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GAO hoists red flag over costly Boeing Army project

By Darrell Hassler and Tony Capaccio
Bloomberg News

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Boeing's family of Army ground-combat systems, designed to improve battlefield communications, may exceed projected costs and not meet requirements, the General Accounting Office said yesterday.

The Future Combat Systems (FCS) project "is at significant risk for not delivering required capability within budget resources," the GAO said in a report. "Three-fourths of the FCS' needed technologies were still immature when the program started."

The report was released yesterday in conjunction with a House Armed Services subcommittee hearing that examined whether the Army is providing too much funding on the program at the expense of other needs.

Boeing is within budget and on schedule with the program, company spokeswoman Maria McCullough said, adding it has plans to mitigate risks related to undeveloped technology.

"We are on cost. We are definitely on target in terms of scheduling and meeting our milestones," McCullough said. "All areas that we would consider as an elevated risk have been identified and planned for."

Future Combat Systems is the Army's top program for transforming itself into a more lethal, mobile force.

The House's tactical air and land forces subcommittee, led by Rep. Curt Weldon, R-Pa., is the first to review, and possibly cut, the Army's $3.2 billion request for fiscal year 2005, up from $157 million in fiscal 2003 and $1.4 billion this year.

The program's budget request increases to $4.3 billion in fiscal 2006, to $5 billion annually after 2008 and then to more than $9 billion a year after 2011 when production ramps up, the GAO said.

"If FCS experiences the technical difficulties that every major development program seems to experience, the cost overruns will consume the Army budget," Weldon said.
 
"The question is how do we reduce the risk in developing FCS without sacrificing the current force? We need FCS to be successful," he said.

The Army hopes to introduce its first Future Combat Systems units in 2011, with full production scheduled for 2013 if the system passes a rigorous set of realistic combat tests.

"I can't think in the 23 years I've sat here of a system more fraught with risk," Rep. John Spratt, D-S.C., said to Army Lt. Gen. Joseph Yakovac, who testified about the program as deputy to the Army acquisition secretary. "It's going to be a Herculean task to bring it together on the ambitious schedule you've set," he said.

Defense contracts are coming under scrutiny as President Bush faces a budget deficit. Boeing and closely held Science Applications International, based in San Diego, won the eight-year, $14.7 billion FCS award in December.

Boeing is to oversee the development of 18 types of armored vehicles, as well as unmanned drones, connected under a battlefield communications network.

The military estimates the system will cost an additional $92 billion for production through 2020, second only to the $199 billion Joint Strike Fighter contract won by Lockheed Martin in 2001.

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