We have reported that, as FCS started product  development, it did not have mature technologies or adequately defined  requirements. Yet system-level  requirements are not yet stabilized and will continue to change,  postponing the needed match between requirements and resources. Since program start, the Army has made a number of design trade- offs that have been incorporated into the current design concepts. As  shown in figure 2 above, at the system of systems level, there are about  11,500 requirements. Some of FCS’s  critical technologies may not reach a high level of maturity until the final  major phase of acquisition, the start of production. Even if  requirements setting and technology maturity proceed without incident,  FCS design and production maturity will still not be demonstrated until  after the production decision is made. FCS  affordability depends on the accuracy of the cost estimate, the overall  level of development and procurement funding available to the Army, and  the level of competing demands. FCS Costs Have Increased as Army Attains More Information, but Firm Knowledge Base Still Lacking

At the start of product development, FCS program officials estimated that  the program would require about $20 billion in then-year dollars for  research, development, testing, and evaluation and about $72 billion to  procure the FCS systems to equip 15 brigade combat teams. The total FCS program is now expected to cost $160.7 billion in  then-year dollars, a 76 percent increase. While it is a more accurate reflection of program costs  than the original estimate, the latest estimate is still based on a low level of  knowledge about whether FCS will work as intended. Also, the latest cost  estimate has not yet been independently validated, as called for by DOD’s  acquisition policy. The Army is planning to make substantial financial investments in the FCS  program before key knowledge is gained on requirements, technologies,  system designs, and system performance. Army Has Taken Steps to Control FCS Program Costs

The Army has taken several steps to help manage the growing cost of FCS. FCS began product development prematurely in 2003, and today  is a long way from having the level of knowledge it should have had before  committing resources to a new product development effort. The elements  of a sound business case—firm requirements, mature technologies, a  knowledge-based acquisition strategy, a realistic cost estimate, and  sufficient funding—are not present. A full commitment to the Army’s strategy for acquiring  FCS is not yet warranted because the Army has not demonstrated  sufficient knowledge to provide confidence that it can deliver a fully  capable FCS within projected costs and time frames. The markers should include, but  not be limited to  the schedules for all critical technologies to realistically progress  through TRL 7;    waypoints and criteria for reaching a set of system-level  requirements that are both technically feasible and affordable;  the schedule and funding availability for developing essential  complementary programs;    waypoints and criteria to be used to lead up to and complete the  preliminary and critical design reviews;    waypoints and criteria to be used to lead up to and complete testing  of fully integrated prototypes of all FCS systems, including the  network; and     waypoints and criteria to be used to demonstrate that key  production processes are in statistical control. The Congress should also consider restricting annual appropriations for  fiscal years 2008 and 2009 for the FCS program until definitive progress in  establishing a sound business case is demonstrated in terms of firm  requirements, mature technologies, a knowledge-based acquisition  strategy, a realistic cost estimate, and sufficient funding. Appendix I: Scope and Methodology

To develop the information on the Future Combat System program’s  progress toward meeting established goals, the contribution of critical  technologies and complementary systems, and the estimates of cost and  affordability, we interviewed officials of the Office of the Under Secretary  of Defense (Acquisition, Technology, and Logistics); the Army G-8; the  Office of the Under Secretary of Defense (Comptroller); the Secretary of  Defense’s Cost Analysis Improvement Group; the Director of Operational  Test and Evaluation; the Assistant Secretary of the Army (Acquisition,  Logistics, and Technology); the Army’s Training and Doctrine Command;  Surface Deployment and Distribution Command; the Program Manager for  the Future Combat System (Brigade Combat Team); the Future Combat  System Lead Systems Integrator; and LSI One Team contractors.
Why GAO Did This Study

The Department of Defense (DOD) anticipates that the Future Combat System (FCS) will modernize the U.S. Army's ability to move, shoot, and communicate on the battlefield. It is an impressive concept that is the product of holistic, non-traditional thinking. The Army describes FCS as one of the most complex weapon acquisition programs ever executed because it involves developing and integrating a family of 18 systems and an information network. Army leadership started the program early as part of its effort to change Army culture and believes that the program risks are manageable. GAO is required by law to review the program annually. In this report, GAO analyzes FCS's acquisition business case and assesses requirements stability, technology maturity, soundness of the acquisition strategy, and reasonableness and affordability of program costs.

What GAO Found

The FCS entered the development phase in 2003 and has not yet reached the level of knowledge it should have attained in the pre-development stage. The elements of a sound business case--firm requirements, mature technologies, a knowledge-based acquisition strategy, a realistic cost estimate, and sufficient funding--are still not demonstrably present. The Army will continue building basic knowledge in areas such as requirements and technologies for several more years. Requirements stability: The Army has reached agreement on FCS system of systems requirements--about 11,500--that help define how FCS units are expected to work as a whole. But the Army must continue to work out the technical feasibility and expected costs of the requirements for individual FCS systems. These requirements may not be completely stabilized until 2008. Until then, the Army expects the system-level requirements to change and to make trade-offs to offset technical risks and cost. Technology maturity: None of FCS's 49 critical technologies was at a level of maturity recommended by DOD policy at the start of a program. Some technologies may not reach full maturity until after production starts. Not having firm requirements matched with mature technologies at the start of development is a key indicator of program risk. Also, the Army is depending on 52 complementary programs, each of which is essential for FCS to perform as intended. Some of these programs have significant technical challenges; some do not have the funding needed to complete development. Soundness of acquisition strategy for design and production: The current acquisition strategy for FCS is improved over the original strategy but still calls for maturing technologies, designing systems, and preparing for production at the same time. Even if requirements and technologies proceed without incident, FCS design and production process maturity will not be demonstrated until after the production decision is made. Although production representative prototypes will not be available, the Army plans to test all FCS systems before committing to production. If problems are discovered in testing at that stage, they will be very expensive to correct. Reasonableness and affordability of program costs: The estimated cost of the FCS program now stands at $160.7 billion, a 76 percent increase since program start. This is a better estimate than the original, as it embodies a more realistic schedule and scope. Including the total investment for the 52 essential complementary programs, the FCS program cost estimate would reach the $200 billion range. The Army has taken steps it believes will control FCS costs. Yet, the current level of knowledge about FCS is low, which makes it difficult to have a solid basis for cost projections. FCS's long-term affordability depends on the accuracy of cost estimates, an increased level of procurement funding, and the level of competing demands.