GAO Questions Army’s $62B Cost Estimates for Combat Vehicles

 In Land, U.S. Army, Forces & Capabilities
Army photo

General Dynamics prototype for the Mobile Protected Firepower (MPF) vehicle

WASHINGTON: The Army will con­duct alter­na­tive cost esti­mates and addi­tion­al engi­neer­ing reviews for its future armored fighting vehicles, prod­ded by a GAO report out today. By GAO’s count, the ser­vice has wasted $21.8 bil­lion in the last 20 years on earlier, failed armor programs.

Eager to update its armored force against the Russian threat, the Army is using the accel­er­at­ed Middle-Tier Acquisition process to devel­op both the Optionally Manned Fighting Vehicle (OMFV), a heav­i­ly armed troop car­ri­er to replace the M2 Bradley, and the Mobile Protected Firepower (MPF) vehi­cle, an air-deploy­able light tank to sup­port para­troop­ers and other infantry. (Both pro­grams fall under the modernization team for Next Generation Combat Vehicles). BAE and General Dynamics have already built com­pet­ing pro­to­types for the MPF, while the OMFV pro­gram was recent­ly reboot­ed and is awaiting new industry proposals for designs.

Mid-tier acqui­si­tion, also known as Section 804 after the leg­is­la­tion that cre­at­ed it, skips many of the steps in the usual, labo­ri­ous Pentagon process, reduc­ing bureau­crat­ic delay but at the price of rais­ing the risk should a flawed assump­tion go uncaught.

On both pro­grams, the Army has start­ed work with some com­po­nent tech­nolo­gies less mature than GAO would rec­om­mend, the report says. On both pro­grams, the Army skipped an early “sys­tems engi­neer­ing review” that the tra­di­tion­al process would have required. On the OMFV pro­gram in par­tic­u­lar, the Army’s sched­ule didn’t explic­it­ly include such reviews at crit­i­cal points in the future, either. (MPF’s plan was more detailed, since it start­ed life as a tra­di­tion­al pro­cure­ment before shift­ing to an 804). On GAO’s rec­om­men­da­tion, the Army agreed to con­duct the sys­tems engi­neer­ing reviews “at key deci­sion points” to come.

BAE photo

BAE Systems’s prototype for the Army’s Mobile Protected Firepower (MPF) light tank.

GAO’s great­est con­cern, how­ev­er, was more subtle than a miss­ing step: It’s that the Army’s cost esti­mates look a lot more cer­tain than they really are.

Yes, GAO said, the Army did prop­er­ly take into account a “com­pre­hen­sive” range of costs, from ini­tial R&D through mass pro­duc­tion, field­ing, main­te­nance, and even­tu­al retire­ment. Those “life cycle costs” were approx­i­mate­ly $16 bil­lion for MPF, which will be bought in small­er num­bers – about 500 – and use large­ly off-the-shelf tech­nol­o­gy, and $46 bil­lion for OMFV, which is more ambi­tious both in total num­bers – poten­tial­ly replac­ing thou­sands of Bradleys – and new technology, especially automation. The Army prop­er­ly used his­tor­i­cal data for com­par­i­son, GAO said, and even tried to factor in the risk of unex­pect­ed prob­lems on both pro­grams.

But the Army still boiled down its final esti­mate for each pro­gram to a single number. That hides a con­sid­er­able uncer­tain­ty in how both MPF and OMFV will actu­al­ly play out, GAO argued. Instead of a single number, GAO said, the better approach would be to give Army lead­ers a range of esti­mates, from best-case cost to worst.

“The Secretary of the Army should direct the … pro­gram to update its cost esti­mate to include analy­ses to sup­port the devel­op­ment of a range of pos­si­ble cost out­comes for deci­sion makers in a manner con­sis­tent with GAO’s Cost Estimation Guide,” the report says.

The Army accept­ed this GAO rec­om­men­da­tion as well. That means that mil­i­tary offi­cials and, pre­sum­ably,  Congress will have access to a range of esti­mates for both pro­grams in the future. Will the press and the public get to see? That’s some­thing we’ll push for.

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