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

United States Government Accountability Office: 

For Release on Delivery: 
Expected at 2:00 p.m. EDT:
March 26, 2009: 

Defense Acquisitions: 

Key Considerations for Planning Future Army Combat Systems: 

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


GAO Highlights: 

Highlights of GAO-09-410T, a report to Subcommittee on Air and Land 
Forces, Committee on Armed Services, House of Representatives. 

Why GAO Did This Study: 

The Future Combat System (FCS) program—which comprises 14 integrated 
weapon systems and an advanced information network—is the centerpiece 
of the Army’s effort to transition to a lighter, more agile, and more 
capable combat force. The substantial technical challenges, the cost of 
the program, and the Army’s acquisition strategy are among the reasons 
why the program is recognized as needing special oversight and review. 

This testimony is based on GAO’s March 12, 2009 report and addresses 
knowledge gaps that will persist in the FCS program as Congress is 
asked to make significant funding commitments for development and 
production over the next several years. 

What GAO Found: 

The Army will be challenged to demonstrate the knowledge needed to 
warrant an unqualified commitment to the FCS program at the 2009 
milestone review. While the Army has made progress, knowledge 
deficiencies remain in key areas. Specifically, all critical 
technologies are not currently at a minimum acceptable level of 
maturity. Neither has it been demonstrated that emerging FCS system 
designs can meet specific requirements or mitigate associated technical 
risks. Actual demonstrations—versus modeling and simulation 
results—have been limited, with only small scale warfighting concepts 
and limited prototypes demonstrated. Network performance is also 
largely unproven. These deficiencies do not necessarily represent 
problems that could have been avoided; rather, they reflect the actual 
maturity of the program. Finally, there is an existing tension between 
program costs and available funds that will likely worsen, as FCS costs 
are likely to increase at the same time as competition for funds 
intensifies between near- and far-term needs in DOD and between DOD and 
other federal agencies. 

DOD could have at least three programmatic directions to consider for 
shaping investments in future capabilities, each of which presents 
challenges. First, the current FCS acquisition strategy is unlikely to 
be executable with remaining resources and calls for significant 
production commitments before designs are demonstrated. To date, FCS 
has spent about 60 percent of its development funds, even though the 
most expensive activities remain to be completed before the production 
decision. In February 2010, Congress will be asked to consider 
approving procurement funding for FCS core systems before most 
prototype deliveries, the critical design review, and key system tests 
have taken place. Second, the program to spin out early FCS 
capabilities to current forces operates on an aggressive schedule 
centered on a 2009 demonstration that will employ some surrogate 
systems and preliminary designs instead of fully developed items, with 
little time for evaluation of results. Third, the Army is currently 
considering an incremental FCS strategy—that is, to develop and field 
capabilities in stages versus in one step. Such an approach is 
generally preferable, but would present decision makers with a third 
major change in FCS strategy to consider anew. While details are yet 
unavailable, it is important that each increment be justifiable by 
itself and not dependent on future increments. 

What GAO Recommends: 

In its March 2009 report, GAO suggested Congress consider not approving 
full funds for the program until several conditions are met, such as 
preparation of a complete budget for any program emerging from the 
milestone review. GAO also recommends the Secretary of Defense, among 
other things, ensure the program that emerges conforms to current 
defense acquisition policy, such as technology maturity; any spin out 
approach is based on fully tested results; and any incremental strategy 
involves free standing, justifiable increments. 

View [hyperlink,] or key 
components. For more information, contact Paul Francis at (202) 512-
4841 or 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the Department of the Army's 
Future Combat System (FCS), a networked family of weapons and other 
integrated systems. FCS is in the forefront of efforts to help the Army 
transform into a lighter, more agile, and more capable combat force by 
using a new concept of operations, new technologies, and a new 
information network, linking whole brigades together in a system of 
systems. Later this year, FCS faces a congressionally mandated go/no-go 
decision review to determine the program's future. This review is 
crucial, as production funding and commitments will build rapidly after 
that point, limiting the government's ability to alter its course. 

My statement today is based on the work we conducted over the last year 
in response to the National Defense Authorization Act for Fiscal Year 
2006, which requires GAO to report annually on the FCS program. 
[Footnote 1] This statement discusses the knowledge gaps that will 
persist in the FCS program as Congress is asked to make significant 
funding commitments for development and production over the next 
several years. For additional information on these issues, please refer 
to our report released March 12, 2009.[Footnote 2] 


The FCS concept is designed to be part of the Army's Future Force, 
which is intended to transform the Army into a more rapidly deployable 
and responsive force that differs substantially from the large division-
centric structure of the past. The Army is reorganizing its current 
forces into modular brigade combat teams, each of which is expected to 
be highly survivable and the most lethal brigade-sized unit the Army 
has ever fielded. The Army expects FCS-equipped brigade combat teams to 
provide significant warfighting capabilities to the Department of 
Defense's (DOD) overall joint military operations. 

Since being approved for development in 2003, the program has gone 
through several restructures and modifications. In 2004, the program re-
introduced four systems that had been deferred, lengthened the 
development and production schedules, and instituted plans to spin out 
selected FCS technologies and systems to current Army forces throughout 
the program's development phase. In 2006, the Army again deferred four 
systems, among other changes. In 2008, the Army altered its efforts to 
spin out capabilities to current forces from heavy brigade combat teams 
to infantry brigade combat teams. 

The FCS program began in May 2003 before the Army defined what the 
systems were going to be required to do and how they would interact. 
The Army moved ahead without determining whether the concept could be 
successfully developed with existing resources--without proven 
technologies, a stable design, and available funding and time. The Army 
projects the FCS program will cost $159 billion, not including all the 
costs to the Army, such as complementary programs. The Army is also 
using a unique partner-like arrangement with a lead system integrator 
(LSI), Boeing, to manage and produce the FCS. For these and other 
reasons, the FCS program is recognized as being high risk and requiring 
special oversight. Accordingly, in 2006, Congress mandated that DOD 
hold a milestone review following the FCS preliminary design review. 
[Footnote 3] Congress directed that the review include an assessment of 
whether (1) the needs are valid and can best be met with the FCS 
concept, (2) the FCS program can be developed within existing 
resources, and (3) the program should continue as currently structured, 
be restructured, or be terminated. Congress required the Secretary of 
Defense to assess the program against specific criteria, including the 
maturity of critical technologies, program risks, demonstrations of the 
FCS concept and software, and a cost estimate and affordability 
assessment, and to report on findings by the time of the milestone 

This statement is based on work we conducted between March 2008 and 
March 2009 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Significant Knowledge Gaps in Key System Development Areas: 

Assessed against the criteria to be used for the milestone review, the 
FCS program has significant knowledge gaps. Specifically, the program 
has yet to show that critical technologies are mature, design issues 
have been resolved, requirements and resources are matched, performance 
has been demonstrated versus simulated, and costs are affordable. The 
Army will be challenged to convincingly demonstrate the knowledge 
necessary to warrant an unqualified commitment to FCS at the 2009 
milestone review. 

While best practices and DOD policy preference are for each of a 
program's critical technologies to achieve a technology readiness level 
(TRL) of 7 prior to entering development, the Army is struggling to 
achieve a TRL 6, the level required for the milestone review, after 
almost 6 years of development. Although the Army projects that TRL 6 
will be achieved by the time of the review, the Army will be challenged 
to do so. Dates for several key demonstrations have slipped, and 
several ratings have yet to be validated by independent reviewers. 
Furthermore, the Army's experience with maturing FCS technologies does 
not inspire confidence that it will be able to execute the fast-paced 
integration plans involved with advancing technologies to TRL 7 before 
the production decision in 2013. 

Design knowledge expected to be available at the time of the milestone 
review may not provide the necessary confidence that FCS design risks 
are at acceptable levels. The Army continues to set and refine 
requirements in order to establish system designs, particularly at the 
system level. Although the Army plans to have completed all system- 
level preliminary design reviews before the milestone review, the 
schedule to close out all the reviews may take more time than 
anticipated, key risk items will have to be addressed, and design trade-
offs will be necessary. For example, the projected weight of the FCS 
manned ground vehicles has increased, which could have a number of 
effects on vehicle performance. In the coming months, the Army will 
have to address these and other design and requirements conflicts. It 
is important to note that DOD's updated acquisition policy calls for 
holding preliminary design review at or near the time of the decision 
to begin development, which in the case of FCS was in 2003. 

The Army will be challenged to meet the congressional direction to 
demonstrate--versus simulate-that the FCS warfighting concept will work 
by the time of the milestone review. At this time, limited 
demonstrations of select capabilities, including manned ground vehicles 
and software, have been conducted, but no meaningful demonstration that 
the FCS concept as a whole will work has been attempted. A thorough 
demonstration of the FCS network, the linchpin of the FCS concept, will 
not be attempted until 2012. There have been some demonstrations of 
early versions of the lightweight armor and an active protection 
system, but the feasibility of the FCS survivability concept remains 

The Army is expected to update its cost estimate, currently $159 
billion, for the milestone review.[Footnote 4] Last year, the Army 
indicated its notional plans to increase estimates by about $19 
billion, but has not said whether it would have to trade off 
capabilities to accommodate the higher costs. The Army has also 
indicated its willingness to reduce funding to current force systems in 
favor of FCS. While the updated program cost estimate will be a better 
representation of actual costs than previous estimates, the program 
still has many risks and unprecedented challenges to meet, and thus, 
the estimate will likely change again as more knowledge is acquired. 

Army Plans to Proceed with Production Commitments before Solid Level of 
Knowledge Demonstrated to Decision-makers: 

At the milestone review, DOD will have to evaluate at least three 
programmatic options to shape investments in combat systems for the 
Army, each of which presents challenges. The first involves the FCS 
program, which, as currently structured, has significant risks for 
execution. Second, the decision to produce spin out systems to current 
forces is expected to occur before full testing of production- 
representative prototypes. Third, the Army is considering altering the 
FCS strategy to follow an incremental approach, which is preferable to 
the current approach, but presents other challenges. 

The FCS acquisition strategy is unlikely to be executable within 
current cost and schedule projections, given the significant amount of 
development and demonstration yet to be completed. The timing of 
upcoming commitments to production funding puts decision makers in the 
difficult position of making production commitments without knowing if 
FCS will work as intended. Under the current acquisition strategy, FCS 
decisions are not knowledge-based, nor do they facilitate oversight. 
For example, the Army has scheduled only 2 years between the critical 
design review and the production decision in 2013, leaving little time 
to gain knowledge between the two events. As a result, FCS will rely on 
immature prototypes for making the decision to proceed into production. 
Also, if the program receives approval to proceed at the milestone 
review this year, the Army will have only 40 percent of its financial 
and schedule resources left to complete what is typically the most 
challenging and expensive development work ahead, as depicted in figure 
1 below. 

Figure 1: Remaining FCS Research and Development Funding and Key 

[Refer to PDF for image: shaded line graph] 

Fiscal year: 2003; 
Percent of funds remaining: 99%. 

Fiscal year: 2004; 
Percent of funds remaining: 94%. 

Fiscal year: 2005; 
Percent of funds remaining: 83%. 

Fiscal year: 2006; 
Percent of funds remaining: 73%. 

Fiscal year: 2007; 
Percent of funds remaining: 61%. 

Fiscal year: 2008; 
Percent of funds remaining: 49%. 

Fiscal year: 2009; Preliminary design review; 
Percent of funds remaining: 39%. 

Fiscal year: 2010; 
Percent of funds remaining: 28%. 

Fiscal year: 2011; Critical design review; 
Percent of funds remaining: 18%. 

Fiscal year: 2012; 
Percent of funds remaining: 12%. 

Fiscal year: 2013; Low-rate initial production; 
Percent of funds remaining: 7%. 

Fiscal year: 2014; 
Percent of funds remaining: 3%. 

Fiscal year: 2015; Initial operating capability; 
Percent of funds remaining: 0%. 

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

[End of figure] 

Historical experience and recent independent cost estimates on FCS 
suggest that costs will grow beyond the Army's estimates. Our previous 
work has shown the development costs for programs with mature 
technologies increased by a modest average of 4.8 percent over the 
first full estimate, whereas the development costs for programs with 
immature technologies increased by a much higher average of 34.9 
percent. Similarly, program acquisition unit costs for the programs 
with the most mature technologies increased by less than 1 percent, 
whereas the programs that started development with immature 
technologies experienced an average program acquisition unit cost 
increase of nearly 27 percent over the first full estimate. Our work 
also showed that most development cost growth occurred after the 
critical design review. Specifically, of the 28.3 percent cost growth 
that weapon systems average in development, 19.7 percent occurs after 
the critical design review. 

Under the current strategy, the Army's plans for funding core 
production efforts put congressional decision makers in a difficult 
position in a number of ways. Facilitization costs begin in fiscal year 
2011, the budget for which will be presented to Congress in February 
2010, several months after the milestone review and prior to the 
critical design review.[Footnote 5] In fact, there could still be 
action items from the preliminary design review to complete at that 
time. Further, when Congress is asked to approve funding for initial 
low-rate production of core FCS systems, the Army will not yet have 
proven that the FCS network and the program concept will work, a 
demonstration that is expected as part of Limited User Test 3 in 2012. 
This situation is illustrated further in figure 2 below. 

Figure 2: FCS Program Events and Congressional Budget Decisions on 
Production Funds: 

[Refer to PDF for image: illustration] 

Article delivery and testing: 
NLOS-C: 2010; 
MGV: 2011; 
CI. IV UAV: 2012; 
LUT 3: 2013. 

FCS Program decision points: 
PDR: 2009; 
DAB: 2009; 
CDR: 2011; 
MSC: 2013. 

Congressional budget decisions on production money: 
FY 09 request -$154.6 million; 
FY 10 request -$148 million; 
FY 11 request -$677.8 million; 
FY 12 request -$2.2 billion; 
FY 13 request -$5.7 billion. 

CDR = Critical Design Review; 
DAB = Defense Acquisition Board Milestone Review; 
LUT = Limited User Test; 
NLOS-C = Non-Line-of-Sight Cannon; 
MGV = Manned Ground Vehicle; 
MSC = Milestone C; 
PDR = Preliminary Design Review; 
Cl. IV UAV = Class IV Unmanned Aerial Vehicle. 

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

[End of figure] 

Significant production funds will also be spent on the Non-Line-of-
Sight Cannon and spin out systems between now and the FCS core 
production decision in 2013. To meet congressionally required fielding 
dates, the Army began building Non-Line-of-Sight Cannon prototypes last 
year, but has encountered some setbacks due to development issues and 
delays. The vehicles are planned to be used as training assets and will 
not be fieldable systems. The Army is planning for a seamless 
transition between these prototypes and production of the core FCS 
systems, but given the financial investment from the Army and 
consequently, the energized industrial base, this could create pressure 
to proceed into core production prior to achieving a solid level of 
knowledge on which to move forward. 

Currently, the Army's efforts to field spin out systems relies on a 
rushed schedule that calls for making production decisions before 
production-representative prototypes have clearly demonstrated a useful 
military capability. A shift in focus on the Army's efforts to spin out 
capabilities to current forces from heavy brigade combat teams to 
infantry brigade combat teams resulted in moving the production 
decision from January 2009 to December 2009.[Footnote 6] However, only 
one key test has been conducted under the new structure, and this event 
was a shortened version of an event that was originally planned to 
focus on the heavy brigade combat team. Additionally, testing completed 
to date has involved surrogate or non-production representative forms 
of systems, and the three tests scheduled for this year will follow the 
same practice. 

Army officials have said that they are considering an incremental or 
block acquisition approach to FCS in order to mitigate risks in four 
major areas: (1) immaturity of requirements for system survivability, 
network capability, and information assurance; (2) limited availability 
of performance trade space to maintain program cost and schedule given 
current program risks; (3) program not funded to Cost Analysis 
Improvement Group estimates and effect of congressional budget cuts; 
and (4) continuing challenges in aligning schedules and expectations 
for multiple concurrent acquisitions. Restructuring the FCS program 
around an incremental approach has the potential to alleviate the risks 
inherent in the current strategy and is an opportunity to apply recent 
DOD policy updates, such as the creation of configuration steering 
boards, and provide decision-makers with more information before 
program commitments are made. On the other hand, an incremental 
approach entails its own oversight challenges. First, it presents 
decision makers with another FCS strategy to consider, possibly after 
the fiscal year 2010 budget is submitted. Second, the approach must 
ensure that each increment stands on its own and is not dependent on 
future increments. 

As DOD considers the current strategy, an incremental strategy, and its 
production commitments, it will also have to continue to pay close 
attention to the role being played by the FCS lead system integrator. 
We have previously reported that the role of the integrator posed 
oversight challenges. Since then, the Army has committed to using the 
integrator for initial production, potentially a larger role than 
initially envisioned. 

Concluding Remarks: 

The 2009 milestone review is the most important decision on the Future 
Combat System since the program began in 2003. If the preliminary 
design reviews are successfully completed and critical technologies 
mature as planned in 2009, the FCS program will essentially be at a 
stage that statute and DOD policy would consider as being ready to 
start development. In this sense, the 2009 review will complete the 
evaluative process that began with the original 2003 milestone 
decision. Furthermore, when considering that the current estimate for 
FCS ranges from $159 billion to $200 billion when the potential 
increases to core program costs and estimated costs of spin outs are 
included, 90 percent or more of the investment in the program lies 
ahead. Even if a new, incremental approach to FCS is approved, a full 
milestone review that carries the responsibility of a go/no-go decision 
is still in order, along with attendant reports and analyses that are 
required inputs. In the meantime, a configuration steering board, as 
required by DOD policy, may help bridge the gaps between requirements 
and system designs and help in the timely completion of the FCS 
preliminary design reviews. 

There is no question that the Army needs to ensure its forces are well 
equipped. The Army has vigorously pursued FCS as the solution, a 
concept and an approach that is unconventional, yet with many good 
features. The difficulties and redirections experienced by the program 
should be seen as revealing its immaturity, rather than as the basis 
for criticism. However, at this point, enough time and money have been 
expended that the program should be evaluated at the 2009 milestone 
review based on what it has shown, not on what it could show. The Army 
should not pursue FCS at any cost, nor should it settle for whatever 
the FCS program produces under fixed resources. Rather, the program 
direction taken after the milestone review must strike a balance 
between near-term and long-term needs, realistic funding expectations, 
and a sound plan for execution. Regarding execution, the review 
represents an opportunity to ensure that the emerging investment 
program be put on the soundest possible footing by applying the best 
standards available, like those contained in DOD's 2008 acquisition 
policy, and requiring clear demonstrations of the FCS concept and 
network before any commitment to production of core FCS systems. 

Any decision the Army makes to change the FCS program is likely to lag 
behind the congressional schedule for authorizing and appropriating 
fiscal year 2010 funds. Therefore, Congress needs to preserve its 
options for ensuring it has adequate knowledge on which to base funding 
decisions. Specifically, it does not seem reasonable to expect Congress 
to provide full fiscal year 2010 funding for the program before the 
milestone review is held nor production funding before system designs 
are stable and validated in testing. 

In our report released March 12, 2009, we raised several matters for 
congressional consideration. We suggested Congress consider restricting 
budget authority for fiscal year 2010 until DOD fully complies with the 
milestone review requirements and provides a complete budget 
justification package for any program that emerges. In addition, 
Congress could consider not approving production or long lead item 
funds for core FCS until after the critical design review is 
satisfactorily completed and demonstrations have provided confidence 
that the FCS system-of-systems operating with the communications 
network will be able to meet its requirements. 

We also made several recommendations to the Secretary of Defense 
including ensuring that the FCS program that emerges from the milestone 
review conform with current DOD acquisition policy and directing the 
Secretary of the Army to convene an FCS configuration steering board. 
We recommended that if an incremental approach is selected for FCS, the 
first increments should be justifiable on their own as worthwhile 
military capabilities that are not dependent on future capabilities for 
their value. We further recommended that spin out items are fully 
tested in production representative form before they are approved for 
initial production. Finally, we recommended that the Secretary reassess 
the role of the lead system integrator, particularly with respect to 
any future role in production efforts. 

Mr. Chairman, this concludes my prepared statement. I would be happy to 
answer any questions you or members of the subcommittee may have. 

Contacts and Staff Acknowledgements: 

For future questions about this statement, please contact me on (202) 
512-4841 or Individuals making key contributions to 
this statement include William R. Graveline, Assistant Director; 
William C. Allbritton; Noah B. Bleicher; Tana M. Davis; Marcus C. 
Ferguson; Carrie W. Rogers; and Robert S. Swierczek. 

[End of section] 


[1] Pub. L. No. 109-163, §211. 

[2] GAO, Defense Acquisitions: Decisions Needed to Shape Army's Combat 
Systems for the Future, [hyperlink,] (Washington, D.C.: March 12, 

[3] John Warner National Defense Authorization Act for Fiscal Year 
2007, Pub. L. No. 109-364, § 214 (2006). 

[4] These costs do not include the costs of the FCS spin out 
initiative, currently estimated at about $21 billion. 

[5] The funds requested in fiscal year 2009 and 2010, and a portion of 
that in 2011 are for Non-Line-of-Sight-Cannon production. 

[6] Heavy brigades are equipped with armor, such as the Bradley 
Fighting Vehicle. Light brigades are equipped with motorized infantry, 
such as the High Mobility Multi-purpose Wheeled Vehicle. 

[End of section] 

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