The Army  plans to buy 15 brigades’ worth of FCS equipment by 2025. This would be a significant improvement over  the traditional approach of building superior individual weapons that must  be retrofitted and netted together after the fact. FCS Restructures the Program and Changes Contracting Approach

As a key element of its efforts to transform itself, the Army has recognized  FCS from its outset as the greatest technology and integration challenge it  has ever undertaken. We have reported that, as FCS started product  development, it did not have mature technologies or adequately defined  requirements. At the heart of a business case is a knowledge-based approach to product  development demonstrating high levels of knowledge before significant  commitments are made. Objectives, 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 other contractors. Given that, an improved business case for the FCS program is essential to  help ensure the program is successful in the long run. Yet system-level  requirements are not yet stabilized and will continue to change,  postponing the needed match between requirements and resources. We  have previously reported unstable requirements can lead to cost, schedule,  and performance shortfalls. When the program was  looked at again in April 2005, 31 percent of the technologies were  expected to mature to a TRL 6 by 2005, and all technologies are not  expected to be mature to that level until 2009. The FCS acquisition schedule indicates several key issues:    The program did not have the basic knowledge needed for program  start in 2003. Furthermore, this latest estimate does not include complementary  programs that are essential for FCS to perform as intended, or the  necessary funding for spin-outs. These and other unfunded programs would have to compete for  already tight funding. Adding these items  brings the total required FCS investment to the $200 billion range. Recent FCS Recommendations and Matters for Congressional Consideration

In our most recent report on the FCS, we made specific recommendations  to the Secretary of Defense, with the intent that DOD limit its commitment  to the FCS until it demonstrates a solid business case. Consequently, we added several matters for congressional consideration  in order to highlight key issues and actions that Congress may want to  take. If the business case for FCS is found not to be executable, determine  whether investments in FCS design- and production-related activities  should be curbed until system-level requirements are firm and  technologies are mature. This should be a go/no-go  review of the FCS program that is based on (1) the program’s ability to  demonstrate whether it is meeting the knowledge markers outlined above  at times consistent with DOD policy and best practices and (2) whether  the funds can still be made available to afford its costs. DOD Comments on Our Report and Our Evaluation

DOD concurred with the intent of our recommendations but did not agree  to limit its commitment to the FCS program or to take any action beyond  what it had already planned to do. In light of DOD’s response,  Congress should consider directing the Secretary of Defense to:  report on the results of the May 2006 Defense Acquisition Board’s  review of the FCS program business case in the areas of requirements,  technologies, acquisition strategy, cost, and funding, and    direct DOD to conduct and report the results of a milestone review in  2008, following the preliminary design review, that will be a go/no-go  review of the FCS program based on its demonstration of a sound  business case. 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.
Why GAO Did This Study

The Future Combat System (FCS) is a networked family of weapons and other systems in the forefront of efforts by the Army to become a lighter, more agile, and more capable combat force. When considering complementary programs, projected investment costs for FCS are estimated to be on the order of $200 billion. FCS's cost is of concern given that developing and producing new weapon systems is among the largest investments the government makes, and FCS adds significantly to that total. Over the last 5 years, the Department of Defense (DOD) doubled its planned investments in such systems from $700 billion in 2001 to $1.4 trillion in 2006. At the same time, research and development costs on new weapons continue to grow on the order of 30 to 40 percent. FCS will be competing for significant funds at a time when federal fiscal imbalances are exerting great pressures on discretionary spending. In the absence of more money being available, FCS and other programs must be executable within projected resources. Today, I would like to discuss (1) the business case needed for FCS to be successful and (2) our recent recommendations to DOD and matters for congressional consideration regarding the FCS program.

What GAO Found

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, multiprogram 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. Last month, we made recommendations to the Secretary of Defense to take several actions, prior to DOD's long-term commitment to the program, to improve the FCS business case and establish knowledge-based measures to guide oversight of FCS progress. These recommendations detailed specific steps DOD should take leading up to a major milestone review of the program in 2008 when the program is expected to have achieved the level of knowledge it should have had in 2003. We believe it is at this point the program should be reviewed as to whether it has established enough of a solid business case to continue. While DOD concurred with the intent of our recommendations, it did not agree to limit its commitment to the FCS program or to do much beyond what it had already planned to do. This concerns us. As a result, we have also raised to Congress several matters for consideration to ensure that FCS has a sound business case before future funding commitments are made. We believe the actions we have recommended to DOD and the matters for consideration we have presented to Congress are necessary to improve the prospects for FCS success and to protect the government's ability to change course if the program does not progress as the Army plans.