The FCS program is recognized as being high risk and needing special  oversight. Definition, Development, and Demonstration of Capabilities Will Finish Late in the FCS Schedule

Ideally, the Army should have entered development in 2003 with firm  requirements and mature technologies. It will be  years before demonstrations validate that the FCS will provide needed  capabilities. Requirements, Technologies, and Designs Are Not Yet Mature

While the Army should have firmed requirements at the outset of its  development program, it now faces a daunting task in completing this  work by the preliminary design review and subsequent milestone review in  2009—6 years into a 10-year development schedule. Significant Challenges in Developing And Demonstrating FCS Network and Software

It is not yet clear if or when the information network that is at the heart of  the FCS concept can be developed, built, and demonstrated by the Army  and lead system integrator (LSI). The Army does not plan to  demonstrate that the FCS system of systems performs as required until  after the production decision for the core program in 2013. Significant Commitments to Production Will Be Made Before FCS Capabilities Are Demonstrated

While the FCS production decision for the core FCS program is to be held  in fiscal year 2013, production commitments will begin in fiscal years 2008  and 2009 with production for the first of a series of three planned spin out  efforts and the early versions of the NLOS-C vehicle. When development funds are included, $39 billion will have been  appropriated and another $8 billion requested. Army Commitment to LSI for Production Heightens Oversight Challenges

The Army’s April 2007 decision to contract with the LSI for FCS  production makes an already close relationship closer, represents a  change from the Army’s original rationale for using an LSI, and may  further complicate oversight. As we have previously reported,  this is a burden that will need to be increasingly borne by the Office of the  Secretary of Defense. FCS Costs Likely to Grow beyond Army Estimates

The Army’s $160.9 billion cost estimate for the FCS program is largely  unchanged from last year’s estimate despite a program adjustment that  reduced the number of systems from 18 to 14. This may mean a reduction  in capabilities of the FCS program and thus represents a reduction in the  Army’s buying power on FCS. Further, two independent cost estimates— from DOD’s Cost Analysis Improvement Group (CAIG) and the other from  the Institute for Defense Analyses (IDA), a federally funded research and  development center—are significantly higher than the Army’s estimate. It is  reasonable to include such growth factors, based on our own analysis of  weapon systems and the low level of knowledge attained on the FCS  program at this time. At a minimum, the criteria  should include, among other things, the completion of the definition of all  FCS requirements including those for the information network and the  synchronization of FCS with all essential complementary programs. We further recommended that the Secretary of Defense (1)  closely examine the oversight implications of the Army’s decision to  contract with the LSI for early production of FCS spin outs, NLOS-C, and  low rate production for the core FCS program; (2) take steps to mitigate  the risks of the Army’s decisions, including the consideration of the full  range of alternatives for contracting for production; and (3) evaluate  alternatives to the LSI for long-term sustainment support of the FCS  system of systems. Finally, regarding the FCS network and software development and  demonstration efforts, we recommended that the Secretary of Defense (1)  direct the FCS program to stabilize network and software requirements on  each software build to enable software developers to follow disciplined  software practices; (2) establish a clear set of criteria for acceptable  network performance at each of the key program events; and (3) in setting  expectations for the 2009 milestone review, include a thorough analysis of  network technical feasibility and risks, synchronization of network  development and demonstration with that of other FCS elements, and a  reconciliation of the differences between independent and Army estimates  of network and software development scope and cost.
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 Army's acquisition strategy, and the cost of the program are among the reasons why the program is recognized as needing special oversight and review. This testimony is based on GAO's two March 2008 reports on FCS and addresses (1) how the definition, development, and demonstration of FCS capabilities are proceeding, particularly in light of the go/no-go decision scheduled for 2009; (2) the Army's plans for making production commitments for FCS and any risks related to the completion of development; and (3) the estimated costs for developing and producing FCS.

What GAO Found

Today, the FCS program is about halfway through its development phase, yet it is, in many respects, a program closer to the beginning of development. This portends additional cost increases and delays as FCS begins what is traditionally the most expensive and problematic phase of development. In the key areas of defining and developing FCS capabilities, requirements definition is still fluid, critical technologies are immature, software development is in its early stages, the information network is still years from being demonstrated, and complementary programs are at risk for not meeting the FCS schedule. It is not yet clear if or when the information network that is at the heart of the FCS concept can be developed, built, and demonstrated. Yet, the time frame for completing FCS development is ambitious; even if all goes as planned, the program will not test production-representative prototypes or fully demonstrate the system of systems until after low rate production begins. Even though the development of FCS will finish late in its schedule, commitments to production will come early. Production funding for the first spinout of FCS technologies and the early version of the FCS cannon begin in fiscal years 2008 and 2009. Production money for the core FCS systems will be requested beginning in February 2010, with the DOD fiscal year 2011 budget request--just months after the go/no-go review and before the stability of the design is determined at the critical design review. In fact, by the time of the FCS production decision in 2013, a total of about $39 billion, which comprises research and development and production costs, will already have been appropriated for the program, with another $8 billion requested. Also, the Army plans to contract with its lead system integrator for the initial FCS production, a change from the Army's original rationale for using an integrator. This increases the burden of oversight faced by the Army and the Office of the Secretary of Defense. While the Army's cost estimates for the FCS program remain about the same as last year--$160.9 billion--the content of the program has been reduced, representing a reduction in buying power for the Army. The level of knowledge for the program does not support a confident estimate, and cost estimates made by two independent organizations are significantly higher. Competing demands from within the Army and DOD limits the ability to fund higher FCS costs. Thus, the Army will likely continue to reduce FCS capabilities in order to stay within available funding limits. Accordingly, FCS's demonstrated performance, the reasonableness of its remaining work, and the resources it will need and can reasonably expect will be of paramount importance at the 2009 milestone review for the FCS program.