Monday, April 21, 2014

Massive GCV Cuts On The Table As Army 'Reviews' Program

Posted on InsideDefense.com: December 5, 2012
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Posted: December 5, 2012 Twitter Follow InsideDefense.com on Twitter

The Army's Ground Combat Vehicle development is poised to be hit by massive budget cuts that could radically transform it from one of the service's most prized modernization efforts to an endangered program, Inside the Army has learned.

A draft resource management decision from the Office of the Secretary of Defense would cut $150 million from the Army's $1.4 billion budget request for the GCV in fiscal year 2014, but deeper cuts are also being considered by OSD's cost assessment and program evaluation shop (CAPE) under a "ground forces program review" study. Sources said those cuts would slash between $600 million and $700 million annually from the GCV program between FY-14 and FY-18, according to a Defense Department official close to the matter.

"I think the writing on the wall is that the spigot is rapidly closing and we need to start dealing with that reality," the official said. "It's just overall bad timing for a new and expensive vehicle program."

The coming drawdown in Afghanistan, coupled with cries for increased budget austerity at home, may make it impossible for the Army to fund the GCV's development to the extent it once wished, the official said.

Matthew Bourke, an Army spokesman, acknowledged that the service was reviewing the GCV acquisition strategy but declined to discuss specifics. "The Army is currently reviewing the GCV [engineering and manufacturing development] phase acquisition strategy to ensure we maximize competition to the greatest extent possible, while maintaining affordability and requirements achievability," he wrote in a Nov. 30 email.

While final GCV numbers are still being negotiated by the Army and OSD, the service is lobbying to re-direct any trimmed GCV funding to vehicle modernization efforts like its program to convert flat-bottomed Strykers into double-V hull configurations, as well as to Abrams tank and Bradley Fighting Vehicle upgrades, the DOD official said.

"There is still some back-and-forth between Army and OSD," the official said. "Basically the thinking is we've got this huge drawdown coming, we've got vehicles that have performed well, why not keep what we've got and put money back in those? We have a new platform that has a requirement, but is the new requirement as valid as it was five to six years ago?"

But OSD is not "officially questioning" the service's need for the program, said a second DOD official close to the discussion, noting that "everyone thinks the Army needs to do something." Yet, the viability of a GCV program with a smaller development budget or delayed schedule remains unclear.

The GCV, which is intended to replace the Bradley Fighting Vehicle, is now halfway through its 24-month technology-development phase with competing contractors General Dynamics and BAE Systems. Each was awarded a $450 million contract in August 2011. The 48-month EMD phase can proceed next year with up to two contractors, but, as previously reported by Inside the Army, service and OSD officials are discussing a path ahead that allows for only a single EMD competitor as a cost-saving measure.

That potential strategy has not garnered much support on Capitol Hill, where the fate of the GCV budget request will ultimately be decided.

"It would go against current DOD policy to maintain competition during development," a House source said. "It would also mean selecting a vehicle design based on PowerPoint, not a real prototype, which also goes against current DOD acquisition policies that have emphasized lowering risk through thorough TD. Politically, it would be creating enemies of the program among the advocates of the losing side, which is never helpful, especially for a program that is already on shaky ground. So overall, yes, it is a bad idea if one actually wants this program to succeed."

But a Senate official said the appropriations committee would likely keep an "open mind" on any GCV changes, especially if the Army begins to rein in costs or requirements. The official cautioned, however, that too many changes could put the program in jeopardy.

"We knew they were going to be challenged to fund the Ground Combat Vehicle and the other modernization initiatives at the same time," the official said. "Eliminating one of the potential EMD participants may get some tough questioning -- maybe approaching it from a requirements angle, rather than eliminating an EMD participant might be a better idea."

Should the Army find a way to tone down its GCV requirements -- which it has done in the past -- and still keep the program going, the service could find supporters, the official said, adding: "The Army will probably have a requirements debate in FY-14."

However, another scenario being discussed involves elongating the EMD period to allow for smaller contract awards over time. The Army wanted the first GCV to roll off the production line in April 2018, according to the Congressional Research Service; changing the EMD schedule would certainly delay those plans.

"If they go that route you're going to raise questions and, like any other change, it puts the program at risk," the Senate official said. "People then look at it like if you cut that amount of money from it; it's only [10 to 15] percent of the fleet; you may have to stretch it out over a long period of time; do we really want to be spending millions of dollars per vehicle to do this? Is that affordable?"

Senate appropriators are already skeptically eying the GCV program, writing in their report on the FY-13 defense spending bill that the Army's combat vehicle modernization strategy as a whole relies too heavily on spending to develop the GCV, while underfunding future efforts to upgrade platforms already in the inventory. The Army ultimately wants to acquire 1,847 GCVs, with possible follow-on purchases.

"The committee is concerned that the Army is not adequately budgeting for modernization efforts for a large portion of the fleet," the committee wrote. "Over the next five years, the Army has programmed 80 percent of its combat vehicle budget for the GCV, though the vehicle will only make up 10 percent of the Army combat vehicle fleet." -- Tony Bertuca

 
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