Defense Acquisitions: Role of Lead Systems Integrator on Future Combat Systems Program Poses Oversight Challenges

GAO-07-380 Published: Jun 06, 2007. Publicly Released: Jun 06, 2007.
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Highlights

The Army's Future Combat Systems (FCS) program features multiple new systems linked by a first-of-a-kind information network. The Army contracted with a lead systems integrator (LSI) for FCS that could serve in a more expansive role than a typical prime contractor would. In response to a congressional mandate, this report addresses (1) why the Army decided to employ an LSI for the FCS program; (2) the nature of the LSI's working relationship with the Army; and (3) how FCS contract fees, provisions, and incentives work. In conducting its work, GAO reviewed extensive program documentation and held discussions with key officials at DOD and throughout the FCS program.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense The Secretary of Defense should reassess OSD's approach to overseeing the FCS program, including asserting its own policy-based markers for progress, particularly in the areas of cost, technology maturity, design maturity, and production maturity.
Closed - Implemented
In April 2009, the SECDEF made a decision to cancel the vehicle component of the FCS program. (The entire acquisition program was subsequently cancelled.) The SECDEF concluded that there were significant unanswered questions concerning the FCS vehicle design strategy and expressed concern that the vehicles did not reflect the lessons of counterinsurgency and close-quarters combat in Iraq and Afghanistan. He added that because the FCS vehicles were estimated to cost over $87 billion, he needed more confidence in the program strategy, requirements and maturity of the the technologies before proceeding further. In making this "no-go" decision, the SECDEF found that the FCS would not be able to provide the capabilities the Army will need and he did not have confidence in its acquisition strategy, requirements, and technology maturity. Moreover, he stated that he was troubled by the terms of the FCS contract, particularly its very unattractive fee structure that gives the government little leverage to promote cost efficiency.
Department of Defense The Secretary of Defense should ensure that there is the best link possible between the fee events in the FCS contract and actual FCS demonstrations.
Closed - Implemented
In April 2009, the SECDEF made a decision to cancel the vehicle component of the FCS program. (The entire acquisition program was subsequently cancelled.) The SECDEF concluded that there were significant unanswered questions concerning the FCS vehicle design strategy and expressed concern that the vehicles did not reflect the lessons of counterinsurgency and close-quarters combat in Iraq and Afghanistan. He added that because the FCS vehicles were estimated to cost over $87 billion, he needed more confidence in the program strategy, requirements and maturity of the the technologies before proceeding further. In making this "no-go" decision, the SECDEF found that the FCS would not be able to provide the capabilities the Army will need and he did not have confidence in its acquisition strategy, requirements, and technology maturity. Moreover, he stated that he was troubled by the terms of the FCS contract, particularly its very unattractive fee structure that gives the government little leverage to promote cost efficiency.
Department of Defense The Secretary of Defense should review the major FCS program changes to ensure that determinations for the government to accept changes as being programmatic or scope-related in nature are carefully scrutinized.
Closed - Not Implemented
DOD concurred with this recommendation and stated that they review program changes at least yearly in support of Selected Acquisition Report submissions, and that they would continue to scrutinize FCS program changes and accurately report against the program baseline. They point out that changes to scope have been as a result of affordability constraints and additional desired capability. In our view, however, some of these changes were made to correct shortcomings in the original acquisition strategy.
Department of Defense The Secretary of Defense should assess whether the experience of the LSI on FCS has broader implications for acquisition management, such as the ability of the DOD workforce to manage a system-of-systems acquisition.
Closed - Not Implemented
DOD concurred with this recommendation and stated that there are a number of ongoing activities to support this recommendation. For instance, DOD is updating its acquisition policy, a key component of which will be the Department's revitalization of the system engineering process to better manage and control system and system-of-system acquisitions. However, DOD has not taken sufficient action to limit the role of the prime contractor in program management activities or increase the capacity of service officials to effectively manage defense acquisitions without support from the prime contractor.

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