US Army modernization could cost $200b
(Reuters)
Updated: 2006-03-15 09:31

WASHINGTON - The U.S. Army's Future Combat Systems modernization program is now expected to cost $200 billion, including 52 essential complementary programs, the Government Accountability Office said on Tuesday.

The Army had taken steps to rein in costs on the complex program led by Boeing Co., but there still wasn't enough knowledge about the program's underlying technologies, making solid cost projections difficult, the watchdog arm of Congress said in a new report.

"FCS's long-term affordability depends on the accuracy of cost estimates, an increased level of procurement funding, and the level of competing demands," the report said.

FCS is developing a family of 18 light, fast, manned and robotic air and ground vehicles, all linked by advanced communications, to be rolled out over two decades.

GAO said it estimated FCS alone would cost $160.7 billion, a 76 percent increase since the program start, but including 52 other programs that were each vital to its success, the program's cost "would reach the $200 billion range."

Some of these complementary programs had significant technical challenges, while others lacked needed funding to complete development, GAO said.

GAO said Army officials believed the program risks were manageable, but it continued to have concerns.

"The elements of a sound business case -- firm requirements, mature technologies, a knowledge-based acquisition strategy, a realistic cost estimate, and sufficient funding -- are still not demonstrably present," it said.

"FCS has all the indicators for risks that would be difficult to accept for any single system," GAO said, adding that those risks were "even more daunting" in the case of FCS given its complexity and reliance on cutting-edge technology.

Given the challenges, the Pentagon's Defense Acquisition Board should carefully reevaluate the program and find ways to hold the Army accountable for achieving measurable progress.

By 2008, the Pentagon should decide whether to proceed with the program or cancel it, depending on its progress against clearly defined markers and the availability of funding, the report said.

Top U.S. Army officials this month told lawmakers the program was on track for a key Pentagon review in May, although Army acquisition chief Claude Bolton said further changes were needed to ensure the program's success.

Bolton called 2006 a "critical execution year" for FCS because it faces more than 52 reviews, key hardware and software deliveries, and several field experiments this year.

Boeing and employee-owned Science Applications International Corp. are the lead systems integrators for the huge modernization project.