firms
and the approach preferred by DOD in its acquisition policies. For a
program to deliver a successful product within available resources,
managers should demonstrate high levels of knowledge before significant
commitments are made. In essence, knowledge supplants risk over time. This
building of knowledge can be described as three levels or points that
should be attained over the course of a program.

           o First, at program start, the customer's needs should match the
           developer's available resources--mature technologies, time,
           funding, and management capacity. An indication of this match is
           the demonstrated maturity of the technologies needed to meet
           customer needs.3 The ability of the government acquisition
           workforce to properly manage the effort should also be an
           important consideration at program start.
           o Second, about midway through development, the product's design
           should be stable and demonstrate that it is capable of meeting
           performance requirements. The critical design review is the
           vehicle for making this determination and generally signifies the
           point at which the program is ready to start building
           production-representative prototypes.
           o Third, by the time of the production decision, the product must
           be shown able to be manufactured within cost, schedule, and
           quality targets and have demonstrated its reliability. It is also
           the point at which the design must demonstrate that it performs as
           expected through realistic system-level testing.

3Technology readiness levels (TRLs) are a way to measure the maturity of
technology. According to best practices, technology is considered
sufficiently mature to start a program when it reaches a readiness level
of 7. This involves a system or prototype demonstration in an operational
environment. The prototype is near or at the planned operational system.
Appendix III lists the definitions for all TRLs.

A delay in attaining any one of these levels delays the points that
follow. If the technologies needed to meet requirements are not mature,
design and production maturity will be delayed. In successful commercial
and defense programs that we have reviewed, managers were careful to
develop technology separately from and ahead of the development of the
product. For this reason, the first knowledge level is the most important
for improving the chances of developing a weapon system within cost and
schedule estimates. DOD's acquisition policy has adopted the
knowledge-based approach to acquisitions. DOD policy requires program
managers to demonstrate knowledge about key aspects of a system at key
points in the acquisition process. Program managers are also required to
reduce integration risk and demonstrate product design prior to the design
readiness review and to reduce manufacturing risk and demonstrate
producibility prior to full-rate production.

The FCS program is about one-third of the way into its scheduled product
development. At this stage, the program should have attained knowledge
point one, with a strategy for attaining knowledge points two and three.
Accordingly, we analyzed the FCS business case first as it pertains to
firming requirements and maturing technologies, which indicate progress
against the first knowledge point. We then analyzed FCS's strategy for
attaining design and production maturity. Finally, we analyzed the costs
and funding estimates made to execute the FCS business case.

Agency and Congressional Actions Since Our Last Report

In our previous report on the FCS program, released in March 2006, we
reported that the program entered the development phase in 2003 without
reaching the level of knowledge it should have attained in the
pre-development phase.4 The elements of a sound business case were not
reasonably present, and we noted that the Army would continue building
basic knowledge in areas such as requirements and technologies for several
more years. We concluded that in order for the FCS program to be
successful, an improved business case was needed.

The Defense Acquisition Board met in May 2006 to review the FCS program.
That review approved the Army approach to spin out certain FCS
technologies to current Army forces in 2008 and directed the Army to
continue with yearly in-process reviews and a Defense Acquisition Board
meeting in the late 2008 timeframe. Performance expectations were also
established for the review. During the meeting, it was noted that
significant cost and schedule risk remains for the program and that
reductions in scope and more flexibility in schedule are needed to stay
within current funding constraints.

4GAO, Defense Acquisitions: Improved Business Case Is Needed for Future
Combat System's Successful Outcome, [47]GAO-06-367 (Washington, D.C.: Mar.
14, 2006).

Also in 2006, Congress mandated that the Secretary of Defense conduct a
milestone review for the FCS program, following the preliminary design
review scheduled for early 2009.5 Congress stated that the review should
include an assessment of whether (1) the needs are valid and can be best
met with the FCS concept, (2) the FCS program can be developed and
produced within existing resources, and (3) the program should continue as
currently structured, be restructured, or be terminated. The Congress
required the Secretary of Defense to review specific aspects of the
program, including the maturity of critical technologies, program risks,
demonstrations of the FCS concept and software, and a cost estimate and
affordability assessment and to submit a report of the findings and
conclusions of the review to Congress. Additionally, Congress has required
the Secretary of Defense to provide an independent cost estimate that will
encompass costs related to the FCS program and a report on the estimate.
The Institute for Defense Analyses is expected to deliver this analysis to
Congress by April 2007.

Finally, in response to concerns over funding shortfalls and other
resource issues for fiscal years 2008 to 2013, the Army has recently made
a number of changes to its plans for the FCS program. Although complete
details are not yet available, the Army plans to

           o reduce the number of individual systems from 18 to 14 including
           eliminating 2 unmanned aerial vehicles;
           o slow the rate of FCS production from 1.5 to 1 brigade combat
           team per year;
           o change the total quantities to be bought for several systems;
           and
           o reduce the number of planned spin-outs from four to three.

Full details of the Army's plans were not available at the time of this
report. Based on what is known, program officials expect that the
production period for the 15 brigade combat teams would be extended from
2025 to 2030. The initial operating capability date would also be delayed
by 5 months to the third quarter of fiscal year 2015.

5John Warner National Defense Authorization Act for Fiscal Year 2007, Pub.
L. No. 109-364, S 214 (2006).

Despite Progress, FCS Requirements Must Still Prove Technically Feasible and
Affordable

The Army has made considerable progress in defining system-of-systems
level requirements and allocating those requirements to the individual FCS
systems. This progress has necessitated making significant trade-offs to
reconcile requirements with technical feasibility. A key example of this
has been to allow a significant increase in manned ground vehicle weight
to meet survivability requirements which in turn has forced trade-offs in
transportability requirements. The feasibility of FCS requirements still
depends on a number of key assumptions about immature technologies, costs,
and other performance characteristics like the reliability of the network
and other systems. As current assumptions in these areas become known,
more trade-offs are likely. At this point, the Army has identified about
70 high technical risks that need to be resolved to assure the technical
feasibility of requirements.

Army Has Made Progress in Defining System-Level Requirements

The Army has defined 552 warfighter requirements for the FCS brigade
combat team that are tied to seven key performance parameters:
network-ready, networked battle command, networked lethality,
transportability, sustainability/reliability, training, and survivability.
Collectively, the Army has stated that the FCS-equipped brigade combat
teams must be as good as or better than current Army forces in terms of
lethality, responsiveness, sustainability, and survivability. In August
2005, the Army and the lead systems integrator translated the warfighter
requirements into 11,500 more specific system-of-systems level
requirements, established the functional baseline for the program, and
allocated requirements to individual FCS systems. Since then, the
contractors have clarified their design concepts and provided feedback on
the technical feasibility and affordability of the requirements.

In an August 2006 review, the Army and its lead systems integrator reduced
the number of warfighter requirements to 544, but increased the
system-of-systems requirements to 11,697. Of the system-of-system
requirements, 289 have "to be determined" items and 819 have open issues
to be resolved. At this review, the FCS requirements were translated
further down to the individual system level, totaling about 90,000. The
system level requirements provide the specificity needed for the
contractors to fully develop detailed designs for their individual
systems. While the stages of translating requirements for FCS are typical
for weapon systems, the enormous volume suggests the complex challenge
that a networked system-of-systems like FCS presents.

Figure 2 illustrates how the FCS requirements are translated from the
warfighter to the individual systems.

Figure 2: Flow of FCS's Overarching Requirements to System-Level
Requirements

Leading up to the review, the lead systems integrator and the
subcontractors identified over 10,000 "to-be-determined" items and issues
to be resolved related to the flow-down of the system-of-systems
requirements to the FCS system-level requirements. The "to-be-determined"
items generally involve the need for the user community and the developers
to come to an understanding on a way to better specify or quantify the
requirement. A common issue to be resolved involves the need for
compromise between the users and developers when the design solution may
not be able to fully meet the initially allocated requirement. The Army
and lead systems integrator plan to resolve the "to-be-determined" items
and issues prior to the preliminary design review in early 2009.6

The Army and lead systems integrator are also developing a network
requirements document that is intended to provide end-to-end network
requirements in an understandable format to inform the system-level
requirements. The number of network requirements in this document has not
yet been determined. However, the Army and lead systems integrator have
identified about 2000 "to-be-determined" items and issues to be resolved
in this area that need to be addressed and clarified. The Army and lead
systems integrator expect to complete this work by the time of the
preliminary design review.

  Some Key Requirements and Design Trade-offs Have Been Made

The Army and its subcontractors have already made some trade-offs as they
continue to refine their system design concepts and the FCS system-level
requirements. One key trade-off came in the area of the projected weight
of the manned ground vehicles and their transportability by aircraft.
Originally, the manned ground vehicles were to weigh less than 20 tons so
they could be carried on the C-130 aircraft. These vehicles were to be
lightly armored at 19 tons and with add-on armor bringing the total
vehicle weight up to about 24 tons. However, the Army and its contractor
team found that this design did not provide sufficient ballistic
protection. Currently, the vehicle designs with improved ballistic
protection are estimated to weigh between 27 and 29 tons. At this weight,
it is practically impossible to transport the vehicles on the C-130s, and
they are now being designed to be transported by the larger C-17 aircraft.
Illustrative of the FCS design challenges, the added weight of the
vehicles could have ripple effects for the designs of the engine,
suspension, band track, and other subsystems. The Army still wants
vehicles to be transportable by the C-130 when stripped of armor and other
equipment, so that C-130 cargo size and weight limits will still serve to
constrain the design of the manned ground vehicles. As these are primarily
paper and simulated designs, the potential for future trade-offs is high.

Another example involves the requirement that the manned ground vehicles
be able to operate for several hours on battery power and without the
engine running. Based on the analyses to date, it has been determined that
current battery technologies would permit less than one hour of this
"silent watch" capability. The Army, lead systems integrator, and the FCS
subcontractors are continuing their assessments, as is the user community,
which is re-evaluating which internal manned ground vehicle subsystems may
need to operate in these situations. With less demand for power, the
batteries are expected to last somewhat longer. As that work concludes,
the Army will be able to determine the specific level of silent watch
capability it can expect for the manned ground vehicles and how best to
change the operational requirements document. The Army plans to finalize
this and other requirement changes and numerous clarifications by the time
of the preliminary design review in early 2009.

6The Army will hold system level preliminary design reviews leading up to
the system-of-systems level preliminary design review in early 2009.

Technical Feasibility of System-Level Requirements Based on Numerous Assumptions

The Army and lead systems integrator believe that most of the FCS
system-level requirements are technically feasible and have decided that
design work should proceed. However, as the design concepts and
technologies mature, their actual performance does not necessarily match
expectations, and trade-offs have to be made. To date, the Army has had to
make a number of requirements and design changes that recognize the
physical constraints of the designs and the limits of technology. Ideally,
these trade-offs are made before a program begins. Because many
technologies are not yet fully mature, significant trade-offs have been
made and will continue to be necessary. The technical feasibility of FCS
requirements still depends on a number of key assumptions about the
performance of immature technologies, thus more trade-offs are likely as
knowledge replaces assumptions. The challenge in making additional changes
to requirements is at least two-fold: first is assessing the potential
ripple effect of changing a requirement for one system on the thousands of
other system requirements; the second is assessing the cumulative effect
of numerous system level requirements changes on the overall
characteristics of survivability, lethality, responsiveness, and
supportability.

  Technical Feasibility Dependent on Addressing Some High Level Risks

The Army has identified numerous known technical risks, about 70 of which
are considered to be at a medium or high level. These involve the
information network, characteristics like weight and reliability that cut
across air and ground vehicles, and several system-specific risks. The
Army is focusing management attention on these risks and has risk
reduction plans in place. Nonetheless, the results of these technology
development efforts will have continuing implications for design and
requirements trade-offs.

    Network

FCS survivability depends on the brigade-wide availability of
network-based situational awareness plus the inherent survivability of the
FCS platforms. There is hardly any aspect of FCS functionality that is not
predicated on the network, and for many key functions, the network is
essential. However, the FCS program manager has stated that the Army still
has a lot yet to learn on how to successfully build such an advanced
information network. Some of the network medium and high level risks
include:

           o End-to-end quality of service on mobile ad-hoc networks. The
           probability is high that the FCS network will not be able to
           ensure that the information with the highest value is delivered to
           the recipients. Failure to support the warfighter in defining and
           implementing command intent for information management will result
           in substantially reduced force effectiveness, in a force that
           trades information for armor.

           o Wideband waveform availability. The current Joint Tactical Radio
           System Ground Mobile Radio program continues to pose risks because
           its schedule is not yet synchronized with the schedule for the
           core FCS program or FCS spin-outs. Any schedule slip in this area
           could lead to further delays. This consequence will mean
           integrators will not have Joint Tactical Radio System hardware in
           sufficient quantities, capability, and function to support the FCS
           schedule. In addition to schedule delays this could also
           jeopardize the network spin-outs, experiments, and the integration
           of the core program requirements.

           o Soldier radio waveform availability. The soldier radio waveform
           provides functional capabilities that are needed to support many
           FCS systems but may not be completed in time to support FCS
           development. These functional capabilities facilitate
           interoperability and gateway functions between the FCS family of
           systems. These systems are critical to FCS performance and delays
           of these functional capabilities will negatively impact the FCS
           schedule.

           o Spectrum availability and usage. There is a high likelihood that
           more frequency spectrum is required for all of the communications
           needs than will be available given current design assumptions.
           Lack of system spectrum may force a choice to operate without
           critical data due to reduced data throughput, reducing mission
           effectiveness and leading to possible failure.
           o Unmanned vehicle network latency. Unmanned ground and air
           vehicles are completely dependent on the FCS network for command
           and control interaction with their soldier/operators. Inadequate
           response time for unmanned payload tele-operation and target
           designation will result in degraded payload performance and
           targeting when these modes are required.

           o Net-ready critical performance parameter verification and
           testability. The Army recognizes the risk that FCS will not be
           able to adequately verify and test compliance with this parameter
           as it relates to the Global Information Grid.7 FCS is expected to
           have extensive connectivity with other services and agencies via
           the Grid. The risk is due to, among other things, the many
           yet-to-be-defined critical or enterprise interfaces which are
           being delivered in parallel. Failure to meet the net-ready
           testability requirements could result in, among other things,
           fielding delays and cost and schedule overruns.

    Weight and Reliability

All of the unmanned and manned ground vehicles and several other FCS
systems are expected to have difficulty meeting their assigned weight
targets. According to program officials, about 950 weight reduction
initiatives were being considered just for the manned ground vehicles. The
Army expects the FCS program to make substantial progress toward meeting
these goals by the time of the preliminary design review. It is not yet
clear what, if any, additional trade-offs of requirements and designs may
be needed to meet the FCS weight goals.

High levels of reliability will be needed for the FCS brigade combat teams
to meet their requirements for logistics footprint and supportability.
Current projections indicate that many FCS systems--including the Class IV
unmanned aerial vehicle, communications subsystems, and sensors--may not
meet the Army's high expectations for reliability. The Army plans to
address these issues and improve reliability levels by the time of the
preliminary design review in 2009.

7The Global Information Grid is a large and complex set of programs and
initiatives intended to provide internet-like capability allowing users at
virtually any location to access data on demand; share information in real
time; collaborate in decision making, regardless of which military service
produced which weapon system; and have greater joint command of a battle
situation.

    System-Specific Risks

The Army and lead systems integrator have also identified other medium to
high risk issues that could affect the requirements and design concepts
for individual FCS systems. These include:

           o Class I unmanned aerial vehicle heavy fuel engine. The Class I
           vehicle requires a heavy fuel engine that is small in size,
           lightweight, and operates with high power efficiency. Such an
           engine does not currently exist, and no single candidate system
           will meet all FCS requirements without additional development. An
           engine design that cannot balance size and power will critically
           affect compliance with several key requirements.

           o Lightweight track component maturation. Current band track
           designs do not meet mine blast requirements and may not meet the
           FCS durability requirement or the critical performance parameter
           requirements for reducing logistics footprint and reduced demand
           for maintenance and supply. Without enhanced mine blast
           resistance, vehicle mobility will be diminished, which could
           result in survivability impacts.

           o Vehicular motion effects. There is likelihood that system design
           may not preclude vehicular-induced motion sickness capable of
           degrading the crews' ability to execute their mission. These
           effects may reduce the ability of the crew to perform cognitive
           tasks while in motion, thereby reducing operational effectiveness.

           o Safe unmanned ground vehicle operations. If necessary
           operational experience and technology maturity is not achieved,
           the brigade combat teams may not be able to use these vehicles as
           planned. Also, if a high level of soldier confidence in the
           reliability and accuracy of fire control of weapons on moving
           unmanned ground vehicles is not achieved, the rules of engagement
           of these systems may be severely restricted.

  Cost Could Force Additional Requirements Trade-offs

Unit cost reduction goals have been established at the FCS brigade combat
team level and have been allocated down to the individual FCS systems and
major subsystems. Many FCS systems are above their assigned average cost
levels, and stringent reduction goals have been assigned. In particular,
the manned ground vehicles have a significant challenge ahead to meet
their unit cost goals. In order to meet these goals, requirements and
design trade-offs will have to be considered.

The Army faces considerable uncertainty about how much investment money it
will have in the future for FCS. The Army has capped the total amount of
development funding available for FCS, and the contract contains a
provision to identify trade-offs to keep costs within that cap. Hence, if
costs rise, trade-offs in requirements and design will be made to keep
within the cap. Recent events provide a good example of this situation. In
2006, the Army conducted a study to determine the number and type of
unmanned aerial vehicles it can and should maintain in its inventory. All
four of the FCS unmanned aerial vehicles were included in that study, and
a decision has recently been made to remove the Class II and III vehicles
from the core program. While this will free up money for other needs, the
Army will have to reallocate the requirements from those unmanned aerial
vehicles to other FCS systems.

Considerations for the 2009 FCS Milestone Review

As it proceeds to the preliminary design review and the subsequent
go/no-go milestone, the Army faces considerable challenges in completing
the definition of technically achievable and affordable system-level
requirements, an essential element of a sound business case. Those
challenges include

           o completing the definition of all system-level requirements for
           all FCS systems and the information network (including addressing
           the "to-be-determined" items and issues to be resolved);
           o completing the preliminary designs for all FCS systems and
           subsystems;
           o clearly demonstrating that FCS key performance parameters are
           achievable with confidence;
           o obtaining a declaration from the Army user community that the
           likely outcomes of the FCS program will meet its projected needs;
           o clearly demonstrating that the FCS program will provide
           capabilities that are clearly as good as or better than those
           available with current Army forces, a key tenet set out by the
           Army as it started the FCS development program in 2003;
           o mitigating FCS technical risks to significantly lower levels;
           and
           o making demonstrable progress towards meeting key FCS goals
           including weight reduction, reliability improvement, and average
           unit production cost reduction.

Army Reports Significant Progress, but Major Technological Challenges Remain

The Army has made progress in the areas of critical technologies,
complementary programs, and software development. In particular, FCS
program officials report that the number of critical technologies they
consider as mature has doubled in the past year. While this is good
progress by any measure, FCS technologies are far less mature at this
point in the program than called for by best practices and DOD policy, and
they still have a long way to go to reach full maturity. The Army has made
some difficult decisions to improve the acquisition strategies for some
key complementary programs, such as Joint Tactical Radio System and
Warfighter Information Network-Tactical, but they still face significant
technological and funding hurdles. Other complementary programs had been
unfunded, but Army officials told us that these issues have been
addressed. Finally, the Army and the lead systems integrator are utilizing
many software development best practices and have delivered the initial
increments of software on schedule. On the other hand, most of the
software development effort lies ahead, and the amount of software code to
be written--already an unprecedented undertaking--continues to grow as the
demands of the FCS design becomes better understood. The Army and lead
systems integrator have recognized several high risk aspects of that
effort and mitigation efforts are underway.

FCS Critical Technologies Are Maturing Faster Than Predicted Last Year

Last year, we reported that an independent review team assessment revealed
that 18 of the program's 49 critical technologies had reached Technology
Readiness Level (TRL) 6--a representative prototype system in a relevant
environment.8 The independent team projected that by 2006, 22 of FCS's 49
critical technologies would reach TRL 6.9 The FCS program office currently
assesses that 35 of 46 technologies are at or above TRL 6--a significantly
faster maturation pace than predicted last year.10 Figure 3 compares the
readiness levels of FCS technologies over a 3-year period.

8A full explanation of technology readiness levels is presented in
appendix III.

9Previous FCS critical technology assessments have been evaluated by an
independent review team. Although the latest assessment has not been
independently reviewed, the Army expects to have an independently-reviewed
critical technology assessment available for the preliminary design review
in early 2009.

10Since our previous report, a Critical Technology Working-Level
Integrated Product Team recommended that the Army remove three critical
technologies from its assessment. The team concluded that these
technologies did not conform to DOD's definition of critical technologies
because, in its view, the technologies did not constitute a unique or
novel application.

Figure 3: TRL 6 Projections over Time

Several of these technologies jumped from a TRL 4 (low-fidelity breadboard
design in a laboratory environment) to a TRL 6 including cross domain
guarding solutions and the ducted fan for the Class 1 unmanned aerial
vehicle. The program's technology officials maintain that such a leap can
be made, even though it was not anticipated by the independent assessment.
They cited the ducted fan technology for small unmanned aerial vehicles as
an example. This technology was largely considered immature until a single
demonstration showcased the system's capabilities in demanding conditions,
which convinced Army leadership that the ducted fan technology was at a
TRL 6. Appendix IV lists all critical technologies, their current TRL
status, and the projected date for reaching TRL 6.

However, not all of the FCS technologies are truly at a TRL 6. Two of the
most important technologies for the success of manned ground vehicles and
the overall FCS concept are lightweight armor and active protection. The
Army has previously been more optimistic about the development pace for
these technologies. However, during the past year, the Army recognized
that the particular solutions they were pursuing for lightweight armor
were inadequate and active protection only satisfied the conditions for a
TRL 5.

  Active Protection System

An active protection system is part of the comprehensive FCS hit avoidance
system architecture that will protect the vehicles from incoming rounds,
like rocket-propelled grenades and anti-tank missiles. The active
protection system would involve detecting an incoming round or rocket
propelled grenade and launching an interceptor round from the vehicle to
destroy the incoming weapon. In mid-2006, the lead systems integrator
(with Army participation) selected Raytheon from among numerous candidates
to develop the architecture to satisfy FCS short-range active protection
requirements. A subsequent trade study evaluated several alternative
concepts and selected Raytheon's vertical launch concept for further
development.

While the FCS program office's most recent technology readiness assessment
indicates that the active protection system is at TRL 6, a 2006 trade
study found that the Raytheon concept had only achieved a TRL 5. Active
protection system is a vital technology for the FCS concept to be
effective, and the FCS manned ground vehicles survivability would be
questionable without that capability. Not only will the active protection
system concept chosen need additional technology development and
demonstration, but it also faces system integration challenges and the
need for safety verifications. Indeed, the Army recognizes that it faces a
challenge in demonstrating if and how it can safely operate an active
protection system when dismounted soldiers are nearby.

  Lightweight Hull and Vehicle Armor

A fundamental FCS concept is to replace mass with superior
information--that is to see and hit the enemy first rather than to rely on
heavy armor to withstand a hit. Nonetheless, the Army has recognized that
ground vehicles cannot be effective without an adequate level of ballistic
protection. As a result, the Army has been developing lightweight hull and
vehicle armor as a substitute for traditional, heavier armor. In the past
year, the Army concluded that it would need additional ballistic
protection and the Army Research Laboratory is continuing armor technology
development to achieve improved protection levels and to reduce weight.
The Army now anticipates achieving TRL 6 on the new armor formulation in
fiscal year 2008, near the time of the manned ground vehicle preliminary
design review. Armor will continue to be a technology as well as
integration risk for the program for the foreseeable future.

  Technology Maturity Must Be Seen in a Broader Context

As noted above, the Army's progress in FCS technology is notable compared
with the progress of previous years. This progress, however, does need to
be put in a broader context. The business case for a program following
best practices in a knowledge-based approach is to have all of its
critical technologies mature to TRL 7 (fully functional prototype in an
operational environment) at the start of product development. For the FCS,
this would mean having had all technologies at TRL 7 by May 2003. By
comparison, even with the progress the program has made in the last year,
fewer than 35 of FCS's 46 technologies have attained a lower maturity--TRL
6--3 1/2 years after starting product development. Immature technologies
are markers for future cost growth. In our 2006 assessment of selected
major weapon systems, development costs for the programs that started
development with mature technologies increased by a modest average of 4.8
percent over the first full estimate, whereas the development costs for
the programs that started development with immature technologies increased
by a much higher average of 34.9 percent.11

FCS program officials do not accept these standards. Rather, they maintain
they only need to mature technologies to a TRL 6 by the time of the
critical design review which is now scheduled for 2011. According to the
Army's engineers, once a technology achieves TRL 6, they are no longer
required to track the technology's progress. They maintain that anything
beyond a TRL 6 is a system integration matter and not necessarily
technology development. Integration often involves adapting the
technologies to the space, weight, and power demands of their intended
environment. To a large extent, this is what it means to achieve a TRL 7.
This is work that needs to be accomplished before the critical design
reviews and is likely to pose additional trade-offs the Army will have to
make to reconcile its requirements with what is possible from a technology
and engineering standpoint. Accordingly, the FCS program has singled out
several critical technologies that have been assessed at TRL 6 but yet
continue to have moderate or high risk that could have dire consequences
for meeting program requirements if they are not successfully dealt with.
Examples include:

           o High density packaged power. Current battery technology may not
           meet the performance levels needed to support the initial
           production of FCS. Among other things, calendar life, cost,
           cooling methods, safety, and thermal management have not been
           demonstrated. The potential impacts of this risk could affect not
           only vehicle propulsion but also lethality and supportability.
           o High power density engine. The Army has recognized that there is
           a risk that engine manufacturers may not have the capability to
           build a reliable, cost effective engine that will meet FCS
           requirements within the FCS program schedule. Engines have been
           tested that meet the power density required but not at engine
           power levels consistent with manned ground vehicle needs. The
           mitigation strategy includes engine testing to identify and
           correct potential engine design issues as soon as possible.

           o Hull anti-tank mine blast protection. The Army recognizes that
           there is a probability, given the weight constraints on FCS
           platforms and evolving blast mitigation technology, that the FCS
           hull and crew restraints will not protect the crew from life
           threatening injury due to anti-tank blast mines equal to (or
           greater than) the threshold requirement. The potential consequence
           is that the mobility and survivability of the brigade combat team
           will be affected. The FCS program and Army Research Laboratory are
           developing an anti-tank mine kit for each manned ground vehicle to
           meet requirements.

           o Highband networking waveform. FCS needs a high data rate
           capability to send sensor data and to support the FCS transit
           network. The Wideband Information Network-Tactical does not yet
           meet the performance requirements for size, weight, and power;
           signature management; and operational environments. There may be
           significant schedule and cost risk involved in getting that radio
           to meet the requirements. Without the high data rate capability,
           sensor data may not be presented in an adequate or timely fashion
           to perform targeting or provide detailed intelligence data to the
           warfighter.

           o Cross-domain guarding solution. FCS needs this technology to
           ensure the security of information transmitted on the FCS
           information network. The Army recognizes that it will be difficult
           to obtain certification and accreditation as well as to meet the
           space, weight, and power and interface requirements of FCS.
           Failure to address these concerns in a timely manner will result
           in delays in fielding FCS-equipped units and additional costs.

11GAO, Defense Acquisitions: Assessments of Selected Major Weapon
Programs, [48]GAO-06-391 (Washington, D.C.: Mar. 31, 2006).

The FCS program will continue to face major technological challenges for
the foreseeable future. The independent technology assessment planned to
coincide with the preliminary design review in early 2009 should provide
objective insights regarding the Army's progress on technology maturity
and system integration issues.

Army Reassessing Complementary Programs

The FCS program may have to interoperate or be integrated with as many as
170 other programs, some of which are in development and some of which are
currently fielded programs. These programs are not being developed
exclusively for FCS and are outside of its direct control. Because of the
complementary programs' importance to FCS--52 had been considered
essential to meeting FCS key performance parameters--the Army closely
monitors how well those efforts will synchronize with the FCS program.
However, many of these programs have funding or technical problems and
generally have uncertain futures. We reported last year that the Army is
reassessing the list of essential complementary programs given the
multiple issues surrounding them and the budgetary constraints the Army is
facing. In addressing the constrained budget situation in the 2008 to 2013
program objective memorandum, program officials said the Army is
considering reducing the set of systems. When the set of complementary
programs is finalized, the Army will have to determine how to replace any
capabilities eliminated from the list.

Two complementary programs that make the FCS network possible, the Joint
Tactical Radio System (JTRS) and the Warfighter Information
Network-Tactical (WIN-T), were restructured and reduced in scope. A
challenge in making changes in these programs is their individual and
cumulative effects on FCS performance.

  JTRS

JTRS is a family of software-based radios that is to provide the high
capacity, high-speed information link to vehicles, weapons, aircraft,
sensors, and soldiers. The JTRS program to develop radios for ground
vehicles and helicopters--now referred to as Ground Mobile Radio --began
product development in June 2002 and the Army has not yet been able to
mature the technologies needed to generate sufficient power as well as
meet platform size and weight constraints. A second JTRS program to
develop variants of small radios that will be carried by soldiers and
embedded in several FCS core systems--now referred to as Handheld,
Manpack, and Small Form Factor radios--entered product development with
immature technologies and a lack of well-defined requirements. In 2005,
DOD directed the JTRS Joint Program Executive Office to develop options
for restructuring the program to better synchronize it with FCS and to
reduce schedule, technology, requirements, and funding risks.12 The
restructuring plan was approved in March 2006 and is responsive to many of
the issues we raised in our June 2005 report.13 However, the program still
has to finalize details of the restructure including formal acquisition
strategies, independent cost estimates, and test and evaluation plans.
Further, there are still cost, schedule, and technical risks associated
with the planned delivery of initial capabilities, and therefore it is
unclear whether the capabilities will be available in time for the first
spin-out of FCS capabilities to current forces in 2008. Fully developed
prototypes of JTRS radios are not expected until 2010 or later.

  WIN-T

The Army is developing WIN-T to provide an integrated communications
network to connect Army units on the move with higher levels of command
and provide the Army's tactical extension to the Global Information Grid.
Although the program has been successful in developing some technologies
and demonstrating early capabilities, the status of its critical
technologies is uncertain. As a result of an August 2005 study, the WIN-T
program is being re-baselined to meet emerging requirements as well as a
shift in Army funding priorities. The Army's proposal for restructuring
would extend system development for about 5 years, and delay the
production decision from 2006 to about 2011, while seeking opportunities
to spin out WIN-T technologies both to FCS and to the current force.
Despite this improvement, several risks remain for the program, and the
restructuring does have consequences. Coupled with new FCS requirements,
the restructure will increase development costs by over $500 million.
Critical technologies that support WIN-T's mobile ad hoc networking must
still be matured and demonstrated, while the new FCS requirements will
necessitate further technology development. Also, some WIN-T requirements
are unfunded, and the Office of the Secretary of Defense recently
non-concurred with part of the program's Technology Readiness Assessment.
In order to obtain concurrence, the WIN-T program manager is updating the
body of evidence material to reaffirm the technology maturity estimates.

12Joint Program Executive Office was established in February 2005 after
Congress directed DOD to strengthen the joint management of all the JTRS
program components.

13GAO, Defense Acquisitions: Resolving Development Risks in the Army's
Networked Communications Capabilities is Key to Fielding Future Force,
[49]GAO-05-669 (Washington, D.C.: June 15, 2005).

Army Is Devoting Considerable Attention to Software Development, but Major Risks
Need to be Addressed

The FCS software development program is the largest in DOD history, and
the importance of software needed for FCS performance is unprecedented.
The Army is attempting to incorporate a number of best practices into
their development, and some initial increments of software have been
delivered on time. However, since the program started, the projected
amount of software needed for FCS has almost doubled, to 63.8 million
lines of code. Further, the Army must address a number of high risk issues
that could impact delivery schedules, operational capabilities, and
overall FCS performance.

Disciplined Approach Needed to Manage Unprecedented Amount of Software

Several numbers help illustrate the magnitude of the FCS software
development effort

           o 95 percent of FCS's functionality is controlled by software,
           particularly the network;
           o 63 million lines of code are currently projected to be needed
           for FCS, more than 3 times the amount being developed for the
           Joint Strike Fighter;
           o FCS will have its own operating system, like Microsoft Windows,
           called the System-of-Systems Common Operating Environment; and
           o Over 100 interfaces or software connections to systems outside
           FCS will have to be developed.

Of primary importance to the success of FCS is the System-of-Systems
Common Operating Environment software. This software is expected to act as
the infrastructure for other FCS software. It is to standardize
component-to-component communications within computers, vehicles, the
virtual private networks, and the Global Information Grid, enabling
interoperability with legacy Army, joint, coalition, government, and
non-government organizations. Finally, it is to provide the integration
framework for the FCS family of systems and enable integrated
system-of-systems functionality and performance.

We have previously reported that software-intensive weapon programs are
more likely to reach successful outcomes if they used a manageable
evolutionary environment and disciplined process and managed by metrics.14
The Army is attempting to follow such an approach to meet the software
challenges on FCS. Specifically, FCS software will be developed in four
discrete stages, or blocks. Each block adds incremental functionality in
eight functional areas (command and control, simulation, logistics,
training, manned ground vehicles, unmanned aerial vehicles, unmanned
ground vehicles, and warfighting systems). The Army and lead systems
integrator are also partitioning software into at least 100 smaller, more
manageable subsystems. The FCS program is also implementing scheduled and
gated reviews to discipline software development and have developed a set
of metrics to measure technical performance in terms of growth, stability,
quality, staffing, and process.

14GAO, Defense Acquisitions: Stronger Management Practices Are Needed to
Improve DOD's Software-Intensive Weapons Acquisitions. [50]GAO-04-393
(Washington, D.C.: Mar. 1, 2004).

  Considerable Risks Remain with Software Development

Apart from the sheer difficulty of writing and testing such a large volume
of complex code, a number of risks face the FCS software development
effort. As requirements have become better understood, the number of lines
of code has grown since the program began in 2003. Specifically, in 2003,
the Army estimated that FCS would need 33.7 million lines of code,
compared to today's estimate of 63.8 million. As the Army and its
contractors learn more about the limits of technology and its design
concepts, the amount and functionality to be delivered by software may
change.

FCS's 63 million lines of software code can be broken down further into
code that is new, reused, or commercial-off-the-shelf, as seen in figure
4.

Figure 4: FCS Projected Software Lines of Code (in thousands)

The Army maintains that new software code presents the greatest challenge
because it has to be written from scratch. Reused code is code already
written for other military systems that is being adapted to FCS.
Similarly, commercial-off-the shelf software is code already written for
commercial systems that is being adapted to FCS. A program official told
us that estimates of software code that will be reused are often
overstated and the difficulty of adapting commercial software is often
understated in DOD programs. This optimism translates into greater time
and effort to develop software than planned. An independent estimate of
reuse and commercial software has concluded that these efforts have been
understated for the FCS program, which will translate into higher cost and
schedule slippage.15 If the independent estimate proves correct, more
software development could be pushed beyond the production decision.

A foundational block of software (Build 0) has already been completed and
an interim package of the System-of-Systems Common Operating Environment
software was recently tested and delivered. However, as can be seen in
table 1, even if FCS stays on schedule, a portion--10 percent--of FCS
software is planned to be delivered and tested after the early 2013
production decision that will limit the knowledge available to decision
makers at that point.16

15The estimate was conducted by the Office of the Secretary of Defense's
Cost Analysis and Improvement Group in support of the FCS Milestone B
review from May 2003.

Table 1: FCS Software Blocks, Percentage of Completion, and Delivery Dates

Block Percentage of total software completed Delivery date  
0                                          5 September 2005 
1                                         30 December 2007  
2                                         61 May 2010       
3                                         90 October 2011   
4                                        100 October 2013   

Source: U.S. Army (data); GAO (analysis and presentation).

Currently, the Army estimates that 45 percent of the total 63 million
source lines of code will have been written and tested by the early 2009
preliminary design review and 75 percent will be done by the 2011 critical
design review. Although there has been no significant schedule slippage to
date on the initial increments of software, both of these estimates may
prove to be ambitious. Additionally, according to program officials, the
most difficult part of software development is the last 10 percent.

Although the Army is attempting to implement several software best
practices, there are a number of factors that may complicate those
efforts. One of the leading problems in software development is the lack
of adequately defined requirements. Without adequate definition and
validation of requirements and design, software engineers could be coding
to an incorrect design, resulting in missing functionality and errors. As
we discussed earlier, the ultimate system-level requirements may not be
complete until the preliminary design review in 2009. The Army
acknowledges that the FCS's lack of adequate requirements and incomplete
system architecture could result in software that does not provide the
desired functionality or performance. This lack of top-level requirements
and architecture definition also affects the accuracy of projected lines
of code. Program risk charts suggest that software estimates could be
understated by as much as 70 percent, which could impact overall schedule
and performance.

16In the recent adjustments to the FCS program, the Army has moved the
Milestone C decision about 5 months to early 2013. Based on the available
information on the program adjustments, it is not clear if the software
delivery dates have been impacted.

The Army has identified specific aspects of FCS software development as
high risk and is developing plans to mitigate the risks:

           o System-of-Systems Common Operating Environment Availability and
           Maturity. There is a recognized risk that the software may not
           reach the necessary technical maturity level required to meet
           program milestones.

           o FCS software integration performance and development. Due to the
           complexity, functional scope, net-centric focus, and real-time
           requirements for the command and control software, software
           integration may not yield fully functional software that performs
           as desired.

           o Block 1 incompatible software components during integration.
           There are a large number of diverse groups working on software
           components that need to be integrated into full units. A lack of
           early integration process and collaboration among the suppliers
           represents substantial risk to rework during integration and
           subsequent schedule impact.

           o Software estimating accuracy. To date, estimating accuracy has
           been hampered by changing requirements, immature architecture, and
           insufficient time to thoroughly analyze software subsystems
           sizing. The difficulties associated with accurate software
           estimating is an indication that complexity increases as the
           design is better understood and this serves to increase the level
           of effort.

           o Software supplier integration. The unprecedented nature,
           volatility, and close coupling of FCS suppliers' software will
           frequently require various combinations of suppliers to share
           information and rapidly negotiate changes in their products,
           interfaces, and schedules. As these suppliers are traditionally
           wary competitors that are used to performing to fixed
           specifications, there are significant risks of slow and inflexible
           adaptation to critical FCS sources of change. Failure to do so
           will translate directly into missed delivery schedules,
           significantly reduced operational capabilities, and less
           dependable system performance.

Considerations for the 2009 FCS Milestone Review

As it approaches the preliminary design review and the subsequent go/no-go
milestone review, the Army should have made additional progress in
developing technologies and software as well as aligning the development
of complementary programs with the FCS program. The challenges that will
have to be overcome include

           o demonstrating that all critical technologies are mature to at
           least the TRL 6 level. This assessment should be reviewed and
           validated by an independent review team;
           o mitigating the recognized technical risks for the FCS critical
           technologies, including their successful integration with other
           FCS subsystems and systems;
           o clearly demonstrating that the risks inherent in the active
           protection system and the lightweight hull and vehicle armor have
           been reduced to low levels;
           o synchronizing the JTRS and WIN-T development schedules with FCS
           system integration and demonstration needs for both the spinouts
           and core program;
           o mitigating the cost, schedule, and performance risks in software
           development to acceptably low levels; and
           o establishing the set of complementary programs that are
           essential for FCS's success, ensuring that that are fully funded,
           and aligning theirs and the overall FCS program schedules.

Concurrent Acquisition Strategy Will Provide for Late Demonstration of FCS
Capabilities

The FCS acquisition strategy and testing schedule have become more complex
as plans have been made to spin out capabilities to current Army forces.
The strategy acquires knowledge later than called for by best practices
and DOD policy. In addition, knowledge deficits for requirements and
technologies have created enormous challenges for devising an acquisition
strategy that can demonstrate the maturity of design and production
processes. Even if requirements setting and technology maturity proceed
without incident, FCS design and production maturity is not likely to be
demonstrated until after the production decision is made. The critical
design review will be held much later on FCS than other programs, and the
Army will not be building production-representative prototypes with all of
their intended components to test before production. Much of the testing
up to the 2013 production decision will involve simulations, technology
demonstrations, experiments, and single system testing. Only after that
point, however, will substantial testing of the complete brigade combat
team and the FCS concept of operations occur. However, production is the
most expensive phase in which to resolve design or other problems found
during testing. Spin-outs, which are intended to accelerate delivery of
FCS capabilities to the current force, also complicate the acquisition
strategy by absorbing considerable testing resources and some tests.

Acquisition Strategy Will Demonstrate Design Maturity after Production Begins

The Army's acquisition strategy for FCS does not reflect a knowledge-based
approach. Figure 5 shows how the Army's strategy for acquiring FCS
involves concurrent development, design reviews that occur late in the
program, and other issues that are out of alignment with the
knowledge-based approach that characterizes best practices and is
supported in DOD policy.

Figure 5: Acquisition Compared with Commercial Best Practices

Ideally, the preliminary design review occurs at or near the start of
product development. Activities leading up to the preliminary design
review include, among others, translating system requirements into design
specifics. Doing so can help reveal key technical and engineering
challenges and can help determine if a mismatch exists between what the
customer wants and what the product developer can deliver. Scheduling the
preliminary design review early in product development is intended to help
stabilize cost, schedule, and performance expectations. The critical
design review ideally occurs midway into the product development phase.
The critical design review should confirm that the system design performs
as expected and is stable enough to build production-representative
prototypes for testing. The building of production-representative
prototypes helps decision makers confirm that the system can be produced
and manufactured within cost, schedule, and quality targets. According to
the knowledge-based approach, a high percentage of design drawings should
be completed and released to manufacturing at critical design review. The
period leading up to critical design review is referred to as system
integration, when individual components of a system are brought together,
and the period after the review is called system demonstration, when the
system as a whole demonstrates its reliability as well as its ability to
work in the intended environment.

The Army has scheduled the preliminary design review in early 2009, about
6 years after the start of product development. The critical design review
is scheduled in fiscal year 2011, just 2 years after the scheduled
preliminary design review and 2 years before the initial FCS production
decision in fiscal year 2013. This will leave little time for product
demonstration and correction of any issues that are identified at that
time.17 This is not to suggest that the two design reviews for the FCS
could have been conducted earlier but rather that commitments to build and
test prototypes and begin low-rate production are scheduled too soon
afterward. The timing of the design reviews is indicative of how late
knowledge will be attained in the program, even if all goes according to
plan. With requirements definition not being complete until at least the
final preliminary design review in early 2009 and technology maturation
not until after that, additional challenges will have to be addressed
within the system integration phase. System integration will already be a
challenging phase due to known integration issues and numerous technical
risks. The best practice measure for the completion of the system
integration phase is the release of at least 90 percent of engineering
drawings by the time of the critical design review.

The Army is planning to have developmental prototypes of all FCS systems
available for testing prior to low-rate initial production. For example,
most of the manned ground vehicle prototypes are expected to be available
in 2011 for developmental and qualification testing.18 However, these
prototypes are not expected to be production-representative prototypes and
will have some surrogate components. Whereas the testing of fully
integrated, production-representative prototypes demonstrate design
maturity and their fabrication can demonstrate production process
maturity, neither of these knowledge points will be attained until after
the initial production decision is made.

17The early 2009 preliminary design review and the 2011 critical design
review are culminating events; system-level preliminary design reviews and
critical design reviews will be conducted prior to those dates.

18The Army will have early prototypes of the non line-of-sight cannon
vehicle available as early as fiscal year 2008 in order to meet
congressional direction.

System-Level Testing Compressed into Late Development and Early Production

The FCS test program is unique because it is designed to field a new
fighting unit and concept of operations to the Army, not just new
equipment. To help do this, the Army has incorporated a new evaluation
unit, known as the Evaluation Brigade Combat Team, to help with
development and testing of the FCS systems and the tactics, techniques,
and procedures necessary for the unit to fight. The test effort will
involve four phases during development, which examine how the program is
maturing hardware and software, during development. These phases are
intended as check points. The first phase has a corresponding spin-out of
mature FCS capabilities to current forces.

The Army is proceeding with its plans to reduce FCS risks using modeling,
simulation, emulation, and system integration laboratories. This approach
is a key aspect of the Army's acquisition strategy and is designed to
reduce the dependence on late testing to gain valuable insights about many
aspects of FCS development, including design progress. However, on a
first-of-a-kind system--like FCS--that represents a radical departure from
current systems and warfighting concepts, actual testing of all the
components integrated together is the final proof that the FCS system-of
-systems concept works both as predicted and expected. FCS program test
officials told us that while they understand the limitations involved, the
use of emulators, surrogates, and simulations gives the Army a tremendous
amount of early information, particularly about the system-of- systems and
the network. This early information is expected to make it easier for the
Army to deal with the compressed period between 2010 and 2014 and give the
Army the ability to fix things quicker. As we were preparing this report,
it was not clear what, if any, impact the Army's program adjustments would
have on its testing and demonstration plans and schedules. Table 2
describes the key test events, as currently scheduled, throughout the FCS
program.

Table 2: Key FCS Test Event Schedule

No. Event             Systems              Description           Dates     
1   Experiment 1.1    Ground sensors and   Provides early and    7/2006 to 
                         other emulators,     limited assessment of 6/2007    
                         radio systems, and   abilities of selected           
                         other systems        network systems                 
2   Experiment 2      Command and control, Early experiment with 1/2008 to 
                         ground sensors,      several FCS systems   1/2009    
                         communications,      at the battalion,               
                         lethality enablers,  company, and platoon            
                         and other systems    echelons                        
3   Spin-Out 1        Various computer     Battalion level test  3/2008 to 
       Limited User Test systems, ground      with current force    4/2008    
       1                 sensors, and missile equipment and                   
                         launch system        selected systems                
                                              being "spun" out to             
                                              current forces                  
Preliminary design review                                        2nd       
                                                                    quarter   
                                                                    fiscal    
                                                                    year 2009 
Defense acquisition board milestone review                       3rd       
                                                                    quarter   
                                                                    fiscal    
                                                                    year 2009 
4   Early Ground      Early prototype of   Initial prototype     3rd       
       Vehicle Delivery  the non line of      with commonality with Quarter   
                         sight-cannon manned  later prototypes      Fiscal    
                         ground vehicle                             Year 2008 
5   Integrated        Integration          First                 8/2009 to 
       Mission Test 2    laboratory,          system-of-systems     11/2010   
                         simulations, common  test in integration             
                         operating system and phase 2 and indicator           
                         other items          of network                      
                                              functionality                   
6   Aerial Vehicle    Prototype of the     Early prototype       3/2010    
                         Class IV Fire Scout  delivery and                    
                                              demonstration                   
7   Limited User Test Small number of      Assess network        2/2010 to 
       2                 unmanned aerial      maturity and          4/2010    
                         vehicles and a task  capabilities of                 
                         organized platoon    aerial vehicles in              
                                              operational                     
                                              environment                     
8   Spin-Out 1        Various computer     Operational test of   4th       
       Initial           systems, ground      selected systems and  Quarter   
       Operational Test  sensors, and missile their effectiveness   Fiscal    
                         launch system        being "spun out" to   Year 2010 
                                              current forces                  
Critical design review                                           2nd       
                                                                    quarter   
                                                                    fiscal    
                                                                    year 2011 
9   Pre-Production    Non-Line-of-Sight    Pre-production        3rd       
       Prototypes        Cannon and other     prototype delivery of Quarter   
       Delivery          manned ground        manned ground         Fiscal    
                         vehicles             vehicles with common  Year 2010 
                                              features              to 4th    
                                                                    Quarter   
                                                                    Fiscal    
                                                                    Year 2011 
10  Technical Field   Field test of the    Important test that   10/2011   
       Test 3            brigade combat team  deals with maturing   to 3/2012 
                         with prototypes      the network and                 
                                              confirms important              
                                              interfaces and                  
                                              interoperability                
11  Integrated        All manned ground    Integrated            8/2010 to 
       Qualification     vehicles and         qualification tests   1/2012    
       Test 3            remaining unmanned   for majority of FCS             
                         ground vehicles,     systems including               
                         aerial vehicles and  pre-production                  
                         ground sensors       representative                  
                                              prototypes in their             
                                              core threshold                  
                                              configurations                  
12  Limited User Test Some of all systems  Assesses the brigade  4/2012 to 
       3                 deployed in two      combat team small     5/2012    
                         companies with the   unit capabilities               
                         network                                              
Initial low-rate production decision                             2nd       
                                                                    quarter   
                                                                    fiscal    
                                                                    year 2013 
13  Production and    All manned ground    Complete full-up      4th       
       Deployment        vehicles and some    system-level tests of Quarter   
       Limited User Test unmanned systems     all systems to        Fiscal    
                                              production standards  Year 2014 
Initial operating capability                                     3rd       
                                                                    quarter   
                                                                    fiscal    
                                                                    year 2015 
14  Live Fire Test    All individual       Live fire tests with  2014 to   
                         systems              complete and          2016      
                                              functional systems              
15  Initial           Brigade combat team  Full spectrum         3rd and   
       Operational Test  and all of the       operations with       4th       
                         systems involved     production            Quarter   
                                              representative        Fiscal    
                                              systems in a          Year 2016 
                                              realistic,                      
                                              operational live                
                                              environment                     
Full rate production decision                                    2nd       
                                                                    quarter   
                                                                    fiscal    
                                                                    year 2017 
Full operating capability                                        3rd       
                                                                    quarter   
                                                                    fiscal    
                                                                    year 2017 

Source: FCS Test and Evaluation Master Plan and FCS Program Office (data);
GAO (analysis and presentation).

The majority of testing through 2012 is limited in scope and is more about
confidence building than demonstrations of key capabilities. Much like the
overall acquisition strategy, the FCS testing plan will provide key
knowledge late in the systems development phase. Early test efforts will
focus on experiments and development testing of individual systems. Some
early systems will be tested as part of the Army's efforts to spin out
technologies to current forces, including unmanned ground sensors and the
non-line-of-sight-launch system. The bulk of the developmental prototypes
will not be available until 2010 and later for testing and demonstrations.

The first large scale FCS test that will include a majority of the
developmental prototypes and a large operational unit will not take place
until 2012, the year before production is now slated to begin. This will
mark the start of the Army's testing of the whole FCS, including the
overarching network and the FCS concept. For example, a limited user test
in 2010 involves only a platoon and a few unmanned aerial vehicles while a
similar test, in 2012, will involve two companies and developmental
prototypes for each of the manned ground vehicles as well as other systems
being tested at the brigade level.

Starting in 2012, several key tests will occur that should give decision
makers a clearer understanding of whether the FCS system-of-systems and
concept actually work as expected. By the end of 2014, production
representative vehicles are expected to be available and tested in a
production limited user test. Another important test is the initial
operational test and evaluation in 2016, which provides the first full
assessment of the entire program including all of the FCS systems, the
brigade combat team, network operations, and the actual operating concept.
This test involves full spectrum operations in a realistic environment.

There are two major risks in the FCS testing approach: schedule
compression and testing of the network. The first risk centers on the lack
of time available to identify, correct, and retest for problems that come
up during early testing and the second on the lack of capabilities to test
an essential element of the FCS concept, the information network.
Independent test officials noted that it is unclear what the Army expects
from the network. With the network identified as a major risk element of
the program, as well as a major risk, test officials noted that the Army
needs to set benchmarks for what will be demonstrated over time.
Independent testing officials have also told us that the FCS test schedule
is very tight and may not allow adequate time for "test-fix-test" testing.
The test and evaluation master plan recognizes this possibility by noting
that within each integration phase there is only time to test and fix
minor issues. More substantial problems would have to be fixed in a
succeeding integration phase. Overall, testing officials are concerned
that the FCS program is driven by its schedule and that the Army may rush
prematurely into operational testing and perform poorly when it is too
late to make cost effective corrections.

Testing of the network is critical because it must provide secure,
reliable access and distribution of information over extended distances
and, sometimes, when operating in complex terrain. Testing the large
number of FCS sensors and the network's ability to process the information
will not be effective since test capabilities, methodologies, and
expertise needed to test a tactical network of this magnitude are
incomplete and insufficient. The first major test of the network and FCS
together with a majority of prototypes will not take place until 2012, the
year before low-rate production is now expected to begin.

The FCS program is thus susceptible to late-cycle churn, that is, the
effort required to fix a significant problem that is discovered late in a
product's development. In particular, churn refers to the additional--and
unanticipated--time, money, and effort that must be invested to overcome
problems discovered through testing. Problems are most serious when they
delay product delivery, increase product cost, or escape to the customer.
The discovery of problems through testing conducted late in development is
a fairly common occurrence on DOD programs, as is the attendant late-cycle
churn. Often, tests of a full system, such as launching a missile or
flying an aircraft, become the vehicles for discovering problems that
could have been found earlier and corrected less expensively. When
significant problems are revealed late in a weapon system's development,
the reaction--or churn--can take several forms: extending schedules to
increase the investment in more prototypes and testing, terminating the
program, or redesigning and modifying weapons that have already made it to
the field. While DOD has accepted such problems over the years, FCS offers
particular challenges, given the magnitude of its cost in an increasingly
competitive environment for investment funds. Problems discovered at the
production stage are generally the most expensive to correct.

Spin-Outs Support the Current Force but Place More Demands on FCS Test Resources

When the Army restructured the FCS program in 2004, it revised its
acquisition strategy to include a way to field various FCS
capabilities--technologies and systems--to current forces while
development of the core FCS program is still underway. This restructuring
was expected to benefit the current forces as well as provide early
demonstrations that would benefit the core FCS program. Known as
spin-outs, the Army plans to begin limited low-rate production of the
systems planned for Spin-Out 1 in 2009 and field those systems to current
Army forces 2 years later. Leading up to the production decision in 2009
will be system development tests and a limited user test. Additional
spin-outs are now planned to occur in 2010 and 2012. Using this method,
the Army plans to deliver significant capabilities to the current force
earlier than previously planned. Over the long-term, these capabilities
include enhanced battle command capabilities and a variety of manned and
unmanned ground and air platforms that are intended to improve current
force survivability and operations.

Currently, FCS Spin-Out 1 involves the non-line-of sight launch system and
unmanned ground sensors as well as early versions of the System-of-
Systems Common Operating Environment and Battle Command software
subsystems. Also included are the kits needed to interface with current
force vehicles. These capabilities will be tested and validated using the
Evaluation Brigade Combat Team, which will provide feedback to help refine
the FCS doctrine and other matters. These systems are expected to be
fielded to operational units starting in 2010, although it is unclear yet
if these elements of FCS will provide significant capability to the
current forces at a reasonable cost.

There are two test-related concerns with spin-outs. One is that spin-outs
have complicated the FCS acquisition strategy because they focus early
testing and test resources on a few mature systems that will be spun out
to current Army forces. FCS program test officials told us that the
primary focus of the program's first integration phase will be on events
supporting systems in that spin-out. It is unclear if subsequent
integration phases will be similarly configured. If that were to occur,
fewer overall FCS systems would be looked at and tested in each phase, and
testing to evaluate how the FCS system-of-systems and concept of
operations could come later than originally planned. A program official
has noted that the schedule to deliver the needed hardware and software to
the evaluation brigade combat team is ambitious and the schedule for tests
leading up to a production decision for Spin-Out 1 is compressed. Some
individual systems developmental and other testing began in 2006, but key
user and operational tests will not occur until 2008, just prior to the
production decision for systems in Spin-Out 1. Independent test officials
have expressed concern not only over whether there will be enough time to
test, fix and test again during these key tests but also whether there
will be enough time to "reset" or refurbish the equipment being used from
one test to another. For example, the technical field test, force
development test and evaluation and pilot test, and the limited user tests
for Spin-Out 1 are to be conducted back-to-back over a several month
period just before the production decision. In addition, key tests
including a limited user test for the non-line-of-sight launch system will
take place after the Spin-Out 1 production decision. FCS program test
officials have told us, however, that the program does not plan to fix and
test again any problems discovered in a particular integration phase until
the next integration phase. They also noted that the compressed event
schedule allowed them to use the same resources and soldiers in each test.

Considerations for the 2009 FCS Milestone Review

As the Army proceeds to the preliminary design review, the FCS acquisition
strategy will likely continue to be aggressive, concurrent, and compressed
and one that develops key knowledge later in the development process than
called for by best practices. Few FCS platforms will have been tested by
this point. The majority of testing and the proof of whether the systems
can be integrated and work together are left to occur after prototypes are
delivered starting in the next decade. The Army faces a number of key
challenges as it proceeds to and beyond the preliminary design review
including

           o completing requirements definition and technology maturity (at
           least to TRL 6) to be able to complete the final preliminary
           design review;
           o clearly demonstrating spinout capabilities prior to committing
           to their initial production and fielding;
           o completing system integration and releasing at least 90 percent
           of engineering drawings by the critical design review in 2011;
           o allocating sufficient time, as needed, for test, fix and retest
           throughout the FCS test program; and
           o allocating sufficient time to thoroughly demonstrate each FCS
           system, the information network, and the FCS concept prior to
           committing to low rate initial production in 2013.

Likely Growth of FCS Costs Increases Tension between Program Scope and Available
Funds

Last year, we reported that FCS program acquisition costs had increased to
$160.7 billion--76 percent--since the Army's original estimate (figures
have been adjusted for inflation.) While the Army's current estimate is
essentially the same, an independent estimate from the Office of the
Secretary of Defense puts the acquisition cost of FCS between $203 billion
and $234 billion. The comparatively low level of technology and design
knowledge at this point in the program portends future cost increases. Our
work on a broad base of DOD weapon system programs shows that most
developmental cost increases occur after the critical design review, which
will now be in 2011 for the FCS. Yet, by that point in time, the Army will
have spent about 80 percent of the FCS's development funds. Further, the
Army has not yet fully estimated the cost of essential complementary
programs and the procurement of spin-out items to the current force. The
Army is cognizant of these resource tensions and has adopted measures in
an attempt to control FCS costs. However, some of these measures involve
reducing program scope in the form of lower requirements and capabilities,
which will have to be reassessed against the user's demands. Symptomatic
of the continuing resource tension, the Army recently announced that it
was restructuring several aspects of the FCS program, including the scope
of the program and its planned annual production rates to lower its annual
funding demands. This will have an impact on program cost, but full
details are not yet available.

New Independent Estimates Indicate Higher FCS Acquisition Costs

The Army's official cost estimate for FCS has changed only slightly from
last year's estimate, which reflected a major program restructuring from
the original estimate. In inflated dollars, the program office estimates
the acquisition cost will be $163.7 billion, up from the original 2003
estimate of $91.4 billion. However, independent cost estimates are
significantly higher, as presented in table 3.

Table 3: Comparison of the Original Cost Estimate and Recent Cost
Estimates for the FCS Program (in billions of dollars)

                                 Original Army  Current Army Independent cost 
                                      estimate      estimate         estimate 
Base year 2003 dollars             May 2003 December 2005         May 2006 
Research, development, test,          $18.1         $26.4      $31.8--44.0 
and evaluation                                                             
Procurement                           $59.1         $92.8           $118.7 
Total                                 $77.2        $119.2    $150.5--162.7 
Inflated dollars                   May 2003 December 2005         May 2006 
Research, development, test,          $19.6         $30.6      $36.6--52.7 
and evaluation                                                             
Procurement                           $71.8        $133.1    $166.7--181.2 
Total                                 $91.4        $163.7    $203.3--233.9 

Source: U.S. Army, Office of the Secretary of Defense (data); GAO
(analysis and presentation).

Recent independent estimates from the Office of the Secretary of Defense's
Cost Analysis Improvement Group indicate that FCS acquisition costs could
range from $203 billion to $234 billion in inflated dollars. The
independent estimate reflected several additional years and additional
staffing beyond the Army's estimate to achieve initial operational
capability. The difference in estimates is also attributable to the Cost
Analysis Improvement Group's assessment that FCS software development
would require more time and effort to complete than the Army had
estimated. The independent estimate also provided for additional risks
regarding the availability of key systems to support the FCS network, such
as the JTRS radios. Neither the Army nor the Defense Acquisition Board has
accepted the independent estimate. Program officials believe the
independent estimate of research and development costs is too high because
it is too conservative regarding risks.

The higher estimates of procurement costs reflect additional quantities of
individual systems needed to provide full capabilities to the Brigade
Combat Team. Neither the Army nor independent estimate reflects the recent
decision to reduce the number of FCS systems and slow down the production
rate. Prior to that decision, the Army had actually been contemplating
expanding the scope of FCS to include additional Class IV unmanned aerial
vehicles, additional unattended ground sensors, intelligent munitions
systems, and test assets for the Army user community, as well as two new
systems--a centralized controller device and a rearming module for the
manned ground vehicles. This expansion would have increased the Army's
estimate to about $208 billion, but appears obviated by the recent
decision to reduce scope.

  Soft Knowledge Base for Cost Estimates Portends Future Cost Growth

Cost estimates for any program are limited by the level of product
knowledge available. All of the FCS estimates are thus limited by the
relatively low level of knowledge in the FCS program today. If the FCS
program had been following knowledge-based acquisition practices, its 2003
estimate would have been based on mature technologies and the current
estimate would have had the benefit of a complete preliminary design
review and a considerable amount of work towards the critical design
review. The program's estimate would be based much more on demonstrated
knowledge and actual cost versus assumptions. Instead, the current FCS
estimates are built on a knowledge base without mature technologies, a
preliminary design that is at least 2 years away, and a critical design
review that is 3 to 4 years away. The Army must, therefore, make
significant assumptions about how knowledge will develop. As experience
has shown, in many DOD weapon systems, assumptions generally prove
optimistic and result in underestimated costs.

As it is currently structured, the Army is planning to make substantial
financial investments in the FCS program before key knowledge is gained on
requirements, technologies, system designs, and system performance. Table
4 shows the annual and cumulative funding, as reported in the program's
current cost estimate, and the level of knowledge to be attained each
fiscal year.

The impact of the Army's recent program adjustments on the research and
development funding stream were not known at the time this report was
written.

Table 4: Annual and Cumulative FCS Funding and Planned Events and
Achievements

                           Annual   Cumulative                                
                        research,    research,                                
                     development, development,                                
                        test, and    test, and                                
          Percentage   evaluation   evaluation                                
          of funding  funding (in  funding (in                                
Fiscal   spent to  millions of  millions of Planned events and             
Year         date     dollars)     dollars) achievements                   
2003          0.5       $165.2       $165.2 Start of product development   
2004          6.1       1701.3      1,866.5 Program restructured           
2005         15.7       2929.9      4,796.4 System-of-Systems Functional   
                                               Review; system- of-systems     
                                               requirements stabilized; cost  
                                               estimate updated               
2006           26       3162.4      7,958.8 Initial system level           
                                               requirements                   
2007         38.2      3717.7a     11,676.5 Preliminary design work in     
                                               progress                       
2008         50.2       3674.8     15,351.3 Most technologies reach TRL 6; 
                                               final system-level             
                                               requirements.                  
2009         61.5       3457.9      18809.2 Preliminary design review; all 
                                               technologies reach TRL 6;      
                                               mandated "go/no-go" review.    
2010         71.9       3187.8       21,997 Limited user test 2; some      
                                               prototypes available           
2011         80.7       2695.4     24,692.4 Critical design review; design 
                                               readiness review; all system   
                                               prototypes available           
2012         88.1       2253.7     26,946.1 Technologies reach full TRL 7  
                                               maturity; limited user test 3; 
                                               initial system-of-systems      
                                               demonstration                  
2013         92.7       1436.2     28,382.3 Milestone C--initial program   
                                               production decision            
2014         96.6       1189.4     29,571.7 Limited user test 4; full      
                                               system-of-systems              
                                               demonstration; fielding start  
                                               brigade combat teams           
2015         99.6        919.8     30,491.5 Initial operational capability 
2016          100        110.6     30,602.1 Initial operational test and   
                                               evaluation; full-rate          
                                               production decision            
2017                                        Full operational capability    

Source: U.S. Army (data); GAO (analysis and presentation).

aResearch and development funding was cut by $254 million in the fiscal
year 2007 budget.

As can be seen in table 4, through fiscal year 2007, the program will have
spent about a third of its development budget--over $11 billion. By the
time of the preliminary design review and the congressionally mandated
go/no-go decision in 2009, the Army will have spent about 60 percent of
its FCS development budget--over $18 billion. At that point, the program
should have matured most of the critical technologies to TRL 6, and the
definition of system-level requirements should be nearing completion. This
is the level of knowledge the program should have achieved in 2003 before
being approved for development start, according to best practices and the
approach preferred by DOD in its acquisition policies. The FCS critical
design review is now scheduled for fiscal year 2011. By that time, the
program will have spent about $24.7 billion, or about 81 percent of its
expected research and development expenditures.

The immature state of FCS technologies and the timing of its critical
design review make the FCS cost estimate vulnerable to future increases.
In our 2006 assessment of selected major weapon systems, we found that
development costs for the programs with mature technologies increased by a
modest average of 4.8 percent over the first full estimate, whereas the
development costs for the programs with immature technologies increased by
a much higher average of 34.9 percent.19 Similarly, program acquisition
unit costs for the programs with mature technologies increased by less
than 1 percent, whereas the programs that started development with
immature technologies experienced an average program acquisition unit cost
increase of nearly 27 percent over the first full estimate. Our work also
showed that most development cost growth occurred after the critical
design review. Specifically, of the 28.3 percent cost growth that weapon
systems average in development, 19.7 percent occurs after the critical
design review.

The current cost estimates do not fully reflect the total costs to the
Army. Excluded are the costs of complementary programs, such as the Joint
Tactical Radio System, which are substantial. Also, the costs to procure
the FCS spin-out items and needed installation kits--previously estimated
to cost about $23 billion--are not included. In fact, the procurement of
FCS spinout items was not previously funded; however, as we were preparing
this report, Army officials told us that in finalizing its budget plans
for fiscal years 2008 to 2013, there was a decision to provide procurement
funding for FCS items to be spun out to current forces. Congress recently
mandated an independent cost estimate to address the full costs of
developing, procuring, and fielding the FCS to be submitted by April 1,
2007.

  Army Steps to Control FCS Program Costs

The Army has taken steps to manage the growing cost of FCS. Program
officials have said that they budgeted for development risk by building $5
billion into the original cost estimates to cover risk. They have also
said that they will not exceed the cost ceiling of the development
contract, but as a result, they may have to modify, reduce, or delete
lower-priority FCS requirements. However, this approach would reduce
capabilities, and a lesser set of FCS capabilities may not be adequate to
meet the user's expectations. Also, the Army is focusing on reducing the
average unit production cost of the FCS brigade combat teams, which
currently exceed the amount at which each brigade combat team is budgeted.
The Army has established a glide path to reduce the unit costs; however,
program officials have said they are struggling to further reduce the unit
costs in many cases, particularly as a result of challenges with the
manned ground vehicles. Further, any additional savings from such
initiatives may not be realized until several years later into the
program.

19GAO, Defense Acquisitions: Assessments of Selected Major Weapon
Programs, [51]GAO-06-391 (Washington, D.C.: Mar. 31, 2006).

The FCS contract allows for the program to make what is called "Program
Generated Adjustments" whereby any known cost overrun or increase in scope
of work that would require additional funding is offset by identifying
work scope that can be deleted with minimal impact to the program. Each
year, the government and lead systems integrator will identify a
prioritized list of candidates for capabilities that can be partially or
completely deleted and its associated budget re-directed to the new work
scope or to offset a cost overrun.

The Army and lead systems integrator monitor the performance of the FCS
program through an earned value management system, which allows program
management to monitor the technical, schedule, and cost performance of the
program. As it proceeds, the Army and lead systems integrator can use the
information gleaned from the earned value management system to make
informed program decisions and correct potential problems early. According
to earned value data, the FCS is currently tracking fairly closely with
cost and schedule expectations. However, it is too early in the program
for the data at this point to be conclusive. Historically, the majority of
cost growth on a development program occurs after the critical design
review. Further, according to program officials, due to the size and
complexity of the program, coupled with an uncertain budget from year to
year, detailed planning packages are only planned about 3 to 6 months in
advance. While this may be unavoidable for a program as complex as FCS,
the near term status of the program, as reported by the earned value
management system, does not fully represent the extent of the challenges
the Army still faces with FCS.

  Funding Constraints Have Forced the Army to Restructure Its FCS Plans

FCS will command most of the Army's investment budget and thus must
compete with other major investments and operations. If FCS costs
increase, demands outside FCS increase, or expected funding decreases,
adjustments are likely to be necessary in FCS. Last year, we reported that
the large annual procurement costs for FCS were expected to begin in
fiscal year 2012, which was largely beyond the then-current budget
planning period (fiscal years 2006 to 2011). This situation is called a
funding "bow wave." This means that more funds would be required in the
years just beyond the years covered in the current defense plan that are
subject to funding limits. As previously structured, the FCS program would
require over $12 billion annually in its peak procurement years. If the
Army budget remains at its current levels, FCS could represent 60-70
percent of the Army's procurement budget in those years at a time that the
Army was meeting other demands, including force modularity, FCS spin-outs,
complementary programs, aviation procurement, missile defense, trucks,
ammunition, and other equipment.

Recently, this tension between FCS scope, costs, and competing demands has
led to another set of changes in the FCS program. The FCS program manager
has informed us that, in light of budget issues for the 2008 to 2013
planning period, the Army has reduced annual production rates, and plans
to forego two of the originally planned unmanned aerial vehicles, among
other adjustments. While this course of action is necessary to accommodate
funding realities, it has other consequences, as it would increase the FCS
unit costs and extend the time needed to produce and deploy FCS-equipped
brigade combat teams. It would also necessitate evaluating the effects of
these changes on individual system requirements and on the aggregate
characteristics of lethality, survivability, responsiveness, and
supportability. Details of the adjustment to the FCS program are not yet
finalized; thus, we have not evaluated the full implications of the
changes.

Considerations for the 2009 FCS Milestone Review

By the time of the preliminary design review and the congressionally
mandated go/no-go milestone in 2009, the Army should have more of the
knowledge needed to build a better cost estimate for the FCS program. The
Army should also have more clarity about the level of funding that may be
available to it within the long term budget projections to fully develop
and procure the FCS program of record. Continuing challenges include

           o developing an official Army cost position that narrows the gap
           between the Army's estimates and the independent cost estimate
           planned for that time frame. In the cost estimate, the Army should
           clearly establish if it includes the complete set and quantities
           of FCS equipment needed to meet established requirements;

           o ensuring that adequate funding exists in its current budget and
           program objective memorandum to fully fund the FCS program of
           record; and
           o securing funding for the development of the complementary
           systems deemed necessary for the FCS as well as to procure the FCS
           capabilities planned to be spunout to the current forces.

Conclusions

The Army has been granted a lot of latitude to carry out a large program
like FCS this far into development with relatively little demonstrated
knowledge. Tangible progress has been made during the year in several
areas, including requirements and technology. Such progress warrants
recognition, but not confidence. Confidence comes from high levels of
demonstrated knowledge, which are yet to come. Following the preliminary
design review in 2009, there should be enough knowledge demonstrated to
assess FCS's prospects for success. It is thus important that specific
criteria--as quantifiable as possible and consistent with best
practices--be established now to evaluate that knowledge.

At the same time, decision makers must put this knowledge in context.
Specifically, if the FCS is able to demonstrate the level of knowledge
that should be expected at a preliminary design review, it will be about
at the point when it should be ready to begin system development and
demonstration. Instead, by that time, FCS will be halfway through that
phase, with only 4 years left to demonstrate that the system-of-systems
design works before the planned production commitment is made. For that
reason, decision makers will have to assess the complete business case for
FCS. This will include demonstrative proof not only that requirements can
be met with mature technologies and the preliminary design, but also that
the remainder of the acquisition strategy adequately provides for
demonstration of design maturity, production process maturity, and funding
availability before the production decision is made.

Clearly, it is in the nation's interests for the FCS to be the right
solution for the future and to be a successful development. FCS has not
been an easy solution to pursue and underscores the commitment and vision
of Army leadership. Nonetheless, in view of the great technical challenges
facing the program, the possibility that FCS may not deliver the right
capability must be acknowledged and anticipated. At this point, the only
alternative course of action to FCS appears to be current Army weapons,
increasingly upgraded with FCS spin-out technologies. It is incumbent upon
DOD, then, to identify alternative courses of action to equip future Army
forces by the time the go/no-go decision is made on FCS. Otherwise,
approval to "go" may have to be given not because FCS is sufficiently
developed, but because there is no other viable course of action.

Recommendations for Executive Action

We recommend that the Secretary of Defense establish criteria now that it
will use to evaluate the FCS program as part of its go/no-go decision
following its preliminary design review. At a minimum, these criteria
should include

           o a definition of acceptable technology maturity consistent with
           DOD policy for a program half way through system development and
           demonstration;
           o determination which FCS technologies will be scored against
           those criteria;
           o use of an independent assessment to score the FCS technologies;
           o a definition of acceptable software maturity consistent with DOD
           policy for a program half way through system development and
           demonstration;
           o an independent assessment to score FCS software;
           o the likely performance and availability of key complementary
           systems;
           o an assessment of how likely the FCS system-of-systems--deemed
           reasonable from the progress in technology, software, and
           design--is to provide the capabilities the Army will need to
           perform its roles in joint force operations (Such an assessment
           should include sensitivity analyses in areas of the most
           uncertainty.);
           o a definition of acceptable levels of technology, design, and
           production maturity to be demonstrated at the critical design
           review and the production decision;
           o an assessment of how well the FCS acquisition strategy and test
           plan will be able to demonstrate those levels of maturity;
           o a determination of likely costs to develop, produce, and support
           the FCS that is informed by an independent cost estimate and
           supported by an acceptable confidence level; and
           o a determination that the budget levels the Army is likely to
           receive will be sufficient to develop, produce, and support the
           FCS at expected levels of cost.

We also recommend that the Secretary of Defense analyze alternative
courses of action DOD can take to provide the Army with sufficient
capabilities, should the FCS be judged as unlikely to deliver needed
capabilities in reasonable time frames and within expected funding levels.

Agency Comments and Our Evaluation

DOD concurred with our recommendations and stated that the Defense
Acquisition Board's review, aligned with the FCS program's preliminary
design review in 2009, will be informed by a number of critical
assessments and analyses. These include a technology readiness assessment,
a system engineering assessment, an independent cost estimate, an
evaluation of FCS capabilities, an affordability assessment, and ongoing
analyses of alternatives that include current force and network
alternatives.

We believe that these are constructive steps that will contribute to the
Defense Acquisition Board review of the FCS following the preliminary
design review. We note that it is important that the board's review be
recognized as a decision meeting--albeit not technically a milestone
decision--so that a declarative go/no-go decision can be made on FCS.
Accordingly, while it is necessary that good information--such as that
included in DOD's response--be presented to the board, it is also
necessary that quantitative criteria that reflect best practices be used
to evaluate the information. These criteria, some of which were included
in our recommendations, should be defined by DOD now. For example, while
FCS technologies need to be independently assessed, it is likewise
important to establish what level of technology maturity is needed for a
program at that stage and to evaluate the FCS technologies against that
standard. This is true for software as well. In the area of cost, Army
cost estimates should be evaluated against recognized standards, such as
confidence levels as well as the independent cost estimate.

We had also recommended that criteria be established to serve as a basis
for evaluating the FCS acquisition strategy, including what would
constitute acceptable levels of technology, design, and production
maturity to be demonstrated at the critical design review and the
production decision. DOD did not respond to these aspects of our
recommendations, but a response is important because they have to do with
the sufficiency of the FCS business case for the remainder of the program.
Finally, as DOD evaluates alternatives, there are several things to keep
in mind. First, an alternative need not be a rival to the FCS, but rather
the next best solution that can be adopted if FCS is not able to deliver
the needed capabilities. Second, an alternative need not represent a
choice between FCS and the current force, but could include fielding a
subset of FCS, such as a class of vehicles, if they perform as needed and
provide a militarily worthwhile capability. Third, the broader perspective
of the Department of Defense--in addition to that of the Army--will
benefit the consideration of alternatives.

We also received technical comments from DOD which have been addressed in
the report, as appropriate.

We are sending copies of this report to the Secretary of Defense; the
Secretary of the Army; and the Director, Office of Management and Budget.
Copies will also be made available to others on request. In addition, the
report will be available at no charge on the GAO Web site at
http://www.gao.gov .

Please contact me on (202) 512-4841 if you or your staff has any questions
concerning this report. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this report.
Other contributors to this report were Assistant Director William R.
Graveline, William C. Allbritton, Noah B. Bleicher, Marcus C. Ferguson,
John P. Swain, Robert S. Swierczek, and Carrie R. Wilson.

Paul L. Francis
Director
Acquisition and Sourcing Management

List of Committees:

The Honorable Carl Levin
Chairman
The Honorable John McCain
Ranking Member
Committee on Armed Services
United States Senate

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

The Honorable Ike Skelton
Chairman
The Honorable Duncan L. Hunter
Ranking Member
Committee on Armed Services
House of Representatives

The Honorable John P. Murtha, Jr.
Chairman
The Honorable C. W. (Bill) Young
Ranking Member
Subcommittee on Defense
Committee on Appropriations
House of Representatives

Appendix I: Scope and Methodology

To develop the information on the Future Combat System program's progress
toward meeting established goals, the contribution of critical
technologies and complementary systems, and the estimates of cost and
program affordability, we interviewed officials of the Office of the Under
Secretary of Defense (Acquisition, Technology, and Logistics); the Army
G-8; the Office of the Under Secretary of Defense (Comptroller); the
Secretary of Defense's Cost Analysis Improvement Group; the Director of
Operational Test and Evaluation; the Assistant Secretary of the Army
(Acquisition, Logistics, and Technology); the Army's Training and Doctrine
Command; Surface Deployment and Distribution Command; the Fraunhofer
Center at the University of Maryland; the Program Manager for the Future
Combat System (Brigade Combat Team); the Future Combat System Lead Systems
Integrator; and Lead Systems Integrator One Team contractors.

We reviewed, among other documents, the Future Combat System's Operational
Requirements Document, the Acquisition Strategy Report, the Selected
Acquisition Report, the Critical Technology Assessment and Technology Risk
Mitigation Plans, and the Integrated Master Schedule.

We attended the FCS System-of-Systems Functional Review, In-Process
Reviews, In-Process Preliminary Design Review, Board of Directors Reviews,
and multiple system demonstrations. 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 report with officials from the
Army and the Secretary of Defense and made several changes as a result. We
performed our review from March 2006 to March 2007 in accordance with
generally accepted auditing standards.

Appendix II: Comments from the Department of Defense

Appendix III: Technology Readiness Levels

Technology Readiness Levels (TRL) are measures pioneered by the National
Aeronautics and Space Administration and adopted by DOD to determine
whether technologies were sufficiently mature to be incorporated into a
weapon system. Our prior work has found TRLs to be a valuable
decision-making tool because they can presage the likely consequences of
incorporating a technology at a given level of maturity into a product
development. The maturity level of a technology can range from paper
studies (TRL 1), to prototypes that can be tested in a realistic
environment (TRL 7), to an actual system that has proven itself in mission
operations (TRL 9). According to DOD acquisition policy, a technology
should have been demonstrated in a relevant environment (TRL 6) or,
preferably, in an operational environment (TRL 7) to be considered mature
enough to use for product development. Best practices of leading
commercial firms and successful DOD programs have shown that critical
technologies should be mature to at least a TRL 7 before the start of
product development.

Table 5: Technology Readiness Level Descriptions

Technology                         Hardware and         Demonstration      
readiness level   Description      software             environment        
1. Basic          Lowest level of  None (paper studies  None               
principles        technology       and analysis)                           
observed and      readiness.                                               
reported          Scientific                                               
                     research begins                                          
                     to be translated                                         
                     into applied                                             
                     research and                                             
                     development.                                             
                     Examples might                                           
                     include paper                                            
                     studies of a                                             
                     technology's                                             
                     basic properties                                         
2. Technology     Invention        None (paper studies  None               
concept and/or    begins. Once     and analysis)                           
application       basic principles                                         
formulated        are observed,                                            
                     practical                                                
                     applications can                                         
                     be invented. The                                         
                     application is                                           
                     speculative and                                          
                     there is no                                              
                     proof or                                                 
                     detailed                                                 
                     analysis to                                              
                     support the                                              
                     assumption.                                              
                     Examples are                                             
                     still limited to                                         
                     paper studies.                                           
3. Analytical and Active research  Analytical studies   Lab                
experimental      and development  and demonstration of                    
critical function is initiated.    non-scale individual                    
and/or            This includes    components (pieces                      
characteristic    analytical       of subsystem).                          
proof of concept  studies and                                              
                     laboratory                                               
                     studies to                                               
                     physically                                               
                     validate                                                 
                     analytical                                               
                     predictions of                                           
                     separate                                                 
                     elements of the                                          
                     technology.                                              
                     Examples include                                         
                     components that                                          
                     are not yet                                              
                     integrated or                                            
                     representative.                                          
4. Component      Basic            Low-fidelity         Lab                
and/or            technological    breadboard.                             
breadboard.       components are   Integration of                          
Validation in     integrated to    non-scale components                    
laboratory        establish that   to show pieces will                     
environment       the pieces will  work together. Not                      
                     work together.   fully functional or                     
                     This is          form or fit but                         
                     relatively "low  representative of                       
                     fidelity"        technically feasible                    
                     compared to the  approach suitable                       
                     eventual system. for flight articles.                    
                     Examples include                                         
                     integration of                                           
                     "ad hoc"                                                 
                     hardware in a                                            
                     laboratory.                                              
5. Component      Fidelity of      High-fidelity        Lab demonstrating  
and/or breadboard breadboard       breadboard.          functionality but  
validation in     technology       Functionally         not form and fit.  
relevant          increases        equivalent but not   May include flight 
environment       significantly.   necessarily form     demonstrating      
                     The basic        and/or fit (size,    breadboard in      
                     technological    weight, materials,   surrogate          
                     components are   etc.). Should be     aircraft.          
                     integrated with  approaching          Technology ready   
                     reasonably       appropriate scale.   for detailed       
                     realistic        May include          design studies.    
                     supporting       integration of                          
                     elements so that several components                      
                     the technology   with reasonably                         
                     can be tested in realistic support                       
                     a simulated      elements/subsystems                     
                     environment.     to demonstrate                          
                     Examples include functionality.                          
                     "high fidelity"                                          
                     laboratory                                               
                     Integration of                                           
                     components.                                              
6.                Representative   Prototype--Should be High-fidelity lab  
System/subsystem  model or         very close to form,  demonstration or   
model or          prototype        fit, and function.   limited/restricted 
prototype         system, which is Probably includes    flight             
demonstration in  well beyond the  the integration of   demonstration for  
a relevant        breadboard       many new components  a relevant         
environment       tested for TRL   and realistic        environment.       
                     5, is tested in  supporting           Integration of     
                     a relevant       elements/subsystems  technology is well 
                     environment.     if needed to         defined.           
                     Represents a     demonstrate full                        
                     major step up in functionality of the                    
                     a technology's   subsystem.                              
                     demonstrated                                             
                     readiness.                                               
                     Examples include                                         
                     testing a                                                
                     prototype in a                                           
                     high-fidelity                                            
                     laboratory                                               
                     environment or                                           
                     in simulated                                             
                     operational                                              
                     environment.                                             
7. System         Prototype near   Prototype. Should be Flight             
prototype         or at planned    form, fit, and       demonstration in   
demonstration in  operational      function integrated  representative     
an operational    system.          with other key       operational        
environment       Represents a     supporting           environment such   
                     major step up    elements/subsystems  as flying test bed 
                     from TRL 6,      to demonstrate full  or demonstrator    
                     requiring the    functionality of     aircraft.          
                     demonstration of subsystem.           Technology is well 
                     an actual system                      substantiated with 
                     prototype in an                       test data.         
                     operational                                              
                     environment,                                             
                     such as in an                                            
                     aircraft,                                                
                     vehicle, or                                              
                     space. Examples                                          
                     include testing                                          
                     the prototype in                                         
                     a test bed                                               
                     aircraft.                                                
8. Actual system  Technology has   Flight-qualified     Developmental test 
completed and     been proven to   hardware.            and evaluation in  
"flight           work in its                           the actual system  
qualified"        final form and                        application.       
through test and  under expected                                           
demonstration     conditions. In                                           
                     almost all                                               
                     cases, this TRL                                          
                     represents the                                           
                     end of true                                              
                     system                                                   
                     development.                                             
                     Examples include                                         
                     developmental                                            
                     test and                                                 
                     evaluation of                                            
                     the system in                                            
                     its intended                                             
                     weapon system to                                         
                     determine if it                                          
                     meets design                                             
                     specifications.                                          
9. Actual system  Actual           Actual system in     Operational test   
"flight proven"   application of   final form.          and evaluation in  
through           the technology                        operational        
successful        in its final                          mission            
mission           form and under                        conditions.        
operations        mission                                                  
                     conditions, such                                         
                     as those                                                 
                     encountered in                                           
                     operational test                                         
                     and evaluation.                                          
                     In almost all                                            
                     cases, this is                                           
                     the end of the                                           
                     last "bug                                                
                     fixing" aspects                                          
                     of true system                                           
                     development.                                             
                     Examples include                                         
                     using the system                                         
                     under                                                    
                     operational                                              
                     mission                                                  
                     conditions.                                              

Source: GAO analysis of National Aeronautics and Space Administration
data.

Appendix IV: Technology Readiness Level Ratings

                                               Last                        
                                             year's Last year's  Latest    
                                                TRL       TRL 6     TRL  Latest TRL 6
FCS Critical Technologies                   ratings projections ratings   projections
Joint               Software Programmable Radio
Interoperability  1 JTRS Cluster 1             5      2007            6  N/A
                  2 JTRS Cluster 5             5      2007            6  N/A
                  3 WIN-T                      5      2007            6  N/A
                    Interface and Information Exchange
                  4 Army, Joint,               4      2008            6  N/A
                    Multinational                                          
                    Interface                                              
                  5 WIN-T Strategic            4      2008            6  N/A
                    Communication                                          
Networked Battle    Security Systems and Algorithms
Command           6 Cross Domain Guarding      4      2008            6  N/A
                    Solution                                               
                  7 Intrusion                  4      2008            4 2008
                    Detection--IP Network                                  
                  8 Intrusion                  4      2008            4 2007
                    Detection--Waveform                                    
                  9 Mobile Ad Hoc              5      2007            6  N/A
                    Networking Protocols                                   
                 10 Quality of Service         5      2007            5 2008
                    Algorithms                                             
                 11 Unmanned Systems Relay     5      2006          N/R  N/A
                    Wideband Waveforms
                 12 Wideband                   5      2007            6  N/A
                    Waveform--JTRS                                         
                 13 Wideband Waveform--SRW     4      2007            6  N/A
                 14 Advanced Man-Machine       6       N/A            6  N/A
                    Interfaces                                             
                 15 Multi-Spectral Sensors     6       N/A            6  N/A
                    and Seekers                                            
                 16 Decision                   6       N/A            6  N/A
                    Aids/Intelligent                                       
                    Agents                                                 
                    Combat Identification
                 17 Air (Rotary                6       N/A            6  N/A
                    Wing/UAV)--to--Ground                                  
                 18 Air (Fixed               N/R       N/A          N/R  N/A
                    Wing)--to--Ground                                      
                    (Interim/Robust                                        
                    Solutions                                              
                 19 Ground--to--Air          N/R       N/A            6  N/A
                 20 Ground--to--Ground         6       N/A          N/R  N/A
                    (Mounted)                                              
                 21 Ground--to--Soldier      N/R       N/A          N/R  N/A
                 22 Rapid Battlespace          5      2008            5 2008
                    Deconfliction                                          
                    Sensor/Data Fusion and Data Compression Algorithms
                 23 Distributed Fusion         4      2007            4 2008
                    Management                                             
                 24 Level 1 Fusion Engine      6       N/A            6  N/A
                 25 Data Compression           6       N/A            6  N/A
                    Algorithms                                             
Networked        26 Dynamic                       6         N/A       6           N/A
Lethality           Sensor--Shooter                                        
                    Pairing Algorithms and                                 
                    Fire Control                                           
                    LOS/BLOS/NLOS Precision Munitions Terminal Guidance
                 27 PGMM Precision             5      2007            6  N/A
                    Munitions, TG                                          
                 28 MRM Precision              5      2007            6  N/A
                    Munitions, TG                                          
                 29 Excalibur Precision        6       N/A            6  N/A
                    Munitions, TG                                          
                 30 NLOS-LS, Terminal          6       N/A            6  N/A
                    Guidance (TG)                                          
                    Aided/Automatic Target Recognition
                 31 Aided Target               5      2007            5 2008
                    Recognition for RSTA                                   
                 32 NLOS-LS ATR for            6       N/A            6  N/A
                    Seekers                                                
                 33 Recoil Management and      6       N/A            6  N/A
                    Lightweight Components                                 
                 34 Distributed                5      2006            6  N/A
                    Collaboration of                                       
                    Manned/Unmanned                                        
                    Platforms                                              
                 35 Rapid Battle Damage      N/R       N/A          N/R  N/A
                    Assessment                                             
Transportability
Sustainability/     High-Power Density/Fuel-Efficient Propulsion
Reliability      36 High-Power Density         5      2007            6  N/A
                    Engine                                                 
                 37 Fuel-Efficient             6       N/A            6  N/A
                    Hybrid-Electric Engine                                 
                 38 Embedded Predictive        5      2009          N/R  N/A
                    Logistics Sensors and                                  
                    Algorithms                                             
                 39 Lightweight Heavy Fuel     4      2007            5 2006
                    Engine                                                 
Training         40 Computer Generated            6         N/A       6           N/A
                    Forces                                                 
                 41 Tactical Engagement        4      2008            5 2008
                    Simulation                                             
Survivability       Active Protection System
                 42 Active Protection          5      2008            6  N/A
                    System                                                 
                 43 Threat Warning System    4-5      2009          4-5 2009
                 44 Signature Management     5-6      2006            6  N/A
                 45 Lightweight Hull and       5      2008            5 2008
                    Vehicle Armor                                          
                 46 Health Monitoring and      6       N/A            7  N/A
                    Casualty Care                                          
                    Interventions                                          
                 47 Power Distribution and     5      2006            6  N/A
                    Control                                                
                    Advanced Countermine Technology
                 48 Mine Detection             6       N/A            6  N/A
                 49 Mine Neutralization        6       N/A            6  N/A
                 50 Efficient Resource         6       N/A          N/R  N/A
                    Allocation                                             
                 51 Protection                 4      2008            5 2008
                 52 High-Density Packaged      5      2008            6  N/A
                    Power                                                  
                    Class 1 UAV Propulsion Technology
                 53 Ducted Fan                 4      2006            6  N/A

Source: U.S. Army (data); GAO (analysis and presentation).

Note: N/A = Not Applicable; N/R = Not Rated

Related GAO Products

Defense Acquisitions: Improved Business Case Key for Future Combat
System's Success, [53]GAO-06-564T . Washington, D.C.: April 4, 2006.

Defense Acquisitions: Improved Business Case is Needed for Future Combat
System's Successful Outcome, [54]GAO-06-367 . Washington, D.C.: March 14,
2006.

Defense Acquisitions: Business Case and Business Arrangements Key for
Future Combat System's Success, [55]GAO-06-478T . Washington, D.C.: March
1, 2006.

DOD Acquisition Outcomes: A Case for Change, [56]GAO-06-257T . Washington,
D.C.: November 15, 2005.

Force Structure: Actions Needed to Improve Estimates and Oversight of
Costs for Transforming Army to a Modular Force, [57]GAO-05-926 .
Washington, D.C.: September 29, 2005.

Defense Acquisitions: Resolving Development Risks in the Army's Networked
Communications Capabilities is Key to Fielding Future Force,
[58]GAO-05-669 . Washington, D.C.: June 15, 2005.

Defense Acquisitions: Future Combat Systems Challenges and Prospects for
Success, [59]GAO-05-428T . Washington, D.C.: March 16, 2005.

Defense Acquisitions: Future Combat Systems Challenges and Prospects for
Success, [60]GAO-05-442T . Washington, D.C.: March 16, 2005.

NASA's Space Vision: Business Case for Prometheus 1 Needed to Ensure
Requirements Match Available Resources, [61]GAO-05-242 . Washington, D.C.:
February 28, 2005.

Defense Acquisitions: The Army's Future Combat Systems' Features, Risks,
and Alternatives, [62]GAO-04-635T . Washington, D.C.: April 1, 2004.

Defense Acquisitions: Assessments of Major Weapon Programs, [63]GAO-04-248
. Washington, D.C.: March 31, 2004.

Issues Facing the Army's Future Combat Systems Program, [64]GAO-03-1010R .
Washington, D.C.: August 13, 2003.

Defense Acquisitions: Army Transformation Faces Weapon Systems Challenges,
[65]GAO-01-311 . Washington, D.C.: May 2001.

Best Practices: Better Matching of Needs and Resources Will Lead to Better
Weapon System Outcomes, [66]GAO-01-288 . Washington, D.C.: March 8, 2001.

(120521)

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Highlights of [74]GAO-07-376 , a report to congressional committees

March 2007

DEFENSE ACQUISITIONS

Key Decisions to Be Made on Future Combat System

The Future Combat System (FCS) is central to Army transformation efforts,
comprising 14 integrated weapon systems and an advanced information
network. In previous work, GAO found that the elements of a sound business
case--firm requirements, mature technologies, a knowledge-based
acquisition strategy, a realistic cost estimate, and sufficient
funding--were not present. As a result, FCS is considered high risk and in
need of special oversight and review. Congress has mandated that the
Department of Defense (DOD) decide in early 2009 whether FCS should
continue.

GAO is required to review the program annually. In this report, GAO
analyzes FCS development, including its requirements definition; status of
critical technologies, software development, and complementary programs;
soundness of its acquisition strategy related to design, production and
spin-out of capabilities to current forces; and reasonableness of costs
and sufficiency of funding.

[75]What GAO Recommends

GAO is making recommendations to the Secretary of Defense that specific
criteria should be considered during the 2009 milestone review and
alternatives to the program analyzed should FCS fail to deliver needed
capabilities when and as expected. DOD concurred with GAO's
recommendations.

The Army has been granted a lot of latitude to carry out a large program
like FCS this far into development with relatively little demonstrated
knowledge. Tangible progress has been made during the year in several
areas, including requirements and technology. Such progress warrants
recognition, but confidence that the program can deliver as promised
depends on high levels of demonstrated knowledge, which are yet to come.
Following the preliminary design review in 2009, there should be enough
knowledge to demonstrate the soundness of the FCS business case. If
significant doubts remain about the program's executability at that time,
DOD will have to consider alternatives to proceeding with the program.
Currently, GAO sees the FCS business case as follows:

Requirements. Progress has been made in defining requirements and making
some difficult trade-offs, but key assumptions about the performance of
immature technologies and other technical risks remain to be proven.

Technology. The Army has made progress in maturing technologies, but it
will take several more years to reach full maturity. All key technologies
should have been mature in 2003 when the program began. FCS software has
doubled in size compared to original estimates and faces significant
risks. The Army is attempting a disciplined approach to managing software
development.

Acquisition Strategy. The FCS acquisition strategy is compressed. Key
testing to demonstrate FCS performance will not be completed, and maturity
of design and production will not be demonstrated until after the
production decision.

Program Costs. New estimates place FCS costs significantly above the
current estimate of $163.7 billion. The Army has recently proposed a plan
to buy fewer systems and slow production rates. This recent program
adjustment will affect program costs, but details are not yet available.

FCS Core Systems

References

Visible links
  47. http://www.gao.gov/cgi-bin/getrpt?GAO-06-367
  48. http://www.gao.gov/cgi-bin/getrpt?GAO-06-391
  49. http://www.gao.gov/cgi-bin/getrpt?GAO-05-669
  50. http://www.gao.gov/cgi-bin/getrpt?GAO-04-393
  51. http://www.gao.gov/cgi-bin/getrpt?GAO-06-391
  53. http://www.gao.gov/cgi-bin/getrpt?GAO-06-564T
  54. http://www.gao.gov/cgi-bin/getrpt?GAO-06-367
  55. http://www.gao.gov/cgi-bin/getrpt?GAO-06-478T
  56. http://www.gao.gov/cgi-bin/getrpt?GAO-06-257T
  57. http://www.gao.gov/cgi-bin/getrpt?GAO-05-926
  58. http://www.gao.gov/cgi-bin/getrpt?GAO-05-669
  59. http://www.gao.gov/cgi-bin/getrpt?GAO-05-428T
  60. http://www.gao.gov/cgi-bin/getrpt?GAO-05-442T
  61. http://www.gao.gov/cgi-bin/getrpt?GAO-05-242
  62. http://www.gao.gov/cgi-bin/getrpt?GAO-04-635T
  63. http://www.gao.gov/cgi-bin/getrpt?GAO-04-248
  64. http://www.gao.gov/cgi-bin/getrpt?GAO-03-1010R
  65. http://www.gao.gov/cgi-bin/getrpt?GAO-01-311
  66. http://www.gao.gov/cgi-bin/getrpt?GAO-01-288
  74. http://www.gao.gov/cgi-bin/getrpt?GAO-07-376
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