Defense Acquisitions: Status of the Expeditionary Fire Support	 
System (21-DEC-07, GAO-08-331R).				 
                                                                 
The United States Marine Corps and the Special Operations Command
determined in 1999 that there was a need for a weapon system that
could be carried inside the V-22 Osprey and deployed to support  
assault operations. The Expeditionary Fire Support System (EFSS),
which consists of a vehicle that tows a 120 mm mortar and another
vehicle that tows an ammunition trailer, is one of the systems	 
now being developed to meet this need. In June 2005, the Marine  
Corps approved low-rate initial production of 6 EFSS units--each 
unit made up of two vehicles, a mortar and ammunition trailer.	 
From May to July 2007, the Marine Corps Operational Test and	 
Evaluation Activity, the independent test agency for the Marines,
conducted initial operational testing and evaluation of the EFSS 
using refurbished developmental prototypes. The program office	 
began receiving the low-rate production mortars in late October  
2007 and is now going through the acceptance process. The	 
delivery of the low-rate production vehicles to the government	 
was delayed until mid-November 2007 so that problems identified  
during the summer 2007 operational test could be fixed. The EFSS 
full-rate production decision was initially scheduled for	 
September 13, 2007, but has since been delayed. 		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-331R					        
    ACCNO:   A79168						        
  TITLE:     Defense Acquisitions: Status of the Expeditionary Fire   
Support System							 
     DATE:   12/21/2007 
  SUBJECT:   Defense capabilities				 
	     Defense contingency planning			 
	     Defense operations 				 
	     Defense procurement				 
	     Military operations				 
	     Military procurement				 
	     Military technology				 
	     National defense operations			 
	     Strategic planning 				 
	     Weapons systems					 
	     V-22 Aircraft					 

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GAO-08-331R

December 21, 2007

The Honorable Carl Levin
Chairman
Committee on Armed Services
United States Senate

Subject: Defense Acquisitions: Status of the Expeditionary Fire Support
System

The United States Marine Corps and the Special Operations Command
determined in 1999 that there was a need for a weapon system that could be
carried inside the V-22 Osprey and deployed to support assault operations.
The Expeditionary Fire Support System (EFSS), which consists of a vehicle
that tows a 120 mm mortar and another vehicle that tows an ammunition
trailer, is one of the systems now being developed to meet this need.

In June 2005, the Marine Corps approved low-rate initial production of 6
EFSS units--each unit made up of two vehicles, a mortar and ammunition
trailer. From May to July 2007, the Marine Corps Operational Test and
Evaluation Activity, the independent test agency for the Marines,
conducted initial operational testing and evaluation of the EFSS using
refurbished developmental prototypes. The program office began receiving
the low-rate production mortars in late October 2007 and is now going
through the acceptance process. The delivery of the low-rate production
vehicles to the government was delayed until mid-November 2007 so that
problems identified during the summer 2007 operational test could be
fixed. The EFSS full-rate production decision was initially scheduled for
September 13, 2007, but has since been delayed.

As you requested, we reviewed the EFSS program and we provided a briefing
to your office on September 12, 2007. This correspondence summarizes that
briefing and incorporates additional information on program changes made
through December 2007. Specifically, we reviewed (1) whether the EFSS
design is meeting its key performance parameters and other critical
requirements, (2) plans to overcome any identified performance shortfalls,
and (3) how the current cost and schedule estimates compare to those
estimated at contract award.

Results In Brief

The EFSS met all of its key performance parameters and 13 of 14 critical
requirements during the operational test. The only critical requirement
not met was the mortars' maximum rate of fire.  The EFSS also experienced
several safety, performance and reliability problems during testing, which
led the test activity to conclude that the EFSS was operationally
effective with limitations and operationally suitable with limitations.
Testing identified

           o safety issues, including potential injury to a crew member
           riding in the ammunition support vehicle's rear seat;
           o performance issues, including how fast the weapon can be fired
           and moved, and the vehicle's equipment-carrying capacity; and
           o reliability issues, including mechanical failures, such as the
           inability to sufficiently cool the engine and vehicle-starting
           problems at altitude.

Also, because of delays getting test assets, cold weather testing that was
planned for February 2007 was not conducted. Recently, the program office
discovered a problem with the primer for the propellant section of the
mortar's ammunition. If this problem is not resolved in time, the cold
weather testing could be missed again.

The Marine Corps is working on a number of design changes to address the
safety, performance and reliability problems identified to date. In
response to the concerns you expressed to the Marine Corps on September
12, 2007, the Marine Corps delayed the EFSS full-rate production decision
until after the safety, performance, and reliability shortfalls are shown
to be corrected in testing planned for this winter, which will culminate
with follow-on operational testing of production units in early 2008. The
Marine Corps also approved additional limited production of six EFSS
systems. This plan does not commit the government to any additional
purchases, but allows the program office to obligate the fiscal year 2007
funding it had intended to use for full-rate production. According to the
program office, the scope of follow-on testing has doubled from the
previous plan and the test and evaluation master plan is being revised
accordingly.

Since the original acquisition program cost and schedule estimate was
approved in 2004, costs have increased by $15.5 million and the schedule
has been extended by nearly 2 years. According to the program office, the
cost growth is because of the additional scope of testing, the costs
associated with ensuring the ammunition complies with safety requirements,
and changes to the vehicle performance requirements. The program has also
experienced major schedule delays because the Marine Corps was optimistic
in its belief that using commercial off-the-shelf systems with some
modifications could provide a solution to meet the need for an internally
transportable system. Greater-than-anticipated design changes, coupled
with the recent decisions to conduct additional testing, resulted in the
deferral of the EFSS's initial operational capability from June 2006 to
spring 2008. Because of the additional developmental work, the Marine
Corps assumed more risk on the low-rate initial production option, which
was changed from firm fixed price to cost reimbursable. Recently the
Marine Corps authorized additional limited production before reaching
agreement on the scope and price--an arrangement that can make it more
difficult to control costs.

Background

The EFSS consists of two prime mover vehicles, a 120-mm mortar, an
ammunition trailer, digitized fire direction equipment (used to orient the
weapon and compute firing data), a basic load of 34 rounds of ammunition
and crew. The EFSS supports Marine operational maneuver from the sea and
requires at least two MV-22 Osprey or two CH-53E sorties to deploy--one
sortie to transport the vehicle and the 120-mm mortar,^1 and another
sortie to carry the second vehicle and the ammunition trailer. A crew of
five Marines is also divided between the two sorties.

During the early stages of the program, the program officials for the EFSS
and for the Internally Transportable Vehicle worked closely to locate a
single vehicle platform to fulfill the needs of both programs. Both
vehicles share the same basic configuration, chassis, suspension, and the
need to fit inside a V-22. The programs proceeded with an approach using
non-developmental items and integrating commercially available components
onto a common chassis. Because of their common design goals, the Marine
Corps consolidated EFSS and the Internally Transportable Vehicle into a
single contract. This allowed the Marine Corps to take advantage of common
contract execution, fewer government personnel, and mutuality of vehicle
design with anticipated subsequent cost and schedule savings. The Marine
Corps also believed that the combined production of over 600 systems^2
would translate to a lower unit cost, because of economies of scale.

On November 10, 2004, following a competition, the Marines awarded a $12
million contract^3 with a hybrid structure including both firm fixed price
and cost plus award fee line items for both EFSS and the Internally
Transportable Vehicle to one prime contractor, General Dynamics Ordnance
and Tactical Systems. As of November 10, 2004, the contract price was
valued at $296 million. Both programs have separate line items in the
budget, and once fielded, EFSS and the Internally Transportable Vehicle
will be managed as separate programs for the life cycle of the systems.

In 2007, the EFSS received internal and external flight certification for
both the MV-22 and the CH-53E aircraft. In July 2007, the operational test
for EFSS was completed, and in August 2007 the production baseline for
EFSS was approved. Table 1 lists significant program events.

Table 1: Major Program Events

Key events: Milestone B - Program start; 
Started: [Empty]; 
Completed: Nov. 2004. 

Key events: Milestone C: Conditional approval for low-rate initial 
production; 
Started: [Empty]; 
Completed: June 2005. 

Key events: EFSS developmental testing - I; 
Started: Mar. 13, 2006; 
Completed: Mar. 18, 2006. 

Key events: LRIP contract award; 
Started: [Empty]; 
Completed: Sept. 2006. 

Key events: EFSS internal flight certification issued; 
Started: [Empty]; 
Completed: May 2007. 

Key events: EFSS developmental testing - II; 
Started: May 14, 2007; 
Completed: May 25, 2007. 

Key events: EFSS external flight certification issued; 
Started: [Empty]; 
Completed: June 2007. 

Key events: EFSS operational test and evaluation; 
Started: May 30, 2007; 
Completed: July 11, 2007. 

Key events: EFSS production baseline established; production readiness 
review completed; 
Started: [Empty]; 
Completed: August 31, 2007. 

Key events: Marines approve procurement of 6 production EFSS. This 
effort does not commit the government to additional units; 
Started: [Empty]; 
Completed: September 21, 2007. 

Key events: EFSS low-rate initial production units delivered; 
Started: [Empty]; 
Completed: October - November 2007. 

Key events: EFSS follow-on operational test & evaluation (including 
cold weather testing); 
Proposed: February 2008; - March 2008. 

Key events: Full-rate production; 
Proposed: Spring 2008. 

Key events: EFSS initial operational capability; Proposed: Spring 2008. 

Key events: EFSS full operational capability; Proposed: Fiscal year 
2010. 

Source: U.S. Marine Corps.

EFSS Meets Most Requirements, but Experienced
Safety, Performance and Reliability Problems

According to Marine Corps Operational Test and Evaluation officials, EFSS
met all of its tested key performance parameters as well as met 13 of 14
critical requirements, but also experienced several safety, performance
and reliability problems during operational testing. The Marine Corps
Operational Test and Evaluation Activity conducted the EFSS' initial
operational testing and evaluation in three phases (amphibious, desert,
and high altitude) to determine whether the system is operationally
effective and operationally suitable.

The EFSS most critical requirements are expressed in two levels. At the
top are four overarching key performance parameters that are considered
essential for effective military capability. See table 2.

Table 2: Key Performance Parameters

Key Performance Parameter: Transportability; 
Requirement: 110 nautical mile lift internal to CH-53E and MV-22 
(threshold=objective). 

Key Performance Parameter: Fire Range; 
Requirement: Unassisted indirect fire maximum range for standard high 
explosive projectile at least 7 km (threshold), 14 km (objective). 

Key Performance Parameter: Range Error; 
Requirement: Achieve range error probable of 0.6% of range (threshold), 
0.3% of range (objective) and a deflection error probable of 0.6% of 
range (threshold), 0.1% of range (objective) for high explosive at two- 
thirds of maximum range. 

Key Performance Parameter: Net Ready; 
Requirement: Data system should interface with specified DOD networks. 

Source: U.S. Marine Corps.

Note: The threshold value is the minimum acceptable performance
requirement to satisfy a need. The objective value is what is desired by
the user.

The second level of requirements, critical requirements, address
transportability, lethality, and technical fire direction. See table 3,
EFSS critical requirements.

Table 3: Critical Requirements

Requirement type: Transportability and mobility; 
Critical requirement details: 
* Unload time of 5 minutes (threshold) and 3 minutes (objective) for 
external lift; 
* Embarkation time between 10 and 20 minutes (threshold) and between 5 
and 10 minutes (objective) for internal lift; 
* Debarkation time between 5 and 10 minutes (threshold) and between 3 
and 5 minutes (objective) for internal lift; 
* Ability to transport the crew, crew personal equipment, section 
equipment, and basic load of ammunition (threshold=objective); 
* Average off-road speed of 5 mph; 
* Average unimproved road speed of 10 mph; 
* Transportable by US C-130 aircraft and larger (threshold=objective) 
without disassembly or modification; 
* Transportable by all US Navy amphibious ships, Military Sealift 
Command ships and contracted cargo ships (threshold=objective). 

Requirement type: Lethality; 
Critical requirement details: 
* Capable of firing ordnance of 105mm in diameter or larger 
(threshold=objective); 
* Capable of firing a variety of specified existing ammunitions types; 
* Maximum rate of fire of 4 rounds per minute (threshold), 16 rounds 
per minute (objective) for one minute for all specified ammunition 
types; 
* Sustained rate of fire of 2 rounds per minute (threshold), 6 rounds 
per minute (objective) for all ammunition types. 

Requirement type: Technical fire direction; 
Critical requirement details: 
* Capable of determining ballistic solutions (threshold=objective); 
* Permit the crew to manually enter/edit all technical fire control 
data (threshold=objective). 

Source: U.S. Marine Corps.

Of the 14 critical requirements, one was changed after contract award in
2004. The sustained rate of fire was reduced from four rounds per minute
to two rounds per minute. The program office attributed this change to a
typographical error found in the requirements documentation. Additional
changes were to noncritical requirements including

           o an increase in the time allowed for some mortar timed events;
           o added improved on-road speed of 35 miles per hour; and
           o a decrease in the basic ammunition load from 50 to 100 rounds of
           munitions to 34 rounds.^4

Currently, there is no armor requirement for the vehicles, but the Marines
are developing both a permanent and an add-on armor kit that will enhance
survivability.^5

In September 2007, the test activity concluded that the EFSS was
operationally effective with limitations and operationally suitable with
limitations. The system met its vertical-transport, maximum-range, and
accuracy key performance parameters. The test activity determined that the
information-exchange key performance parameter did not require testing
because this communication component had been previously tested. The
system also met 13 of 14 critical requirements. It did not meet the
critical requirement related to maximum rate of fire. The system also did
not meet some noncritical requirements for timed events, which involve
rate of fire, first round response, shift out of traverse, and emplacement
and displacement. Although required times were achieved on occasion, the
preponderance of observed times took longer than required. In addition,
the test activity found that the EFSS vehicles were capable of carrying
all required equipment, but not securely. Other performance, safety,
reliability issues, as well as mechanical failures were identified, as
summarized in table 4.

Table 4: Factors Limiting EFSS Capability

Performance shortfall: Safety; 
Impact on program: Issues related to ammunition trailer and its 
inability to be towed safely pose a risk of injury to the crew member 
riding in rear seat of vehicle. Three incidents involving the trailer 
occurred during the EFSS operational test. 

Performance shortfall: Performance; 
Impact on program: Measures associated with timed events and the 
inability of the vehicle to securely carry all required equipment 
impact performance. Also, issues involving the mortar sight's being 
difficult for operators to use and problems using the shock mount were 
documented. 

Performance shortfall: Reliability; 
Impact on program: The mortar's mean rounds between operational mission 
failure did not meet the threshold. The reliability requirements are 
separate for the mortar and the vehicles: 
* The transport barrel clamps were not stout enough to prevent the 
mortar tube from rotating. This contributed to brake damage on one 
mortar during movement; 
* Each prime mover vehicle's physical configuration was different. This 
prevented the test team from interchanging parts on several occasions. 

Performance shortfall: Mechanical failures; 
Impact on program: 
* The compressor for the air ride system and Central Tire Inflation 
System was not robust enough to support all the air powered systems on 
the vehicle; 
* The cooling system was not able to cool the engine and transmission 
sufficiently during operations; 
* The vehicles had difficulty starting at altitude. 

Performance shortfall: Other issues & test limitations; 
Impact on program: 
* Due to delays in getting test assets, cold weather testing that was 
planned for February 2007 was not conducted; 
* Testing was not executed in extreme cold, high humidity, or extreme 
heat (up to 125 degrees Fahrenheit ). EFSS was tested at temperatures 
of up to 115 degrees. 

Source: Marine Corps Operational Test and Evaluation Activity and EFSS     
program office.                                                            

In addition to the issues identified during operational testing, the
program office recently determined that there is a design issue with
primer for the propellant of the mortar round that could affect the
insensitive munition certification--essentially, the primer in the tail of
the mortar ignites the propellant.^6 One aspect of the insensitive
munition testing is a drop test of the mortar to ensure it does not go off
in case the munition is mishandled. The United States successfully drop
tested the round 9.3 feet onto a steel plate while the mortar was at 125
degrees Fahrenheit. France uses the same mortar round and tested it at a
9.3 feet drop at 160 degrees Fahrenheit. The primer ignited the
propellant, which burned but the round did not explode. According to the
program office, the design has been changed and the solution completed
retesting for insensitive munition certification on December 12th, in time
to conduct cold weather testing now scheduled to occur early in 2008. Data
analysis of the test results is ongoing.

In light of the limitations identified during operational testing and 
the system's limited armor protection, the Director of the Marine Corps 
Operational Test and Evaluation Activity described the EFSS as a 
"niche" capability. The system is intended to accompany Marines on foot 
and travel cross-country. According to the Director, as long as the 
EFSS is used within these strict operating limits, the system can be 
used safely. Test activity officials also indicated that EFSS provides 
a capability not currently fielded in the operating forces. A Marine 
Corps Operational Test and Evaluation official indicated that although 
EFSS' limited armor protection will still persist because the system 
has to fit in an MV-22, other problemsThe Marine Corps Operational Test 
Activity recommended prior to fielding the system, that safety, 
performance, and reliability issues should be addressed, that 
developmental testing should be completed, and that follow-on 
operational test and evaluation, including cold weather testing, should 
be conducted. 

Full-Rate Production Decision Delayed until Completion of Follow-On 
Testing: 

In response to the concerns you expressed on September 12, 2007, the 
Marine Corps delayed the planned September 13, 2007, EFSS full-rate 
production decision until spring 2008. The EFSS program office is now 
working to address performance shortfalls by testing fixes in 
developmental testing and verifying those fixes in follow-on testing 
planned for this winter and spring 2008. 

Initially, the program office sought approval to enter into full-rate 
production by fielding one EFSS battery out of a production buy of 66 
units.[Footnote 7] The program office wanted to field one battery and 
get approval for full-rate production based on addressing outstanding 
performance, safety, and testing issues. On September 12, 2007, we 
briefed your staff that, as initially planned, the full-rate production 
decision would be made before the first production quantities had been 
delivered or tested, fixes to the problems discovered in operational 
testing were proven, and cold weather performance could be tested. 

Since our briefing, the Marine Corps approved additional limited 
production of six EFSS units to field one artillery battery.[Footnote 
8] This plan does not commit the government to any additional 
purchases, but allows the program office to obligate the fiscal year 
2007 funding it had intended to use for full-rate production. The 
Marine Corps plans to address the limitations the test activity 
identified by (1) collaborating with the testers and revising the EFSS 
Test and Evaluation Master Plan, (2) addressing performance shortfalls, 
and (3) conducting follow-on operational testing on production units in 
the February-March 2008 time frame. According to Marine Corps 
Operational Test and Evaluation Activity officials, they will conduct 
the follow-on test (which includes durability and cold weather events). 

The Director of the Marine Corps Operational Test and Evaluation 
Activity described the plan as an unusual commitment of resources 
beyond the initial operational test and evaluation event. He noted that 
normally in non-major acquisition programs such as the EFSS program, 
the testing activity does not retest and evaluate fixes for 
deficiencies it identified during operational testing. Normally, test 
activity staff return to verify the program office's fixes once they 
are in place. For EFSS, the test activity reached an agreement with the 
program office to update the Test and Evaluation Master Plan. This 
update includes additional combined developmental and operational 
testing followed by the testers verifying that the fixes work during 
the follow-on operational test and evaluation event. 

According to the program office, the scope of follow-on testing has 
doubled from the previous plan. In the area of safety, a roll cage and 
an improved trailer tongue, or hitch, are being tested.[Footnote 9] In 
addition, the program office is experimenting with different settings 
on the brakes, and is lowering the ammunition trailer's tire pressure 
to reduce bouncing. Regarding mechanical failure and reliability, the 
program office believes it has identified the fixes for all of the 
mechanical failures listed in table 4 and made several other design 
changes. For example, to address the cooling deficiency, a lower 
gearing is used that reduces the load on the engine and consequently 
the engine's cooling needs. Overall vehicle weight was reduced and is 
better centered. To address the high altitude starting problem, the 
existing glow plugs were replaced with a higher temperature glow 
plug.[Footnote 10] Also, an intake air heater and controller were added 
to pre-heat the intake air in low ambient air temperatures. Changes 
were also made to the lower control arm to improve manufacturability. 
The lower control-arm design change reduced the number of pieces for 
the steel arm from 23 to 15 pieces. This reduces manufacturing time, 
labor, and ultimately allows reduced long-term production and life- 
cycle costs. 

Program Cost Growth and Delays Resulted Primarily from Underestimated 
Development Effort: 

Since the original acquisition-program cost-and-schedule estimate was 
approved in 2004, the cost has increased $15.5 million and the schedule 
has been extended by nearly 2 years. The EFSS required more development 
than the Marine Corps expected, which resulted in some cost growth, a 
significant contract delay, delayed production deliveries, and less 
information at decision points. 

Cost Increases Related to Program Scope: 

The total program cost increased from $675.7 million in 2004 to $691.2 
million in 2007 (in fiscal year 2004 dollars). The cost growth of $15.5 
million was all in research and development, which increased from $47.5 
million to $63.0 million. According to the program office, cost growth 
is driven by three factors. First, funding that was added for future 
development will instead be used for the cost increase associated with 
the increased scope of ongoing developmental testing and follow-on 
testing.[Footnote 11] Second, funding was added for the costs 
associated with ensuring the ammunition is compliant with "insensitive 
munition" requirements that had not been included in the first approved 
program baseline. And third, changes made to the performance 
capabilities of the vehicles, such as an increase in on-road speed from 
10 to 35 miles per hour, required some additional development funding. 
The program office is also considering whether to combine the 2009 and 
2010 planned procurements of 48 systems into fiscal year 2009 to 
achieve economy of scales savings. 

According to the program office, each EFSS will cost in the range of 
$570,000 to $680,000 in base year 2004 procurement dollars. The 
procurement unit cost calculation excludes the engineering, program 
management, logistics planning, spares, and cost of 20 years of 
ammunition currently projected at $501.7 million to $548.3 million. 
However, the program office is concerned that recent unfavorable 
exchange rate changes could increase the unit cost of the systems, 
driven by the cost of the French-built mortar. 

Original Schedule Proved Optimistic: 

The program has experienced major schedule delays because the Marine 
Corps was optimistic in its belief that using commercial off-the-shelf 
systems with some modifications could provide a solution to meet the 
need for an internally transportable system. The EFSS program's 2005 
risk management plan notes the EFSS schedule is aggressive with little 
flexibility to accommodate schedule slips. According to the program 
office, the schedule was driven by the first deployment date for the 
first equipped Marine Expeditonary Unit aboard the MV-22. Also, 
according to the program manager, a compressed development and test 
schedule was chosen to help save on ammunition cost (by combining pre- 
operational test work up with some training events, thereby using fewer 
rounds of ammunition). The program office also thought it could meet 
the EFSS requirements by using a mostly commercial-off-the-shelf 
system, but meeting the MV-22 transportability key performance 
parameter required more development than anticipated. 

The ambitiousness of the development schedule was evident when the 
Marine Corps made a production decision in June 2005, before the 
development scope was fully recognized. [Footnote 12] Partly because of 
the additional development scope that had to be negotiated, it took 
over a year to exercise the production option. The Marine Corps 
exercised the low-rate initial production option in September 2006, and 
at the same time the government assumed more development risk because 
it changed the option type from firm fixed price as originally awarded 
in the contract to cost reimbursable. The selection of contract type is 
generally a matter of risk allocation: fixed-price contracts place the 
risks associated with performing the contract on the contractor; cost 
reimbursement-type contracts place minimal risk on the contractor. The 
risk associated with performance shifts between the parties depending 
on the type of contract selected. The shift in contract type was done, 
according to the program office, because the design remained extremely 
uncertain and more developmental work was needed than originally 
anticipated.[Footnote 13] 

Many changes have had to be incorporated into the design so the system 
would meet the MV-22 cabin size and weight restrictions because the 
internal MV-22 transportability requirement affects the wheel weight, 
vehicle balance, and vehicle dimensions. In addition, the issues that 
arose early in development involving the vehicle's axle, hub assembly, 
driveshaft, chassis and electrical system have been addressed in 
response to an earlier operational assessment on the internally 
transportable vehicle program. These design changes were incorporated 
into the EFSS development vehicles while they were being delivered to 
the government. The program office subsequently used them for 
operational testing. Program officials informed us that production 
deliveries were delayed partly because the contractor's efforts were 
diverted to refurbishing the prototypes for testing. As a result of the 
introduction of design changes onto refurbished development vehicles, 
the operational test vehicles had different physical configurations. 
According to program officials, the first production vehicles were 
delivered in mid-November 2007, 4 months after operational testing 
ended. 

The test schedule also allowed no time to fix problems identified 
during EFSS developmental test phase II. This test phase ended about 5 
days before operational testing began. There was no time allotted to 
analyze development test results and make changes to the systems used 
in operational testing, to incorporate solutions into production 
representative assets, as is normally done before operational testing. 
As a result, operational testing bore more burden of discovery than 
normal. The timed events EFSS failed to meet in operational testing 
were the same timed events it could not meet in development test phase 
II. Ultimately, EFSS's initial operational capability has been delayed 
from June 2006 to spring 2008 because of the developmental and 
operational test problems. This delay has not decoupled the EFSS 
schedule from the first Marine Expeditionary Unit deployment with V- 
22s, which is currently projected to take place in the fall of 2008, 
because that deployment was delayed. 

In light of the decision to delay the full-rate production decision, 
the Marine Corps is negotiating a second buy of six EFSS units as a 
firm-fixed price option to the original contract. However, until a 
final agreement is reached on the scope and price, the program office 
exercised an undefinitized option. Exercise of an undefinitized option 
authorizes work before reaching agreement on the terms and conditions 
for the work. According to the EFSS program manager, because of delays 
in the program because of design changes, operational pressure to be 
available for the first marine expeditionary unit's deployment using 
the V-22, as well as the time needed for the Defense Contract 
Management Agency to audit proposed part prices and labor and other 
rates, they have gone forward with exercising an undefinitized option. 
We have previously reported that undefinitized contracts put the 
government at risk because they provide little incentive for the 
contractor to control cost until the terms of the work are finalized or 
definitized.[Footnote 14] In addition, the government does not have 
much bargaining power over the work done during the undefinitized 
period. The program office expects to have a definitized option between 
December 2007 and January 2008. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to the Department of Defense and it 
chose to provide technical comments, which were incorporated as 
appropriate. 

Scope and Methodology: 

We focused our review efforts on the EFSS program, although it shares 
contract solicitation and execution with the Internally Transportable 
Vehicle program. 

To determine whether the current EFSS met its key performance 
parameters and other critical requirements, we first assessed whether 
any requirements had changed by comparing the program's requirements 
documented in the 2004 Capabilities Development Document with 
subsequent revisions; we also reviewed the integrated performance 
specification and the requirements traceability matrix. We discussed 
identified requirements changes with the EFSS program office--Marine 
Corps Systems Command, Product Group 14 (Armor and Fire Support 
Systems)--located at Quantico, Va. We also discussed changes in 
requirements with a representative from the Marine Corps Combat 
Development Command, the organization responsible for establishing the 
EFSS requirements. We obtained and analyzed the results of major test 
events, including EFSS developmental test phases I and II, ITV 
operational assessment, and EFSS operational test. We discussed the 
test results with the EFSS tester, the Marine Corps Operational Test & 
Evaluation Activity, also located at Quantico, Va. We interviewed the 
program office staff, including the program manager and lead engineer 
and Marine Corps Operational Test & EvaluationActivity staff, including 
the Director and the Fire Support Operational Test Project Officer and 
discussed the performance shortfalls documented in the test reports. 

To identify the Marine Corps's plans to address performance shortfalls, 
we reviewed the plans listed in the proposed acquisition decision 
memorandum for the full-rate production decision planned in September 
2007. We discussed the program office's plans to address the problems 
discovered in developmental and operational testing with program and 
test officials. We interviewed program officials and discussed the 
advantages and disadvantages of conditionally moving forward with this 
decision. After the Marine Corps decided to postpone the EFSS full-rate 
production decision, we discussed the impact this delay has on the 
overall program and the schedule for testing the planned EFSS fixes as 
well as the cold weather testing. 

To determine how the current cost and schedule estimate compares to 
those estimated at contract award, we reviewed the contract, life-cycle 
cost estimates and compared the 2004 approved acquisition program 
baseline to the current one. We met with program office officials, 
including the contracting officer and his staff, to discuss, and where 
possible document, the reasons for any changes in the estimates and 
their overall impact on the program. We did not determine the 
appropriateness of the change in LRIP option type from firm fixed price 
to cost reimburseable, which was exercised in September 2006. 

We conducted our review from July 31, 2007 to December 21, 2007, in 
accordance with generally accepted government auditing standards. 

As agreed with your office, unless you announce its contents earlier, 
we will not distribute this report further until 6 days from its date. 
At that time, we will send copies to the Secretary of Defense, the 
Commandant of the Marine Corps, and interested congressional 
committees. We will also make copies available to others upon request. 
In addition, the report will be available at no charge on the GAO Web 
site at [hyperlink, http://www.gao.gov]. If you or your staff have any 
questions concerning this report, please contact me at (202) 512-4841. 
Key contributors to this assignment are David Best, Bonita Oden, Laura 
Holliday, and Greg Campbell. 

Signed by: 

Paul Francis: 
Director: 
Acquisition and Sourcing Management: 

[End of section] 

Footnotes: 

[1] This 120 mm mortar's interior is rifled, with a pre-engraved 
driving band that imparts rotation to the shell. More than 1000 units 
have been produced and have been in service with 24 armed forces in 22 
countries, for over 10 years. The EFSS mortar tube can fire both rifled 
and smooth bore ammunition. EFSS is using rifled rounds produced by a 
French firm. 

[2] The ITV acquisition objective increased to approximately 700 
vehicles; the EFSS total buy is expected to be 70, including 4 
developmental systems. 

[3] The indefinite-delivery/indefinite-quantity contract allows for a 
certain amount of contract process streamlining. This type of contract 
provides for an indefinite quantity of supplies or services during a 
fixed period of time. The government places delivery orders (for 
supplies) or task orders (for services) against a basic contract for 
individual requirements. Minimum and maximum quantity limits are 
specified in the basic contract either as number of units or as dollar 
values. The Government uses this kind of contract when it cannot 
predetermine, above a specified minimum, the precise quantities of 
supplies or services that the government will require during the 
contract period. 

[4] This was included as a concept of employment in the Capabilities 
Development Document, stating: "The basic load can be between 50 and 
100 rounds of various munitions or a mix of munitions that can be 
adequately transported by the EFSS prime and ammunition movers." In 
other words, the 50 to 100 EFSS ammunition basic load (per section) was 
a concept of employment and not a Marine Corps Combat Development 
Command requirement. The basic load of ammunition is now required to be 
34 rounds per EFSS. 

[5] Congress has provided procurement funding for armor protection. 

[6] An insensitive munition is one that will not detonate under any 
condition as other than its intended mission to destroy a target. 
Section 2389, Title 10 of the U.S. Code provides that the Secretary of 
Defense shall ensure, to the extent practicable, that insensitive 
munitions under development or procurement are safe throughout 
development and fielding when subjected to unplanned stimuli. DOD 
Directive 5000.1 (Jan. 2003) states all systems containing energetics 
shall comply with insensitive munitions criteria. 

[7] An EFSS battery consists of six rifled towed mortars, 12 prime 
movers (vehicles), six ammunition trailers, five Battery Support 
Vehicles, ammunition suite, and support package. 

[8] These systems are in addition to the six low-rate initial 
production systems purchased with fiscal year 2006 funding. 

[9] The program office extended the trailer hitch to improve trailer 
stability and safety. 

[10] A glowplug is a heating device used to aid starting diesel 
engines. 

[11] According to the program manager, they are deferring developmental 
efforts that had been added in 2012 and 2013 to improve the digitized 
fire direction center equipment and provide it with software digital 
capability, upgrade the precision extended range munition, and enhance 
the insensitive munition (IM) illumination capability. 

[12] According to EFSS program officials, the scheduled was designed to 
meet an initial operational capability that coincided with the first 
Marine Expeditionary Unit deployment using the MV-22 and help save on 
ammunition cost (by combining pre-operational test work up with some 
training events; thereby using fewer rounds of ammunition). 

[13] The program office uses a hybrid contract structure covering both 
EFSS and the Internally Transportable Vehicle and includes logistics 
support, systems development, and ammunition as cost plus award fee 
lines, production options as firm fixed price lines, and an indefinite 
delivery/indefinite quantity line for the Internally Transportable 
Vehicles. 

[14] GAO, Defense Acquisitions: Success of Advanced SEAL Delivery 
System Hinges on Establishing a Sound Contracting Strategy and 
Performance Criteria, GAO -07-745, (Washington D.C.: May 24, 2007). 

[End of section] 

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