Internal review finds cost of Army future combat program soaring

Total cost estimates for the Army's Future Combat Systems have nearly doubled in the last three years, soaring from $175 billion to $300 billion to develop, build and operate the massive modernization program, according to a report sent to Capitol Hill last week.

The latest cost estimate, provided by the Office of the Secretary of Defense's Cost Analysis Improvement Group, comes at a particularly crucial time for FCS, which has been under intense scrutiny from Government Accountability Office investigators and lawmakers concerned that the program is neither affordable nor executable.

Lawmakers required the review as part of the fiscal 2006 defense authorization bill and withheld $150 million in research and development funds until it was completed. Tagged "for official use only," the review complies with the letter of the law but provides only a broad summary of the Pentagon's analysis of the program, a House Armed Services Committee aide who has seen the document told CongressDaily.

"It's two pages," the aide said. "With a program that complex, two pages isn't quite what we were hoping for."

Still, the report gives a look at how program costs have increased substantially since the Army was given the green light in May 2003 to proceed with design and development of FCS, a complex system of manned and unmanned air and ground vehicles tied together by an expansive high-tech network.

The "biggest delta" over early projections is in research and development, which ultimately could cost more than twice original estimates, the aide said. Initially, the Army intended to spend $18 billion for research and development, but that figure grew to $27 billion after the program was restructured more than a year ago.

The so-called CAIG, known for its conservative estimates, puts the R&D phase at between $32 billion and $44 billion.

The CAIG report highlights several areas responsible for increased research costs, including a software development program that will entail more design and development -- and require more money -- than the Army planned.

Additionally, lagging development for complementary systems that form the backbone of the expansive FCS network, including the Joint Tactical Radio System and Warfighter Information Network-Tactical, ultimately will drive up costs for FCS, the aide said.

Meanwhile, the Army will not, as it had planned, be able to decrease the number of engineers assigned to the program after a preliminary design review scheduled in fiscal 2008, resulting in further cost increases. The new estimates for program procurement are "pretty close" to the Army's latest projections, but operations and maintenance costs are much higher, the aide said.

The expensive program has become a source of concern for lawmakers, who have repeatedly questioned the program's management and its soaring costs. GAO, too, concluded in an April report that the Army's poor management of the program and lack of a cohesive business plan could threaten efforts to transform the service into a flexible, more efficient fighting force.

The Army has countered that rising costs were not caused by mismanagement, but by changes in program requirements and attempts to introduce new technologies into the force ahead of schedule. Original research and procurement estimates -- which do not include personnel and operations costs, as the CAIG report does -- put the program at $92 billion. The Army now estimates FCS will cost $160 billion.