FCS Procurement Structure Comes Under GAO Scrutiny
DID has covered the USA’s $120+ billion Future Combat Systems program before, and recently noted questions regarding its survivability in urban warfare. Now the US Government Accountability Office (GAO) has issued Report #GAO-06-478T (Defense Acquisitions: Business Case and Business Arrangements Key for Future Combat System’s Success). The key paragraph from the abstract reads:
“There are a number of compelling aspects of the FCS program, and it is hard to argue with the program’s goals. However, the elements of a sound business case for such an acquisition program – firm requirements, mature technologies, a knowledge-based acquisition strategy, a realistic cost estimate and sufficient funding – are not yet present. FCS began product development prematurely in 2003. Since then, the Army has made several changes to improve its approach for acquiring FCS. Yet, today, the program remains a long way from having the level of knowledge it should have had before starting product development. FCS has all the markers for risks that would be difficult to accept for any single system, much less a complex, multi-system effort. These challenges are even more daunting in the case of FCS not only because there are so many of them but because FCS represents a new concept of operations that is predicated on technological breakthroughs. Thus, technical problems, which accompany immaturity, not only pose traditional risks to cost, schedule, and performance; they pose risks to the new fighting concepts envisioned by the Army.
Many decisions can be anticipated that will involve trade-offs the Government will make in the program. Facts of life, like technologies not working out, reductions in available funds, and changes in performance parameters, must be anticipated. It is important, therefore, that the business arrangements for carrying out the FCS program – primarily in the nature of the development contract and in the lead system integrator (LSI) approach – preserve the government’s ability to adjust course as dictated by these facts of life. At this point, the $8 billion to be spent on the program through fiscal year 2006 is a small portion of the $200 billion total. DOD needs to guard against letting the buildup in investment limit its decision making flexibility as essential knowledge regarding FCS becomes available. As the details of the Army’s new FCS contract are worked out and its relationship with the LSI evolves, it will be important to ensure that the basis for making additional funding commitments is transparent. Accordingly, markers for gauging knowledge must be clear, incentives must be aligned with demonstrating such knowledge, and provisions must be made for the Army to change course if the program progresses differently than planned.”