Unmanned Aerial Vehicles: Outrider Demonstrations Will Be Inadequate to
Justify Further Production (Letter Report, 09/23/97, GAO/NSIAD-97-153).

GAO reviewed the Department of Defense's (DOD) acquisition of the
Outrider, an unmanned aerial vehicle (UAV) system, through a streamlined
acquisition process known as the Advanced Concept Technology
Demonstration (ACTD), focusing on whether: (1) DOD is applying lessons
learned from prior UAV programs to the Outrider; and (2) the Outrider is
likely to meet user needs.

GAO noted that: (1) DOD is not applying lessons learned from prior UAV
programs to the Outrider ACTD; (2) for example, despite problems with
the Pioneer and Hunter stemming from DOD's decision to award further
production contracts without conducting operational testing or
demonstrating that the system is user-supportable, DOD is pursuing the
same strategy for the Outrider; (3) in addition, DOD has underestimated,
as it did for the Pioneer and Hunter programs, the time and effort
necessary to integrate nondevelopmental items into Outrider; (4)
moreover, the Outrider system may not satisfy user needs unless problems
associated with meeting joint requirements are resolved and
interoperability with other DOD systems is ensured; and (5)consequently,
DOD will not have assurance that the Outrider will meet user needs by
the time of the planned fiscal year 1998 low-rate production decision.

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

 REPORTNUM:  NSIAD-97-153
     TITLE:  Unmanned Aerial Vehicles: Outrider Demonstrations Will Be 
             Inadequate to Justify Further Production
      DATE:  09/23/97
   SUBJECT:  Defense procurement
             Military aircraft
             Air defense systems
             Concurrency
             Defense capabilities
             Aircraft research
             Testing
             Product performance evaluation
IDENTIFIER:  Hunter Unmanned Aerial Vehicle
             Joint Tactical Unmanned Aerial Vehicle
             Outrider Unmanned Aerial Vehicle
             Pioneer Unmanned Aerial Vehicle
             Predator Unmanned Aerial Vehicle
             DOD Advanced Concept Technology Demonstration Program
             Maneuver Unmanned Aerial Vehicle
             
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Cover
================================================================ COVER


Report to the Secretary of Defense

September 1997

UNMANNED AERIAL VEHICLES -
OUTRIDER DEMONSTRATIONS WILL BE
INADEQUATE TO JUSTIFY FURTHER
PRODUCTION

GAO/NSIAD-97-153

Unmanned Aerial Vehicles

(707181)


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

  ACTD - Advanced Concept Technology Demonstration
  CDL - Common Data Link
  DOD - Department of Defense
  UAV - unmanned aerial vehicles

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


B-276890

September 23, 1997

The Honorable William S.  Cohen
The Secretary of Defense

Dear Mr.  Secretary: 

The Department of Defense (DOD) has undertaken a number of efforts in
the past to acquire unmanned aerial vehicles (UAVs) to complement its
mix of manned and national reconnaissance assets.  Our previous
reviews of UAV programs have shown that DOD's acquisition efforts to
date have been disappointing.\1 This report discusses the Outrider, a
UAV system, which DOD is acquiring through a streamlined acquisition
process known as an Advanced Concept Technology Demonstration
(ACTD).\2 We examined whether (1) DOD is applying lessons learned
from prior UAV programs to the Outrider and (2) the Outrider is
likely to meet user needs. 


--------------------
\1 Unmanned Aerial Vehicles:  DOD's Acquisition Efforts
(GAO/T-NSIAD-97-138, Apr.  9, 1997). 

\2 ACTDs are a product of DOD's acquisition reform efforts and are
used to determine if a mature technology can satisfy a military
mission.  ACTDs are intended to enable the services to examine new
capabilities without committing to the large research and development
investments required in traditional acquisition programs.  This
approach allows the user to operate the new capability and (1)
determine its utility, (2) develop related concepts of operation, and
(3) define specific requirements.  If successfully completed and a
significant number of systems is required, it then transitions to the
formal acquisition process.  Systems acquired under the ACTD process
are not subject to the stringent reporting and oversight requirements
of DOD's traditional acquisition process. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

DOD is not applying lessons learned from prior unmanned aerial
vehicle programs to the Outrider ACTD.  For example, despite problems
with the Pioneer and Hunter stemming from DOD's decision to award
further production contracts without conducting operational testing
or demonstrating that the system is user-supportable, DOD is pursuing
the same strategy for the Outrider.  In addition, DOD has
underestimated, as it did for the Pioneer and the Hunter programs,
the time and effort necessary to integrate nondevelopmental items
into Outrider.\3 Moreover, the Outrider system may not satisfy user
needs unless problems associated with meeting joint requirements are
resolved and interoperability with other DOD systems is ensured. 
Consequently, DOD will not have assurance that Outrider will meet
user needs by the time of the planned fiscal year 1998 low-rate
production decision. 


--------------------
\3 A nondevelopmental item is:  (1) any previously developed item of
supply used exclusively for governmental purposes by a federal
agency, state, or local government, or a foreign government with
which the United States has a mutual defense cooperation agreement or
(2) any item described in (1) that requires only minor modifications
or modifications of the type customarily available in the commercial
marketplace in order to meet the requirements of the procuring
department or agency. 


   BACKGROUND
------------------------------------------------------------ Letter :2

UAVs are pilotless aircraft, controlled remotely or by preprogrammed
on-board equipment.  The Outrider system consists of four air
vehicles, ground control equipment, one remote video terminal, four
modular mission payloads, communications devices, a means of launch
and recovery, and one mobile maintenance facility for every three
Outrider systems (see fig.  1).  The Outrider ACTD grew out of the
Joint Tactical UAV program.  The original concept of the Joint
Tactical UAV program was to acquire (1) a 50-kilometer UAV system,
the Maneuver, to satisfy reconnaissance and surveillance needs of
Army brigade and Marine Corps regimental commanders and (2) a
200-kilometer UAV system, the Hunter, to satisfy the reconnaissance
and surveillance needs of Army corps and division commanders and Navy
task force commanders.  The Joint Tactical UAV program was
restructured in fiscal year 1996.  The Hunter portion was canceled
and the Maneuver portion was reconstituted as the Outrider ACTD to
evaluate one UAV system's ability to perform both the Hunter and
Maneuver missions. 

   Figure 1:  Outrider in Flight

   (See figure in printed
   edition.)

To streamline the acquisition process, DOD designated Outrider an
ACTD in December 1995 and awarded a contract for a 2-year ACTD in May
1996.  During this period, DOD will acquire 6 nondevelopmental
Outrider systems with 24 air vehicles at a cost of approximately $57
million.  DOD can procure more systems during the ACTD using low-rate
production options built into the contract and, according to an
Outrider program official, has requested $30 million for fiscal year
1998 to do so.  According to DOD, the purpose of the Outrider ACTD is
to evaluate the utility of the system through a series of operational
demonstrations.  The Army, the Navy, and the Marine Corps will
prepare assessments of the system's military utility based on the
operational demonstrations.  At the end of the ACTD, Defense
Acquisition Board executives will review the service assessments and
determine if the ACTD should become a formal acquisition program.  If
DOD approves transition to the formal acquisition process, program
officials must prepare documentation identical to that required of
traditional acquisition programs. 


   DOD HAS NOT LEARNED PAST UAV
   LESSONS
------------------------------------------------------------ Letter :3

Prior to beginning the Outrider ACTD, DOD acquired three other
nondevelopmental tactical UAV systems:  Pioneer, Hunter, and
Predator.  Each of these UAV programs provided DOD with important
lessons about acquisition strategies, system integration, and
logistic supportability.  However, DOD is not applying these lessons
to the Outrider ACTD. 


      OUTRIDER ACQUISITION
      STRATEGY REPEATS MISTAKES OF
      THE HUNTER
---------------------------------------------------------- Letter :3.1

DOD's acquisition strategy for the Outrider closely resembles the
acquisition strategy used for the Hunter program.  After a user
demonstration, DOD awarded a low-rate production contract for 7
Hunter systems with 56 aircraft before demonstrating through
operational testing that the system was potentially operationally
effective and suitable.\4 Testing of the low-rate production Hunter
systems revealed numerous problems, and eventually DOD terminated the
Hunter program. 

Similarly, according to an Outrider program official, DOD plans to
exercise a contract option for low-rate production of three to six
additional Outrider systems in April 1998 before conducting realistic
operational testing.  The program official stated that user
demonstrations conducted prior to April 1998 as part of the ACTD will
provide a sufficient basis for making a low-rate production decision. 
These user demonstrations, however, will not provide the same level
of assurance for justifying a low-rate production commitment as would
operational testing since such testing involves meeting minimally
acceptable thresholds for key performance parameters.  Outrider as an
ACTD system has neither key parameters nor thresholds, and DOD is not
required to establish them for the demonstrations. 

Lessons learned from prior UAV programs illustrate that
nondevelopmental UAV systems should be operationally tested in
realistic environments before beginning low-rate production.  Our
past work has shown that production of nondevelopmental UAV systems
before operational testing can result in adverse consequences.  DOD
started producing two nondevelopmental UAVs--the Pioneer and, more
recently, the Hunter--before subjecting either to any operational
testing.  The problems DOD has experienced with these systems clearly
illustrate the adverse consequences of beginning production without
having adequate assurance of satisfactory system performance. 
Specifically, in 1990, we reported that lack of Pioneer operational
testing led the Navy to costly and time-consuming trial and error
while trying to adapt the system for shipboard use.\5 Ultimately, DOD
spent about $50 million redesigning and modifying Pioneer systems
initially acquired for $56 million. 

Undeterred by the experience with Pioneer, DOD then started
production of the Hunter without subjecting it to operational
testing.  In 1992, we reported that DOD should not award a production
contract for the Hunter based on limited testing in unrealistic
environments.\6 Nevertheless, DOD awarded a contract for seven Hunter
systems.  These systems were unable to meet requirements, and the
program was terminated in 1995 after an investment of over $757
million. 


--------------------
\4 Operational effectiveness refers to the ability of a system to
accomplish its mission in the planned operational environment. 
Operational suitability is the degree to which a system can be placed
satisfactorily in field use considering such factors as reliability
and maintainability. 

\5 Unmanned Aerial Vehicles:  Realistic Testing Needed Before
Production of Short-Range System (GAO/NSIAD-90-234, Sept.  28, 1990). 

\6 Unmanned Aerial Vehicles:  More Testing Needed Before Production
of Short-Range System (GAO/NSIAD-92-311, Sept.  4, 1992). 


      OUTRIDER SYSTEM INTEGRATION
      MAY PROVE MORE DIFFICULT
      THAN EXPECTED
---------------------------------------------------------- Letter :3.2

Integrating nondevelopmental components into a fieldable Outrider
system is proving more challenging than DOD anticipated.  According
to program officials, integrating components necessary to satisfy the
naval requirements, such as electromagnetic interference shielding
and stronger landing gear, delayed Outrider's first flight from
November 1996 to March 1997.  Because the Outrider ACTD has a 2-year
time limit, schedule delays result in less time available for the
users to assess the system's military utility. 

These nondevelopmental UAV integration lessons are not new to DOD. 
The Hunter and Pioneer were both procured by DOD as nondevelopmental
systems.  Both systems required the expenditure of unexpected
development time and money in retroactive attempts to solve
integration problems.  For example, we stated in our September 28,
1990, report, that the Pioneer system required substantial
development to integrate the system into a shipboard environment.  In
addition, in 1995, DOD concurred with us that the complexity of the
Hunter subsystem integration was significantly underestimated by both
the government and the contractor.\7

An independent DOD team that reviewed the Hunter UAV in 1995 reported
that using nondevelopmental subsystems misled many into believing
that integrating nondevelopmental subsystems would not require
substantial development.  The team recommended that the services
should consider and reevaluate the advantage of attempting to procure
nondevelopmental subsystems without allowing for some developmental
effort needed to integrate them into the overall system. 


--------------------
\7 Unmanned Aerial Vehicles:  No More Hunter Systems Should Be Bought
Until Problems Are Fixed (GAO/NSIAD-95-52, Mar.  1, 1995). 


      ACTD WILL NOT DEMONSTRATE
      OUTRIDER SUPPORTABILITY
---------------------------------------------------------- Letter :3.3

DOD plans to award a low-rate production contract for up to six
Outrider systems without demonstrating a critical component of
military utility--whether the system is user-supportable.  The ACTD's
operational demonstrations will not realistically address the
user-supportability of the Outrider system.  According to an Outrider
program official, the user will perform only basic maintenance during
the operational demonstrations, while the contractor will perform all
other maintenance.  Furthermore, the Outrider ACTD will not include a
logistics demonstration to show that the system is user-supportable
without contractor assistance. 

UAV lessons learned show that procuring nondevelopmental systems
without assurance that they are user-supportable results in cost
growth and program delays.  For example, a logistics demonstration
conducted after DOD procured seven low-rate production Hunter systems
revealed the system was not user sustainable.  DOD analysts reported
that the perception in the Hunter program was that logistics would be
easy to add to a nondevelopmental system.  In reality, adding
military logistics to a nondevelopmental system proved a significant
challenge.  The analysts noted that an expensive, time-consuming
developmental effort was needed to acquire the logistics support for
Hunter.  In addition, while ACTD unit cost may be low, militarizing
capabilities and adding logistics support increases program costs. 
For example, while a Predator ACTD system cost about $15 million, a
Predator combat-ready production system, with configuration changes,
added subsystems, and full integrated logistics support provisions,
costs about twice that amount. 


   OUTRIDER MAY NOT SATISFY USER
   NEEDS
------------------------------------------------------------ Letter :4

The Outrider system may not satisfy user needs unless problems
associated with meeting joint requirements are resolved and
interoperability with other DOD systems can be achieved.  Design
changes necessary to increase Outrider's range to 200 kilometers have
delayed the program and have increased the weight of the air vehicle
to the point it may not be suitable for shipboard operations. 
Furthermore, developing an air vehicle engine suitable for naval use
has proven problematic.  In addition, the Outrider analog datalink is
not compliant with DOD's communications interoperability standards
for reconnaissance assets and provides limited payload growth
options. 


      PROBLEMS ASSOCIATED WITH
      MEETING JOINT REQUIREMENTS
---------------------------------------------------------- Letter :4.1

The Outrider system is encountering technical problems that must be
resolved before the system can meet user needs.  First flight of the
Outrider system was delayed 4 months because of these problems. 
According to program officials, these problems arose from modifying
the Outrider to satisfy joint requirements.  The Outrider system was
originally designed to satisfy the 50 kilometer, land-based, Army
maneuver UAV requirement.  Under the ACTD, Outrider's joint range
requirement is
200 kilometers and includes operation from amphibious ships. 

Modifications to satisfy joint requirements have necessitated several
changes to the air vehicle design.  These changes, such as adding
electromagnetic interference shielding for shipboard operations and
increasing air vehicle size to satisfy the range requirement, have
added a large amount of weight to the air vehicle.  Since DOD awarded
the ACTD contract in May 1996, the weight of the fueled air vehicle
has grown from the proposed 385 pounds to an actual of 578 pounds. 
The added weight increases the distance necessary to launch and
recover the air vehicle.  According to an Outrider oversight
official, this could necessitate the use of arresting cables or
barrier nets on the deck of a ship. 

According to Navy officials, the Navy is reluctant to use cables or
nets to recover the Outrider because of the impact on other shipboard
flight operations.  The Navy has previously expressed concerns about
the adverse impact of arresting cables and barrier nets on the normal
flight operations of amphibious assault ships.  In December 1995, we
reported that Navy fleet officials opposed fielding the Hunter UAV on
Navy ships because erecting barrier nets would adversely impact other
flight operations from their amphibious assault ships.\8

Additionally, Outrider's joint requirements include a heavy fuel
engine.  Naval use requires a heavy fuel engine because the
automotive gasoline currently used by the Outrider is considered too
combustible for safe use on ships.  DOD research officials estimate
it may ultimately cost $100 million to develop a heavy fuel engine
that is small enough to power the Outrider.  Without a heavy fuel
engine, the system will not satisfy naval users.  A senior program
official acknowledged the heavy fuel engine development is not
proceeding as successfully as planned, and the current gasoline
engine is not performing adequately.  Consequently, 1 year into the
ACTD, DOD now plans to acquire another gasoline engine. 


--------------------
\8 Unmanned Aerial Vehicles:  Hunter System Is Not Appropriate for
Navy Fleet Use (GAO/NSIAD-96-2, Dec.  1, 1995). 


      POTENTIAL INTEROPERABILITY
      ISSUES EXIST
---------------------------------------------------------- Letter :4.2

DOD is not capitalizing on opportunities to demonstrate that Outrider
will be interoperable with other DOD systems during the ACTD period. 
DOD will not be demonstrating the Outrider with the Army and the
Navy's standardized computer workstations or with the software being
designed to control all tactical UAVs, including the Predator UAV
system, which is already in production.  Nor will DOD be
demonstrating the Outrider with a DOD-compliant Common Data Link
(CDL) that would allow information from the Outrider to be more
easily transferred to other DOD systems. 


      OUTRIDER ACTD SCHEDULE NOT
      ALIGNED WITH TACTICAL
      CONTROL SYSTEM SCHEDULE
---------------------------------------------------------- Letter :4.3

DOD is developing a tactical control system that will control all
tactical UAVs.  The current Outrider and Predator control systems are
incompatible and do not meet standards for communications
compatibility with DOD's other airborne reconnaissance systems. 
Although the Outrider will be required to work with the tactical
control system, according to an Outrider program official, DOD will
attempt to demonstrate interoperability on only one occasion during
the ACTD. 

A potentially serious interoperability issue may arise if the
Outrider development schedule is not aligned with the tactical
control system program schedule.  The tactical control system is
primarily software designed to perform common mission planning and
control for all tactical UAVs, including the Outrider, and it will be
installed on computers already used by the services, such as the
Navy's TAC-4 and the Army's Sunspark Systems.  However, during the
ACTD, DOD is allowing the Outrider contractor the option of using
either (1) Outrider-specific hardware and software that is supposed
to be interoperable with the tactical control system or (2) the
tactical control system.  According to the Outrider Demonstration
Manager, the contractor has opted to use the Outrider-specific
equipment, and only one demonstration of interoperability between the
Outrider equipment and the tactical control system is planned for the
ACTD.  If the actual tactical control system and service computers
are not used during the ACTD, the services' overall assessments of
military utility will not be based on actual system performance.  DOD
acknowledges the risk their plan creates of not achieving the
required interoperability between the Outrider and the tactical
control system. 


      OUTRIDER DATALINK NOT
      COMPLIANT WITH DOD STANDARD
      ARCHITECTURE
---------------------------------------------------------- Letter :4.4

The Outrider datalink is not compliant with the CDL, DOD's standard
for communications interoperability for all airborne reconnaissance
and surveillance missions, including those missions performed by the
Outrider.  The CDL requires a digital data link, whereas the Outrider
employs an analog data link. 

According to officials from the Defense Airborne Reconnaissance
Office, which is responsible for airborne reconnaissance and
intelligence communications interoperability, the analog data link
has no growth options and operates in the same widely used band of
the microwave spectrum as European and Korean television.  These
officials noted that a CDL-compliant digital data link would offer
the Outrider program several advantages over the current analog link. 
For example, a digital data link would (1) be less susceptible to
distortion and interference, (2) minimize a system's signature, (3)
provide anti-jam capabilities, and (4) offer encrypted
communications.  The digital data link also provides for greater
capability, including (1) a means to upgrade to all-weather payloads,
such as the synthetic aperture and millimeter wave radars and (2)
computer processing of gathered imagery. 

A Defense Airborne Reconnaissance Office study indicates that a short
development effort could result in a CDL-compliant digital data link
for the Outrider at an acceptable cost.  However, Outrider officials
maintain that a CDL-compliant digital data link would be too
expensive given Outrider's post-ACTD cost limit of $350,000 for the
33rd air vehicle and sensor. 


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

Because DOD's strategy for acquiring the nondevelopmental Outrider
system will not provide assurance of successful performance and
interoperability before DOD's planned low-rate production decision,
and to avoid repeating the mistakes of prior UAV programs, we
recommend that the Secretary of Defense delay low-rate production of
the Outrider system until the results of operational testing of
available systems demonstrate it is potentially operationally
effective and operationally suitable for all intended users. 


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

DOD reviewed a draft of this report.  DOD disagreed with most of our
findings.  It partially concurred with our recommendation. 
Specifically, DOD disagreed that it had not learned from problems in
past programs and stated these problems in part led it to initiate
the Outrider ACTD.  DOD also disagreed that Outrider may not satisfy
user needs unless it meets the Navy's shipboard requirements and is
interoperable with the tactical control system.  It stated that the
ACTD responds to an approved joint requirement and does not identify
service unique requirements, but will address the effect of weight
and engine type.  DOD also noted that it has formed an integrated
team between the Outrider and tactical control system programs and
taken other measures to ensure interoperability. 

We recognize that DOD is aware of problems with past UAV programs and
agree that an ACTD can provide useful insights.  However, we remain
concerned about DOD's strategy for the Outrider because the planned
demonstrations of military utility that will precede DOD's low-rate
production decision are (1) limited in scope; (2) will not be
complete before the decision; and (3) may not identify and resolve
serious system deficiencies, such as compatibility with joint
requirements, and interoperability with the tactical control system. 
As detailed in this report, similar acquisition strategies for the
Hunter and Pioneer programs resulted in the acquisition of additional
systems that required costly modifications in order to meet user
needs. 

DOD has the opportunity to operationally test the Outrider's
performance without risking commitment to additional unproven systems
under low-rate production.  DOD is acquiring 6 Outrider systems with
24 aircraft under the original contract.  If the Outrider is assessed
positively during the ACTD, DOD could modify the ACTD hardware to the
production representative design for operational tests.  If the
required changes are so significant that the ACTD systems cannot be
made production representative, DOD guidance on transitioning ACTDs
to formal acquisition indicates that a new competition should be
conducted. 

In responding to our recommendation, DOD concurred that Outrider
should not enter production until the results of operational testing
demonstrate its effectiveness and suitability.  DOD noted that
completing operational test and evaluation is a statutory requirement
for formal acquisition programs entering production.  DOD added,
however, that this statute does not apply to ACTDs entering low-rate
production.  We recognize that full operational testing is not a
statutory requirement for ACTDs entering low-rate production. 
However, our past work shows that awarding low-rate initial
production contracts without any operational testing has resulted in
the procurement of substantial inventories of unsatisfactory weapons
requiring costly modifications to achieve satisfactory performance
and, in some cases, deployment of substandard systems to combat
forces. 


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

To determine whether DOD is applying lessons learned from prior UAV
lessons learned to this program, and whether the Outrider would meet
user needs, we reviewed program plans, test schedules, performance
documents, and other records relating to the Outrider ACTD and
examined DOD guidance related to systems acquisition, acquisition
streamlining and reform, and ACTDs. 

We also interviewed and obtained information from knowledgeable
officials of the Joint Chiefs of Staff; the Office of the Secretary
of Defense; Defense Airborne Reconnaissance Office; Chief of Naval
Operations; Department of the Navy, Program Executive Office for
Cruise Missiles and UAV Joint Project; Department of the Army,
Operational Test and Evaluation Command; and the Department of the
Air Force, Deputy Chief of Staff Plans and Operations.  All of these
officials are located in the greater Washington, D.C., metropolitan
area.  Furthermore, we interviewed and obtained information from
representatives of the Commander in Chief, U.S.  Atlantic Fleet,
Norfolk, Virginia; the Department of the Navy, Operational Test and
Evaluation Forces Command, Norfolk, Virginia; the Joint Tactical UAV
Project Office, Huntsville, Alabama; Defense Contract Audit Agency,
Hopkins, Minnesota; Defense Contract Management Command, Hopkins,
Minnesota; and the Outrider ACTD contractor, Alliant TechSystems,
Hopkins, Minnesota. 


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

We performed our work from July 1996 to June 1997 in accordance with
generally accepted government auditing standards. 

This report contains a recommendation to you.  As you know, 31 U.S.C. 
720 requires the head of a federal agency to submit a written
statement on actions taken on our recommendations to the Senate
Committee on Governmental Affairs and the House Committee on
Government Reform and Oversight not later than 60 days after the date
of the report.  A written statement also must be submitted to the
Senate and House Committees on Appropriations with an agency's first
request for appropriations made more than 60 days after the date of
the report. 

We are sending copies of this report to appropriate congressional
committees; the Secretaries of the Army and the Navy; and the 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 Tana Davis, John Warren, and Charles Ward. 

Sincerely yours,

Louis J.  Rodrigues
Director, Defense Acquisitions 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.)



(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 9, 1997. 


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

1.  We understand that the purpose of the Outrider Advanced Concept
Technology Demonstration (ACTD) is to assess the utility of the
Outrider system and note that DOD is acquiring 6 Outrider systems
with 24 air vehicles under the original ACTD contract.  If the
Outrider is assessed positively, these could be used instead of
building production representative systems under low-rate production. 
Specifically, DOD could modify the ACTD systems to create a
production representative system that could be operationally tested
prior to low-rate production.  If required changes are so significant
that the ACTD system cannot be successfully modified, DOD ACTD
guidance indicates that a new competition should be conducted. 

2.  We agree that ACTDs should be based on mature technologies. 
However, DOD officials have acknowledged the Outrider system is not
mature.  We therefore continue to believe that DOD should resolve the
integration challenges for Outrider before proceeding to a low-rate
production decision. 

3.  Although DOD maintains that the development of Outrider is event
rather than schedule driven, we note that DOD has not slipped the
planned low-rate production decision or ACTD completion date in
response to delays to the Outrider test schedule. 

4.  DOD states that it will demonstrate supportability prior to the
full system acquisition.  DOD ACTD guidance states that the full
range of support areas must be considered if the plan for an ACTD is
to transition to low-rate production.  We believe that committing to
further Outrider production without taking advantage of the
opportunity to demonstrate supportability adds unnecessary risk to
the planned acquisition program. 

5.  Our report specifically identifies the differences in the cost of
a Predator ACTD system compared with a Predator production system. 

6.  We modified the text to clarify that the Outrider ACTD is based
on joint requirements. 

7.  ACTD guidance points out that overall systems engineering efforts
performed during the ACTD should include actions ensuring
connectivity, compatibility, and synchronization of ACTD products
with systems these products will operate with on the battlefield. 
Receipt of secondary imagery from the Outrider ground control station
(level 1) does not provide any evidence that the tactical control
system will be able to control or receive information directly from
the Outrider air vehicle (levels 2 and 3).  DOD's plan to demonstrate
Outrider's compliance with tactical control system's interoperability
standards during the ACTD is not the same as demonstrating that
levels 2 and 3 can be achieved in the field. 

8.  DOD's response indicates a tactical Common Data Link (CDL) may be
available for use in Outrider in less than 2 years.  The ACTD is
scheduled for completion in May 1998.  If Outrider low-rate
production were delayed until the CDL became available, DOD could
avoid retrofit risks and expenses. 


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