Unmanned Aerial Vehicles: Maneuver System Schedule Includes Unnecessary
Risk (Letter Report, 09/15/95, GAO/NSIAD-95-161).

The cost of the Defense Department's unmanned aerial vehicle systems,
which are designed to fly over enemy territory and transmit images back
to ground stations, is expected to reach $4.2 billion. Past unmanned
aerial vehicle acquisition programs have been marked by premature entry
into production that resulted in extensive and costly system redesigns
in attempting to achieve acceptable system performance. Nevertheless,
the Joint Tactical Unmanned Aerial Vehicle Project Office plans to begin
production of the Maneuver system, a variant of the Hunter, without
adequate assurance that it can meet operational performance
requirements. As a result, the Pentagon will again risk acquiring an
unsatisfactory system.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-95-161
     TITLE:  Unmanned Aerial Vehicles: Maneuver System Schedule Includes 
             Unnecessary Risk
      DATE:  09/15/95
   SUBJECT:  Defense procurement
             Advanced weapons systems
             Military aircraft
             Combat readiness
             Defense capabilities
             Systems evaluation
             Testing
             Air warfare
             Quality assurance
             Risk management
IDENTIFIER:  Short Range Unmanned Aerial Vehicle
             Israel
             
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Cover
================================================================ COVER


Report to the Secretary of Defense

September 1995

UNMANNED AERIAL VEHICLES -
MANEUVER SYSTEM SCHEDULE INCLUDES
UNNECESSARY RISK

GAO/NSIAD-95-161

Unmanned Aerial Vehicles

(707097)


Abbreviations
=============================================================== ABBREV

  DOD - Department of Defense
  UAV - Unmanned Aerial Vehicle

Letter
=============================================================== LETTER


B-260440

September 15, 1995

The Honorable William J.  Perry
The Secretary of Defense

Dear Mr.  Secretary: 

We are currently reviewing the Joint Tactical Unmanned Aerial Vehicle
(UAV) program, including (1) the Hunter UAV system; (2) a variant of
the Hunter, referred to as the Maneuver system; and (3) another
Hunter variant for shipboard use.  These systems are expected to cost
about $4.2 billion. 

We are issuing this interim report to bring to your attention certain
aspects of the program status and the Joint Tactical UAV Project
Office's proposed acquisition strategy for the Maneuver system that
we believe will unnecessarily increase the Department of Defense's
(DOD) risk on the program. 


   BACKGROUND
------------------------------------------------------------ Letter :1

Both the Hunter and Maneuver UAVs are intended to perform
reconnaissance, surveillance, target acquisition, and other military
missions by flying over enemy territory and transmitting imagery back
to ground stations for use by commanders.  The Maneuver UAV, formerly
called the Close-Range UAV, is to be smaller and have less range
capability than the Hunter.  The Maneuver UAV is to be used by Army
and Marine Corps units operating in the forward battle area. 

Each Maneuver system is to include four air vehicles and a downsized
version of ground support equipment used with the Hunter.  The ground
support equipment is already being developed, and development of the
Maneuver air vehicle, which is to include a low-rate production
phase, is planned to start about September 1995. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

Past UAV acquisition programs have been marked by premature entry
into production that resulted in extensive and costly system
redesigns in attempting to achieve acceptable system performance. 
Nevertheless, the Joint Tactical UAV Project Office plans to begin
production of the Maneuver system without adequate assurance that it
can meet operational performance requirements.  As a result, DOD will
again risk becoming committed to acquiring an unsatisfactory system. 


   ADVERSE IMPACT OF PREMATURE
   PRODUCTION ON OTHER UAV SYSTEMS
------------------------------------------------------------ Letter :3

Despite the importance of operational testing as a management control
to ensure adequate system performance, DOD started producing two
UAVs, the Pioneer and more recently the Hunter, before subjecting
them to any operational testing.  (See figs.  1 and 2.) These two
systems, both acquired as nondevelopmental items\1 from the same
foreign contractor, clearly illustrate the adverse consequences of
beginning production without having adequate assurance of
satisfactory system performance.  For example, premature production
of the Pioneer resulted in a doubling of the costs for the nine
acquired systems that do not meet service requirements.  DOD has also
spent $627 million to acquire and support seven Hunter systems that
are experiencing problems and an uncertain future. 

   Figure 1:  Pioneer UAV

   (See figure in printed
   edition.)

   Figure 2:  Hunter UAV

   (See figure in printed
   edition.)


--------------------
\1 Nondevelopmental item means any item that is (1) commercially
available, (2) in use by a U.S.  agency or foreign government with
which the United States has a mutual defense cooperation agreement,
or (3) any of the items in (1) or (2) that require only minor
modification. 


      IMPORTANCE OF OPERATIONAL
      TESTING
---------------------------------------------------------- Letter :3.1

Operational testing is DOD's primary means of evaluating weapon
system performance in a combat representative environment.  It is
supposed to be structured to determine a system's operational
effectiveness and suitability\2 and to determine if the minimum
acceptable operational performance requirements have been satisfied. 

Thus, operational testing can be an effective internal control over
the acquisition process to ensure that DOD managers have adequate
knowledge about a system's performance before authorizing production. 
If used effectively, it can minimize the risk of producing a
defective system that later requires costly redesign and retrofit to
achieve satisfactory performance. 


--------------------
\2 Operational effectiveness refers to the ability of a system to
accomplish its mission in the planned operational environment. 
Suitability is the degree to which a system can be placed
satisfactorily in field use considering such factors as reliability
and maintainability. 


      EXPERIENCE WITH PIONEER
---------------------------------------------------------- Letter :3.2

DOD did not use operational testing as an effective internal control
over the Pioneer acquisition and later paid the consequences. 
Because Pioneer's predecessors had been used successfully by Israeli
forces, the Navy procured the Pioneer without testing it and deployed
the system to operational forces.  As we reported in 1990,\3 numerous
problems ensued that led the Navy to redesign and modify virtually
the entire system at a cost of about $50 million.  These redesign and
modification costs about matched the Navy's cost of $56 million to
initially procure its nine systems. 

Four years after the initial procurement, the Navy was still buying
replacement hardware, such as completely modified air vehicles, to
bring Pioneer systems up to a minimum essential level of performance. 
Despite this effort, Pioneer was assessed as being unable to meet
service requirements.  So, DOD started acquiring the Short-Range
Joint Tactical UAV, now called Hunter. 


--------------------
\3 Unmanned Aerial Vehicles:  Realistic Testing Needed Before
Production of Short-Range System (GAO/NSIAD-90-234, Sept.  28, 1990). 


      EXPERIENCE WITH HUNTER
---------------------------------------------------------- Letter :3.3

Undeterred by the experience with Pioneer, DOD has also started
production of Hunter without subjecting it to operational testing. 
As a result, DOD has so far spent $627 million acquiring and
supporting a faulty system whose future is uncertain. 

In 1992, we reported\4 that DOD's plans to start the Hunter system's
production before operational testing would result in premature
commitment to production of an unproven system.  We recommended that
the Secretary of Defense require that limited production be deferred
until realistic operational testing provided reasonable assurance
that the system would perform satisfactorily.  DOD disagreed,
maintaining that the system had already been tested sufficiently to
warrant a commitment to production.  Accordingly, in February 1993,
DOD awarded a $171 million contract for production of 7 systems with
56 air vehicles. 

Since then, the system has undergone some 180 major hardware and
software design changes in an attempt to solve its performance
problems.  The system has been grounded for much of the time and
government acceptance of the first production system was delayed for
almost 1 year because of the system's inability to pass tests.  DOD
finally accepted the system in April 1995 but only after granting
numerous waivers to contract specifications and performance
requirements.  Meanwhile, the program is still being restructured to
allow additional time for enhancing the system's chances for passing
operational tests. 


--------------------
\4 Unmanned Aerial Vehicles:  More Testing Needed Before Production
of Short-Range System (GAO/NSIAD-92-311, Sept.  4, 1992). 


   UNNECESSARY RISK ON MANEUVER
   PROGRAM
------------------------------------------------------------ Letter :4

Despite this history, the Joint Tactical UAV Project Office is
planning to begin a 3-year development program for the Maneuver
system in fiscal year 1995 that includes starting low-rate production
before the system's performance is proven in operational testing. 
The low-rate production is scheduled to begin in fiscal year 1997 and
is to include manufacture of
6 systems, including 24 air vehicles, that are not needed for
operational testing.  Further increasing the risk on the Maneuver
program is the fact that the system is to use a downsized version of
Hunter ground support equipment as well as Hunter software that is so
far unproven.  Moreover, the development program is also to include
manufacture of 5 prototype Maneuver systems with 20 air vehicles. 
Three of these systems with 12 air vehicles are to be
production-representative and could be used for operational testing
before beginning low-rate production. 


   RECOMMENDATION
------------------------------------------------------------ Letter :5

We recommend that the Secretary of Defense change the Maneuver
system's acquisition strategy to require that sufficient operational
testing be conducted before the start of low-rate production.  The
purpose of this change is to demonstrate that without any major or
costly design changes, the system can achieve its primary mission and
meet requirements for performance and suitability. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :6

In commenting on a draft of this report, DOD cited various tests
identified in the Maneuver system's proposed acquisition strategy and
stated that it would ensure that sufficient testing occurs to
demonstrate satisfactory performance before low-rate production. 
However, DOD stopped short of committing to have the system undergo
operational testing before low-rate production.  We believe that
operational testing can be used as a management control to ensure
that the Maneuver system meets its key performance parameters before
a production commitment.  We, therefore, affirm our recommendation. 
DOD comments are presented in their entirety in appendix I along with
our evaluation of them. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :7

Our evaluation included an examination of the Joint Tactical UAV
Project Office plans and proposed schedule for acquiring the Maneuver
System.  We also discussed the program with officials of the Joint
Tactical UAV Project Office in Huntsville, Alabama, and the UAV Joint
Project Office in Washington, D.C.  We conducted our work from March
1995 to May 1995 in accordance with generally accepted government
auditing standards. 


---------------------------------------------------------- Letter :7.1

We are sending copies of this report to appropriate congressional
committees; the Secretaries of the Army and the Navy; the Commandant
of the Marine Corps; and the Director, Office of Management and
Budget.  We will make copies available to others on request. 

Please contact me at (202) 512-4841 if you or your staff have any
questions concerning this report.  Major contributors to this report
were Jack Guin, Mark Lambert, John S.  Warren, and Charles A.  Ward. 

Sincerely yours,

Louis J.  Rodrigues
Director, Systems Development
 and Production Issues




(See figure in printed edition.)APPENDIX I
COMMENTS FROM THE DEPARTMENT OF
DEFENSE. 
============================================================== Letter 



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments to the Department of Defense's (DOD)
letter dated July 10, 1995. 


   GAO COMMENTS
------------------------------------------------------------ Letter :8

1.  Although the Navy maintains the Pioneer was procured as an
interim system, this does not negate the need to test prior to
procurement.  The testing referenced by DOD occurred after the Navy
had procured the Pioneer.  When the testing revealed problems, the
Navy employed a costly trial-and-error effort trying to overcome the
problems.  The necessary changes included a modified engine, new
foam-filled wings so that crashed vehicles could float until
salvaged, a new landing recovery system, new flight control software,
and a new propeller.  DOD records reveal that in the 4 years
following initial procurement, the Navy spent $28 million in research
and development funds and an additional $22 million in procurement
funds for replacement hardware trying to get Pioneer's performance up
to the minimum essential level. 

2.  The legislative history of the 1988 National Defense
Appropriations Act shows that Congress limited procurement of Pioneer
to foster commonality among service Unmanned Aerial Vehicle (UAV)
programs.  As we reported in a December 1988 report on UAVs
(GAO/NSIAD-89-41BR, Dec.  9, 1988), during fiscal year 1988 budget
proceedings, Congress refused to authorize funding for procurement of
separate Navy and Army short-range systems and provided that funds
were available only for a joint program.  This led to curtailment of
Pioneer and initiation of the Short-Range UAV program, now called
Hunter. 

3.  Although originally scheduled for 1992, the Hunter system has not
undergone any operational testing, which is now scheduled for 1997. 
Hunter tests that most resembled operational testing were called
"limited user tests." Even so, these tests did not qualify as
operational tests.  First, the system was maintained by contractor
technicians during the tests rather than by military personnel
expected to maintain the system when deployed.  Thus, use of the
contractor technicians detracted from the realism of the tests. 
Also, DOD and the Army's test agencies stated they could not fully
evaluate the test results because of a lack of performance criteria. 
For 81 of 97 measures of performance established for the tests, the
test agencies only gathered related test data because no performance
criteria were established for evaluation purposes; that is, the
system could not be judged as having passed or failed the tests. 
These tests and the developmental testing were not an adequate basis
for starting Hunter's low-rate production because the testing was not
intended to evaluate the system's effectiveness and suitability in a
realistic operational environment. 

4.  As currently planned, the tests to be done before low-rate
production will include various developmental tests and limited user
tests similar to those conducted on Hunter.  In our view, these tests
will not be an adequate basis for committing the Maneuver system to
production.  See comment 3. 

5.  We could identify no information in these DOD comments that
conflicts with or refutes what we said about the acquisition of
Pioneer.  See comment 1. 

6.  The Pioneer's performance in Desert Storm was not without
problems.  For example, according to after action reports, Pioneer's
lack of reliability resulted in excessive maintenance and support
requirements.  Further, electromagnetic interference from other
systems caused crashes in some cases and sometimes prevented video
imagery from being transmitted to the ground control station so it
could be used.  The system was also too slow to keep up with
mechanized forces and was determined to have inadequate range and
endurance.  Among other problems, Pioneer also encountered
difficulties when trying to fly in the rain and required lengthy
improved runways for operations. 

7.  The instability of Hunter's design, as evidenced by the 176
significant modifications referred to by DOD, convinces us that the
system had not demonstrated its readiness for production.  The many
deficiencies detected in acceptance testing of the first of the seven
production systems and the numerous waivers to specifications and
performance requirements, despite the many design changes, are
further evidence that Hunter was not ready for production.  We would
also point out that DOD recently granted numerous waivers in
accepting the second of the seven systems. 

8.  We believe that these controls could be strengthened by requiring
the system to demonstrate satisfactory performance during operational
testing before the production commitment. 

9.  Our report does not criticize the planned use of downsized Hunter
ground support equipment and software with the Maneuver system.  Our
point is that the downsized version is based on Hunter's unproven and
rapidly changing design, which reinforces the need for adequate
operational testing of the Maneuver system before the production
commitment.