A program  should not go forward into product development unless a sound business  case can be made. DOD’s acquisition policy has adopted the knowledge- based approach to acquisitions. Finally, we analyzed the costs  and funding estimates made to execute the FCS business case. The elements of a sound business case were not  reasonably present, and we noted that the Army would continue building  basic knowledge in areas such as requirements and technologies for  several more years. This progress has necessitated making significant trade-offs to  reconcile requirements with technical feasibility. Those  challenges include    completing the definition of all system-level requirements for all  FCS systems and the information network (including addressing the  “to-be-determined” items and issues to be resolved);    completing the preliminary designs for all FCS systems and    clearly demonstrating that FCS key performance parameters are    obtaining a declaration from the Army user community that the  likely outcomes of the FCS program will meet its projected needs;    clearly demonstrating that the FCS program will provide  capabilities that are clearly as good as or better than those available  with current Army forces, a key tenet set out by the Army as it  started the FCS development program in 2003;    mitigating FCS technical risks to significantly lower levels; and    making demonstrable progress towards meeting key FCS goals  including weight reduction, reliability improvement, and average  unit production cost reduction. Army Reports Significant Progress, but Major Technological Challenges Remain

The Army has made progress in the areas of critical technologies,  complementary programs, and software development. Although the program has been successful in developing  some technologies and demonstrating early capabilities, the status of its  critical technologies is uncertain. FCS software integration performance and development. The first phase has a corresponding spin-out of  mature FCS capabilities to current forces. This will have an impact on  program cost, but full details are not yet available. Conclusions

The Army has been granted a lot of latitude to carry out a large program  like FCS this far into development with relatively little demonstrated  knowledge. Tangible progress has been made during the year in several  areas, including requirements and technology. Such progress warrants  recognition, but not confidence. Confidence comes from high levels of  demonstrated knowledge, which are yet to come. Following the  preliminary design review in 2009, there should be enough knowledge  demonstrated to assess FCS’s prospects for success. );    a definition of acceptable levels of technology, design, and  production maturity to be demonstrated at the critical design  review and the production decision;    an assessment of how well the FCS acquisition strategy and test  plan will be able to demonstrate those levels of maturity;    a determination of likely costs to develop, produce, and support the  FCS that is informed by an independent cost estimate and  supported by an acceptable confidence level; and    a determination that the budget levels the Army is likely to receive  will be sufficient to develop, produce, and support the FCS at  expected levels of cost. Defense Acquisitions: The Army’s Future Combat Systems’ Features,  Risks, and Alternatives, GAO-04-635T. Defense Acquisitions: Army Transformation Faces Weapon Systems  Challenges, GAO-01-311.
Why GAO Did This Study

The Future Combat System (FCS) is central to Army transformation efforts, comprising 14 integrated weapon systems and an advanced information network. In previous work, GAO found that the elements of a sound business case--firm requirements, mature technologies, a knowledge-based acquisition strategy, a realistic cost estimate, and sufficient funding--were not present. As a result, FCS is considered high risk and in need of special oversight and review. Congress has mandated that the Department of Defense (DOD) decide in early 2009 whether FCS should continue. GAO is required to review the program annually. In this report, GAO analyzes FCS development, including its requirements definition; status of critical technologies, software development, and complementary programs; soundness of its acquisition strategy related to design, production and spin-out of capabilities to current forces; and reasonableness of costs and sufficiency of funding.

What GAO Found

The Army has been granted a lot of latitude to carry out a large program like FCS this far into development with relatively little demonstrated knowledge. Tangible progress has been made during the year in several areas, including requirements and technology. Such progress warrants recognition, but confidence that the program can deliver as promised depends on high levels of demonstrated knowledge, which are yet to come. Following the preliminary design review in 2009, there should be enough knowledge to demonstrate the soundness of the FCS business case. If significant doubts remain about the program's executability at that time, DOD will have to consider alternatives to proceeding with the program. Currently, GAO sees the FCS business case as follows. Requirements--Progress has been made in defining requirements and making some difficult trade-offs, but key assumptions about the performance of immature technologies and other technical risks remain to be proven. Technology--The Army has made progress in maturing technologies, but it will take several more years to reach full maturity. All key technologies should have been mature in 2003 when the program began. FCS software has doubled in size compared to original estimates and faces significant risks. The Army is attempting a disciplined approach to managing software development. Acquisition Strategy--The FCS acquisition strategy is compressed. Key testing to demonstrate FCS performance will not be completed, and maturity of design and production will not be demonstrated until after the production decision. Program Costs--New estimates place FCS costs significantly above the current estimate of $163.7 billion. The Army has recently proposed a plan to buy fewer systems and slow production rates. This recent program adjustment will affect program costs, but details are not yet available.