Army concerned by termination fees

A senior Army official warned on Wednesday that cutting funds requested to pay for the cancellation of the manned ground vehicle portion of the Army's Future Combat Systems would hinder the service as it begins a modernization effort. Lt. Gen. Ross Thompson, the Army's acquisition chief, said in a conference call with reporters that he expects cancellation fees to contractors to be "in the hundreds of millions of dollars."

If the Army doesn't receive enough money in fiscal 2010 to pay those fees, it will mean delays in modernization plans, Thompson said.

Last week, the House, citing unspent fiscal 2009 funds that could be used to pay termination fees, approved an fiscal 2010 defense authorization bill that provides only $100 million of the $427 million requested by the Pentagon for cancellation costs. Thompson said he recognized concerns among lawmakers about the future of the Army's modernization efforts, but he argued that the service needs "as much stability as possible in funding."

The Army still plans to pursue many of the other technologies developed under FCS, but those efforts will now be clustered under the newly named Army Brigade Combat Team Modernization program.

Service officials say they hope to have a new blueprint for vehicles by September.