By Marina Malenic
PARIS–As the Army awaits formal Defense Department approval to split its multibillion dollar modernization effort into three separate programs, the related combat vehicle development effort terminated by Defense Secretary Robert Gates in April has consumed over $150 million in funding, according to sources and documents.
According to internal Army documents, at least $165 million has been spent on research and development for Future Combat Systems (FCS) Manned Ground Vehicles (MGVs) since April 30. Citing concerns about the Army’s failure to incorporate adequate defenses against roadside bombs in the MGV designs, Gates announced that he was terminating that portion of FCS on April 8 and opening a fresh combat vehicle program.
Boeing [BA], which holds the FCS Lead Systems Integrator contract along with SAIC [SAI], only sent a memo asking its subcontractors to stop work and long-lead procurement for the MGV effort on June 9. The memo asks BAE Systems and General Dynamics [GD] to “stop work immediately on the issuance of any new purchase orders related to reference (e) purchase contracts,” or long-lead procurement for the MGVs.
A spokesman for the FCS program office last week acknowledged that the Army only asked Boeing to send the notice to its subcontractors on June 8.
“Until we receive the new ADM [Acquisition Decision Memorandum], we must execute the program of record,” said Paul Mehney.
Ashton Carter, the Defense Department’s undersecretary for acquisition, technology and logistics, is expected to sign the document implementing Gates’ termination of the MGV effort and the FCS revamp shortly. The ADM has been pending for weeks.
Cheryl Irwin, a spokeswoman for Carter’s office, said via email that the document “is in final coordination and should be [signed] soon.”
She had no comment on the delay.
Further, Mehney explained, a stop work order does not stop all charges related to a contract, so until the existing FCS contract is formally terminated some charges will continue to accrue. He was not able to say what amount might have been saved had the stop-work order been implemented shortly after Gates’ decision.
According to one source familiar with the program, however, any costs related to materials could have been foregone.
Mehney and other Army officials also say that the service is trying to “harvest” as much of the MGV technology as possible for use in the new combat vehicle program Gates has promised to launch.
The House Armed Services Air and Land Forces subcommittee last week concurred with the Pentagon’s recommend cancellation of the MGV effort. Its mark-up of the Fiscal Year 2010 Defense Department spending bill includes full funding of $2.45 billion for FCS aspects slated to continue: the communications network and spin-out equipment. However, the panel called for eliminating $427 million requested by the Pentagon for covering FCS contract termination costs. Chairman Neil Abercrombie (D-Hawaii) in a statement said that amount could be covered with unspent FCS funds from FY09 and FY08.
Boeing executives here said that termination could have an effect on the company’s profits this year.
“Certainly it holds potential impact,” Jim Albaugh, president of the company’s Integrated Defense Systems division, told reporters during a briefing ahead of the Paris Air Show.
Albaugh defended the use of Lead Systems Integrators in Pentagon contract work.
“I look at an LSI as not that different than a prime contractor,” Albaugh explained.
For example, he said, Boeing does “some 40 percent of the work” on the F/A-18 Super Hornet as that system’s prime contractor, while its subcontractors do 60 percent. Similarly, according to Albaugh, Boeing does 40 percent of the work on FCS as the LSI.
“I think a lot of people attack the concept of the LSI, but I don’t see it as a lot different than a prime contractor,” he said. “And anybody that would suggest that we are making decisions for the U.S. Army just doesn’t understand the relationship that we had with the Army and how the Army was involved in every decision that we made.”