oversight

Army Modernization: Steps Needed to Ensure Army Futures Command Fully Applies Leading Practices

Published by the Government Accountability Office on 2019-01-23.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

               United States Government Accountability Office
               Report to the Committee on Armed
               Services, House of Representatives




               ARMY
January 2019




               MODERNIZATION

               Steps Needed to
               Ensure Army Futures
               Command Fully
               Applies Leading
               Practices




GAO-19-132
                                            January 2019

                                            ARMY MODERNIZATION
                                            Steps Needed to Ensure Army Futures Command
                                            Fully Applies Leading Practices
Highlights of GAO-19-132, a report to the
Committee on Armed Services, House of
Representatives




Why GAO Did This Study                      What GAO Found
In order for the Army to maintain its       Since 2017, when the Army announced its initiative to update its forces and
technological edge over potential           equipment with improved capabilities—known as modernization—it has
adversaries, it plans to invest in near-
and long-term modernization efforts.        •    prioritized six broad areas of capability needs as shown in the table below;
However, the Army has struggled with        •    established and assigned eight cross-functional teams to pilot how to
modernization initiatives in the past.           address these needs;
For example, the Future Combat              •    established the Army Futures Command as the focal point for modernization
System was canceled after a cost of              efforts, with a four-star general to oversee it; and
$21 billion and delivery of few new         •    realigned over $1 billion in science and technology funding to support
capabilities.                                    modernization efforts within the $7.5 billion expected to be spent over the
                                                 next 5 years.
The National Defense Authorization
Act for Fiscal Year 2018 included a         Description of Army’s Six Prioritized Capability Needs
provision for GAO to report on the           Army priority                              Description of priority
Army’s modernization strategy. This          Long-Range Precision Fires                 Capabilities, including munitions that restore Army dominance
report assesses (1) the status of the                                                   in range, lethality, and target acquisition.
                                             Next Generation Combat Vehicle             Manned and unmanned combat vehicles with modern
Army’s near- and long-term
                                                                                        firepower, protection, mobility, and power generation.
modernization efforts; and (2) the           Future Vertical Lift                       Manned and unmanned platforms capable of attack, lift, and
extent to which the Army has applied                                                    reconnaissance missions on modern and future battlefields.
leading practices to these efforts. GAO      Army Network                               A mobile system of hardware, software, and infrastructure that
reviewed Army directives, procedures,                                                   can be used to fight cohesively in any environment where the
and policies; and compared the Army’s                                                   electromagnetic spectrum is denied or degraded.
                                             Air and Missile Defense                    Capabilities that ensure future combat formations are protected
efforts with leading practices for                                                      from modern and advanced air and missile threats.
requirements and technology                  Soldier Lethality                          Capabilities, equipment, and training for all fundamentals of
development, effective cross-functional                                                 combat—shooting, moving, communicating, protecting, and
teams, and mergers and organizational                                                   sustaining. This includes an expansion of simulated training.
transformations.                            Source: GAO review of Army documentation. I GAO-19-132


What GAO Recommends                         To date, the Army has generally applied leading practices identified by GAO to
                                            its modernization efforts. For example, the cross-functional team pilots generally
GAO is making four recommendations,         applied leading practices for determining requirements and technology
including that the Army follow leading      development and for establishing effective teams. Similarly, as the Army began
practices for maturing technologies to      the process of establishing the Army Futures Command, it has started to apply
a higher level than currently planned       the leading practices for mergers and organizational transformations by
and develop a plan to capture lessons       establishing a clearly defined mission and providing a clear consistent rationale
learned from the cross-functional           for the command. However, GAO identified other areas where the Army has not
teams. DOD concurred with all the           fully applied leading practices to its modernization efforts including the following:
recommendations.
                                            •    Under the modernization effort, the Army plans to begin weapon systems
                                                 development at a lower level of maturity than what is recommended by
                                                 leading practices. GAO has raised concerns about this type of practice for
                                                 almost two decades for other Army acquisitions, because proceeding into
                                                 weapon systems development at earlier stages of technology maturity raises
                                                 the risk that the resulting systems could experience cost increases, delivery
                                                 delays, or failure to deliver desired capabilities. Taking this approach for
                                                 acquisitions under the modernization effort raises similar concerns for the
                                                 Army’s six prioritized capability needs.
View GAO-19-132. For more information,      •    The Army has not developed a plan for capturing the lessons learned from
contact Jon Ludwigson at (202) 512-4841or        the cross-functional team pilots, and therefore may miss an opportunity to
ludwigsonj@gao.gov                               leverage the experience of these teams in applying leading practices.

                                                                                                     United States Government Accountability Office
Contents


Letter                                                                                   1
               Background                                                                3
               Army Is Establishing New Organizations to Lead Modernization
                 Efforts and Prioritizing Solutions to Address Near-term
                 Capability Gaps while Identifying Long-term Needs                       7
               New Organizations Have Generally Applied Leading Practices but
                 the Army Futures Command Has Taken Limited Steps to Fully
                 Apply These Practices                                                 16
               Conclusions                                                             27
               Recommendations for Executive Action                                    28
               Agency Comments and Our Evaluation                                      28

Appendix I     Objectives, Scope and Methodology                                       30



Appendix II    Comments from the Department of Defense                                 35



Appendix III   GAO Contact and Staff Acknowledgments                                   38


Tables
               Table 1: Examples of Cancelled Army Modernization Programs                3
               Table 2: Army Modernization Priorities and Assigned Cross-
                       Functional Teams                                                  8
               Table 3: Leading Practices for Establishing Effective Cross-
                       Functional Teams                                                20
               Table 4: Leading Practices for Mergers and Organizational
                       Transformations                                                 25

Figures
               Figure 1: DOD Acquisition System Process                                  5
               Figure 2: Comparison of Army Requirements Development
                        Processes                                                      10
               Figure 3: Locations of Army Futures Command Components                  13
               Figure 4: Timeline of Proposed Army Modernization Capabilities          15




               Page i                               GAO-19-132 Army Long-Term Modernization
Abbreviations

DOD               Department of Defense
GAO               Government Accountability Office
U.S.C.            United States Code



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Page ii                                        GAO-19-132 Army Long-Term Modernization
                       Letter




441 G St. N.W.
Washington, DC 20548




                       January 23, 2019

                       The Honorable Adam Smith
                       Chairman
                       The Honorable Mac Thornberry
                       Ranking Member
                       Committee on Armed Services
                       House of Representatives

                       The Army has determined that in order for it to maintain its technological
                       edge over potential adversaries, it must update or upgrade multiple
                       weapon systems—a broad-based effort it refers to as modernization. This
                       modernization effort hinges upon the development of new capabilities
                       through the Department of Defense (DOD) acquisition process. GAO has
                       found that this acquisition process includes developing a clear description
                       of the specific capabilities and characteristics of the system—referred to
                       as requirements. Another key component of the acquisition process is the
                       identification of technologies capable of meeting those requirements and
                       developing them to a level of maturity sufficient for integration into a
                       system in a cost-effective and timely way. Our past work has found that a
                       formal weapons system acquisition program—with dedicated funding and
                       specific timelines for completing system development—should be initiated
                       only after requirements are well-defined and technologies are
                       demonstrated as sufficiently mature.

                       The Army’s past efforts at modernization have included several weapon
                       system acquisition programs that were ultimately cancelled—after years
                       of development and billions of dollars spent. The cancellation of these
                       programs was due to, among other things, problems with the
                       development of requirements for these systems and the integration of
                       new technologies into acquisition programs before they reached a
                       sufficiently high-level of maturity. The failure to deliver these new weapon
                       systems resulted in a continued reliance on the aging systems that had
                       been targeted for replacement. Army officials have acknowledged that
                       improvements to the processes used to develop requirements and mature
                       technologies are critical if the Army is to achieve the goals it has set for its
                       new modernization efforts.

                       Section 1061 of the National Defense Authorization Act for Fiscal Year
                       2018 included a provision for GAO to report on the Army’s modernization




                       Page 1                                    GAO-19-132 Army Long-Term Modernization
strategy. 1 This report is the second that we have issued in response to
this mandate and assesses (1) the status of the Army’s efforts to
establish new acquisition organizations while balancing near- and long-
term modernization; and (2) the extent to which the Army has applied
leading practices to do so. 2

To assess the Army’s efforts to establish new acquisition organizations
and to balance near- and long-term modernization, we reviewed orders
and directives the Army used to establish new acquisition organizations—
such as the Army Futures Command—geared toward modernization
efforts. We also reviewed Army directives, procedures, and policies to
understand changes in Army acquisition practices since 2016. We
reviewed the Army’s 2018 Modernization Strategy report and other
documents, such as strategic portfolio reviews and budgets, to identify
the steps the Army is taking to balance its modernization efforts in the
near- and long-term. We also discussed these topics with relevant Army
officials to get their perspectives on Army modernization efforts.

To assess the extent to which Army has applied leading practices, we
reviewed our prior work on requirements and technology development,
effective cross-functional teams, and mergers and organizational
transformations that have identified relevant leading practices that might
apply to the Army’s modernization efforts. To assess the extent to which
the Army has applied these practices as part of its modernization efforts,
we analyzed Army documentation and spoke with cognizant Army
officials. See appendix I for more information on our objectives, scope
and methodology.

We conducted this performance audit from January 2018 to January 2019
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that


1
See Pub. L. No. 115-91, § 1061(e) (2017).
2
 This report fulfills part of GAO’s statutory mandate required by subparagraph (C) of
section 1061(e)(2) of the National Defense Authorization Act for Fiscal Year 2018.
Subparagraphs (A) and (B) of section 1061(e)(2) of the same Act required GAO to assess
the Army’s near-term modernization efforts, which we addressed in GAO, Army
Modernization: Actions Needed to Measure Progress and to Fully Identify Near-Term
Costs, GAO-18-604SU (Washington, D.C., Sept. 28, 2018) and is for official use only.




Page 2                                       GAO-19-132 Army Long-Term Modernization
                                                          the evidence obtained provides a reasonable basis for our findings and
                                                          conclusions based on our audit objectives.


                                                          Senior Army leadership has acknowledged that the service must change
Background                                                how it develops requirements and acquires weapon systems in order to
                                                          be successful in future wars. However, the Army’s history of failed, costly
                                                          weapon system procurements to replace aging weaponry is due, in part,
                                                          to requirements that could not be met and the immaturity of key
                                                          technologies. Many of these programs failed to provide any capability to
                                                          the warfighter despite the time and funding expended. Some examples of
                                                          these cancelled programs are listed in table 1 below.

Table 1: Examples of Cancelled Army Modernization Programs

                                                                  Cost as of
                                  Duration of                  cancellation
Name of program                   program               (dollars in billions)     Description                            Reasons cancelled
Comanche                          1988-2004                              10.1     Armed reconnaissance                   Cost increases, schedule delays,
                                                                                  helicopter                             and performance shortfalls.
Future Combat                     2000-2009                              21.4     Family of light and mobile             Overly ambitious requirements,
Systems                                                                           manned and unmanned                    immaturity of key technologies,
                                                                                  vehicles                               cost increases, and schedule
                                                                                                                         delays.
Ground Combat                     2010-2014                               1.5     Replacement for the Bradley            Infeasible requirements.
Vehicle                                                                           Infantry Fighting Vehicle
Source: GAO review of DOD documentation. | GAO-19-132

                                                          Note: All dollars amounts in fiscal year 2019 dollars.


Army Modernization                                        In the fall of 2017, the Army began a new modernization effort to rapidly
Efforts Since 2017                                        develop and field new capabilities. As a part of this effort, the Army’s
                                                          then-Acting Secretary and the Chief of Staff in an October 3, 2017
                                                          memorandum identified six priorities to guide Army modernization:

                                                          •    long-range precision fires,
                                                          •    next generation combat vehicle,
                                                          •    future vertical lift,
                                                          •    network,
                                                          •    air and missile defense, and
                                                          •    soldier lethality.




                                                          Page 3                                                   GAO-19-132 Army Long-Term Modernization
                           Given that modernization is an ongoing process, and with Army
                           expectations that some capabilities will be delivered sooner than others,
                           we have divided Army modernization into two timeframes for the
                           purposes of this report:

                           •   Near-term modernization: from fiscal years 2019 to 2023, including
                               buying existing systems and technologies to fill the Army’s urgent
                               needs.
                           •   Long-term modernization: fiscal year 2024 and beyond, including
                               the development of new systems and technologies to meet
                               anticipated needs and maintain superiority over major adversaries.
                           In September 2018, we addressed the Army’s efforts for near-term
                           modernization. 3 We found that the Army had set decisively defeating
                           near-peer adversaries as an overarching objective, but had not
                           established processes for evaluating its modernization efforts against this
                           objective. We also found that the Army had not yet completed a cost
                           analysis of its near-term modernization efforts. To address these issues,
                           we recommended that the Army develop a plan to finalize processes for
                           evaluating the contributions of its near-term investments to the ability to
                           decisively defeat a near-peer adversary; and finalize and report to
                           Congress its cost analysis of near-term investments. DOD concurred with
                           both of these recommendations.

                           As we have previously reported, the Army’s long-term modernization
                           efforts as well as those of the other DOD military services will depend
                           upon adequate and effective investments in science and technology. 4
                           These are investments that focus on increasing fundamental knowledge
                           of new capabilities, applying that knowledge, and demonstrating the
                           technological feasibility of capabilities.


Army Acquisition Process   As with all the military services in DOD, the Army’s acquisition process
                           generally includes a number of phases including: (1) the materiel solution
                           analysis phase, (2) the technology maturation and risk reduction phase,
                           (3) the engineering and manufacturing development phase, and (4) the
                           production and deployment phase. In this report we refer to these phases
                           3
                           GAO-18-604SU.
                           4
                            GAO, Defense Science And Technology: Adopting Best Practices Can Improve
                           Innovation Investments And Management, GAO-17-499 (Washington, D.C.: June 29,
                           2017).




                           Page 4                                     GAO-19-132 Army Long-Term Modernization
                                       more simply as materiel solution analysis, technology development,
                                       system development, and production.

                                       Before these phases begin, the Army must establish requirements to
                                       guide the acquisition process. Requirements describe the capability
                                       desired to be achieved through the use of operational performance
                                       attributes—the testable and measurable characteristics—necessary to
                                       the design of a proposed system and for establishing a program’s cost,
                                       schedule, and performance baselines. These requirements include the
                                       key performance parameters and system attributes that guide a
                                       program’s development, demonstration, and testing. The Army approval
                                       authority for all Army warfighting capability requirements is the Army
                                       Chief of Staff.

                                       At the end of the initial three phases, the Army holds a milestone review,
                                       as shown in figure 1 below, to assess an acquisition program’s readiness
                                       to proceed to the next phase, consistent with relevant DOD policies and
                                       federal statutes.

Figure 1: DOD Acquisition System Process




                                       The Assistant Secretary of the Army for Acquisition, Logistics, and
                                       Technology is generally the Army’s milestone decision authority. 5 The
                                       process is also subject to intermediate reviews by senior Army staff.


Prior GAO Work                         We have issued several reports related to the Army’s modernization
                                       efforts that assess areas regarding requirements and technology



                                       5
                                       See 10 U.S.C. § 2430(d)(1); Army Regulation 70-1 § 1-4.c(1).




                                       Page 5                                       GAO-19-132 Army Long-Term Modernization
development, effective cross-functional teams, and mergers and
organizational transformations:

•   Requirements and Technology Development. In our extensive
    work issued over two decades on requirements and technology
    development, we have emphasized the importance of promoting
    leading practices such as communication between end-users and
    requirements developers; prototyping capabilities as part of
    technology and product development; and maturing technology to a
    certain threshold before approving product development. 6
•   Cross-Functional Teams. In February 2018, we identified eight
    leading practices that effective cross-functional teams should have:
    •    effective communication mechanisms;
    •    well-defined goals common to the team, team leader, and
         management;
    •    an inclusive team environment where all team members have
         collective responsibility and individual accountability for the team’s
         work;
    •    a well-defined team structure with project-specific rules and
         procedures;
    •    autonomy to make decisions rapidly;
    •    senior managers who view their teams as a priority;
    •    commitment to the team’s goals; and




6
 GAO, Weapon Systems: Prototyping Has Benefited Acquisition Programs, but More Can
Be Done to Support Innovation Initiatives, GAO-17-309 (Washington, D.C.: June 27,
2017); Army Weapon Systems Requirements: Need to Address Workforce Shortfalls to
Make Necessary Improvements, GAO-17-568 (Washington, D.C.: June 22, 2017);
Technology Readiness Assessment Guide: Best Practices for Evaluating the Readiness of
Technology for Use in Acquisition Programs and Projects, GAO-16-410G (Washington,
D.C.: August 2016), Best Practices: Stronger Practices Needed to Improve DOD
Technology Transition Processes, GAO-06-883 (Washington, D.C.: Sep. 14, 2006); Best
Practices: Using a Knowledge-Based Approach to Improve Weapon Acquisition,
GAO-04-386SP (Washington, D.C.: Jan. 1, 2004); Best Practices: Better Matching of
Needs and Resources Will Lead to Better Weapon System Outcomes, GAO-01-288
(Washington, D.C.: March 8, 2001); and Best Practices: Better Management of
Technology Development Can Improve Weapon System Outcomes, GAO/NSIAD-99-162
(Washington, D.C.: July 30, 1999).




Page 6                                      GAO-19-132 Army Long-Term Modernization
                                •    leaders empowered to make decisions and provide feedback and
                                     developmental opportunities. 7
                            •   Mergers and Organizational Transformations. In July 2003, we
                                found that the key to successful mergers and organizational
                                transformations is to recognize the “people” element and implement
                                strategies to help individuals maximize their full potential while
                                simultaneously managing the risk of reduced productivity and
                                effectiveness that often occurs as a result of changes. We identified
                                nine leading practices new organizations should follow including
                                ensuring top leadership drives the transformation and establishing a
                                communication strategy, among others. 8

                            The Army’s cross-functional team pilots and early efforts by the Army
Army Is Establishing        Futures Command have prioritized closing near-term capability gaps, and
New Organizations to        have begun planning the transition to long-term capabilities. The cross-
                            functional teams were pilot programs to improve the quality and
Lead Modernization          timeliness of requirements and technology development. These cross-
Efforts and Prioritizing    functional teams are transitioning from independent organizations to
                            organizations within the Army Futures Command, which will also
Solutions to Address        subsume other existing Army organizations tasked with modernization.
Near-term Capability        Army Futures Command is in the process of establishing its policies,
                            processes, and functions as well as its relationships with other Army
Gaps while Identifying      organizations. It plans to reach full capability by July 2019. The Army has
Long-term Needs             already identified near-term priorities and realigned over $1 billion in
                            science and technology funding for long-term modernization. Army
                            Futures Command will be responsible for continuing this prioritization.


Army Established Cross-     In an attempt to increase the efficiency of its requirements and technology
Functional Teams to Pilot   development efforts, the Army established cross-functional team pilots for
                            modernization. A directive from the then-acting Secretary of the Army on
Its Modernization Efforts
                            October 6, 2017, established eight multi-disciplinary cross-functional
                            teams on a pilot basis. The eight cross-functional team pilots were
                            assigned to address the six priority areas, as outlined in table 2.



                            7
                             GAO, Defense Management: DOD Needs to Take Additional Actions to Promote
                            Department-Wide Collaboration, GAO-18-194 (Washington, D.C.: February 28, 2018).
                            8
                             GAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers and
                            Organizational Transformations, GAO-03-669 (Washington, D.C.: July 2, 2003).




                            Page 7                                       GAO-19-132 Army Long-Term Modernization
Table 2: Army Modernization Priorities and Assigned Cross-Functional Teams

Army priority                                        Description of priority                                      Cross-functional team location
Long-Range Precision Fires                           Capabilities, including munitions that restore Army          Long-Range Precision Fires – Fort
                                                     dominance in range, lethality, and target acquisition.       Sill, Okla.
Next Generation Combat Vehicle                       Manned and unmanned combat vehicles with modern              Next Generation Combat Vehicle -
                                                     firepower, protection, mobility, and power generation.       Detroit Arsenal, Mich.
Future Vertical Lift                                 Manned and unmanned platforms capable of attack,             Future Vertical Lift – Redstone
                                                     lift, and reconnaissance missions on modern and              Arsenal, Ala.
                                                     future battlefields.
Army Network                                         A mobile system of hardware, software, and                   Network Command, Control,
                                                     infrastructure that can be used to fight cohesively in       Communication, and Intelligence –
                                                     any environment where the electromagnetic spectrum           Aberdeen Proving Ground, Md.
                                                     is denied or degraded.
                                                                                                                  Assured Positioning, Navigation, and
                                                                                                                  Timing – Redstone Arsenal, Ala.
Air and Missile Defense                              Capabilities that ensure future combat formations are        Air and Missile Defense – Fort Sill,
                                                     protected from modern and advanced air and missile           Okla.
                                                     threats.
Soldier Lethality                                    Capabilities, equipment, and training for all                Soldier Lethality – Fort Benning, Ga.
                                                     fundamentals of combat—shooting, moving,                     Synthetic Training Environment –
                                                     communicating, protecting, and sustaining. This
                                                                                                                  Orlando, Fla.
                                                     includes an expansion of simulated training.
Source: GAO review of Army documentation. | GAO-19-132

                                                           Note: Two of the modernization priorities—Army Network and Soldier Lethality—were subdivided into
                                                           two cross-functional teams while the other four priorities each were assigned one cross-functional
                                                           team.
                                                           These cross-functional team pilots were intended to:

                                                           •   take steps toward achieving the six modernization priorities;
                                                           •   leverage expertise from industry and academia;
                                                           •   identify ways to use experimentation, prototyping, and
                                                               demonstrations; and
                                                           •   identify opportunities to improve the efficiency of requirements
                                                               development and the overall defense systems acquisition process.
                                                           Cross-functional team pilots were structured to help achieve these goals.
                                                           Each cross-functional team pilot consisted of core staff and subject matter
                                                           experts from across the Army. To facilitate the rapid approval of
                                                           requirements, each cross-functional team pilot was led by a general
                                                           officer or a senior civilian official who could communicate directly with the
                                                           highest levels of the Army. The goal of staffing these teams was to
                                                           ensure that each team had individuals who specialized in acquisition,
                                                           requirements, science and technology, test and evaluation, resourcing,
                                                           contracting, cost analysis, sustainment, and military operations. The goal



                                                           Page 8                                             GAO-19-132 Army Long-Term Modernization
of bringing different experts together was to facilitate collaboration and
immediate opportunities for stakeholders to provide input as opposed to
the more traditional requirements development process, in which input
has typically been provided separately. Officials told us that, while all of
these subject matter experts may have provided input on the
requirements development process in the past, placing them on a single
team offered the promise of streamlining those efforts and could eliminate
the need for multiple reviews. Figure 2 below compares the requirements
development process under cross-functional teams to how the Army has
traditionally developed requirements.




Page 9                                  GAO-19-132 Army Long-Term Modernization
Figure 2: Comparison of Army Requirements Development Processes




                                     Page 10                      GAO-19-132 Army Long-Term Modernization
                            The cross-functional team locations chosen by senior Army leadership
                            coincide with the locations of related Army organizations or industry hubs,
                            which could help to facilitate this exchange of ideas among technical
                            experts, and inform prototyping and experimentation. For example, the
                            cross-functional team pilot for the Future Vertical Lift was stationed at
                            Redstone Arsenal where the Army’s existing research, development, and
                            engineering center for aviation is located.

                            In congressional testimony, the Commander of Army Futures Command
                            stated that in order to achieve their near- and long-term modernization
                            objectives, they will have to reduce their requirements development
                            timelines from 3 to 5 years to less than 1 year. According to cross-
                            functional team members we spoke with, the cross-functional team pilots
                            were able to demonstrate progress toward achieving the goals set out for
                            them. 9 Specifically, cross-functional team pilots

                            •   completed requirements documentation for one of the Mounted
                                Assured Positioning, Navigation and Timing System’s capabilities in
                                less than a year;
                            •   replaced small airborne radio with completion of directed requirement
                                for the Integrated Tactical Network in less than 60 days; and
                            •   completed requirements documentation for a soldier lethality
                                capability in 15 days as opposed to the expected 4 months.

Army Futures Command        The Army has taken initial steps to consolidate all its modernization
Scheduled to Become         efforts under one authority, in addition to its initiation of the cross-
                            functional team pilots. In particular, the Secretary of the Army established
Fully Operational by July
                            the Army Futures Command through the issuance of a general order on
2019                        June 4, 2018. According to Army documentation, the intent of the new
                            command is to provide unity of command, accountability, and
                            modernization at the speed and scale required to prevail in future
                            conflicts. This organization is led by a four-star general like its
                            organizational peers: Army Materiel Command, Training and Doctrine
                            Command, and Forces Command. Establishing Army Futures Command
                            is the most significant institutional change to the Army since it
                            reorganized in 1973 in the wake of the Vietnam War.


                            9
                             Army officials stated that these tasks were completed, but officials were not able to
                            provide documentary evidence to support it.




                            Page 11                                         GAO-19-132 Army Long-Term Modernization
The Army is in the process of establishing the new command, but has just
begun to define its organizational structures. According to the 2018 Army
general order, Army Futures Command reached initial operating
capability in July 2018. According to Army Futures Command officials and
documentation, the new organization is charged with integrating several
existing requirements and technology development organizations—such
as Army Capabilities Integration Center in Fort Eustis, Virginia and
Research, Development, and Engineering Command headquartered in
Aberdeen, Maryland—as well as the cross-functional team pilots. The
cross-functional team pilots are in the process of being integrated into the
new command and, according to Army officials, will continue to be
responsible for managing the Army’s six modernization priorities. In
addition, Army Futures Command will be supported by a number of
operational and administrative offices to assist the components with
executing their missions. According to Army officials and documentation,
the new command will be organized around three major components:

•   Futures and Concepts: responsible for identifying and prioritizing
    capability and development needs and opportunities. This
    organization subsumed the Army Capabilities Integration Center on
    December 7, 2018—formerly part of Army Training and Doctrine
    Command, which focuses primarily on the education and training of
    soldiers.
•   Combat Development: responsible for conceptualizing and
    developing solutions for identified needs and opportunities. This
    organization will subsume Research, Development and Engineering
    Command—currently a part of Army Materiel Command, which
    focuses primarily on sustainment.
•   Combat Systems: responsible for refining, engineering, and
    producing new capabilities. The acquisition program offices will
    communicate with the new command through this organization to
    ensure integration of acquisition functions. However, the program
    offices will continue to report to the Assistant Secretary of the Army
    for Acquisition, Logistics and Technology.
Army Futures Command will be headquartered in Austin, Texas, and
existing organizations are not expected to change their locations.
According to Army officials and documentation, the Army chose Austin
because of its proximity to science, technology, engineering, and
mathematics talent, as well as private sector innovators that officials
believe will assist the command in achieving its modernization goals.
According to senior Army leadership we spoke with, the new command
headquarters will have around 300 staff in place by July 2019, a


Page 12                                 GAO-19-132 Army Long-Term Modernization
                                     workforce that may grow to 500 employees—100 military and 400
                                     civilians. Our analysis of Army’s plans for initial staffing at the Army
                                     Futures Command headquarters, based on data from July 1, 2018, found
                                     that about one-third of headquarters staff would be involved directly in
                                     modernization efforts, such as engineers and operations specialists, and
                                     the remainder would consist of support staff, including legal counsel and
                                     contracting professionals. Figure 3 shows the locations of the known
                                     major Army Futures Command components, the 8 cross-functional teams
                                     being integrated under Army Futures Command, and its new
                                     headquarters.

Figure 3: Locations of Army Futures Command Components




                                     Page 13                               GAO-19-132 Army Long-Term Modernization
                                Although initial steps have been taken to establish the new command,
                                key steps have not yet been completed. The Army stated in the executive
                                order establishing the command that it will consider Army Futures
                                Command fully operational once it is sufficiently staffed with operational
                                facilities, secure funding, and the ability to execute its assigned mission,
                                roles, and responsibilities. At full operating capability, officials told us
                                Army Futures Command will also have finalized the organizational
                                structure and the reporting responsibilities of its various components.
                                However, Army Futures Command has not yet established policies and
                                procedures detailing how it will execute its assigned mission, roles, and
                                responsibilities. For example, we found that it is not yet clear how Army
                                Futures Command will coordinate its responsibilities with existing
                                acquisition organizations within the Army that do not directly report to it.
                                One such organization is the Office of the Assistant Secretary of the Army
                                for Acquisition, Logistics and Technology—the civilian authority
                                responsible for the overall supervision of acquisition matters for the
                                Army—and the acquisition offices it oversees. To mitigate concerns about
                                coordination, in August 2018, the Army issued a directive signed by the
                                Secretary of the Army designating the military deputy of this office as an
                                advisor to Army Futures Command, a designation aimed at establishing a
                                means of coordination. Army Futures Command officials have also stated
                                that the Assistant Secretary of the Army for Acquisition, Logistics and
                                Technology will retain full acquisition authorities as required by law. Army
                                documentation shows that further policies and procedures are expected
                                to be issued in 2019.


The Army’s Efforts Have         The Army recognizes the need to balance near-term and long-term
Balanced Modernization          modernization over time. To do so, the Army has balanced its
                                modernization efforts by funding the closure of near-term capability gaps,
by Prioritizing Mitigation of
                                and identifying long-term needs to be funded. Since announcing the
Near-term Capability Gaps       modernization efforts in 2017, the Army has directed more funding toward
while Identifying Long-         closing near-term capability gaps. For example, as part of the planning for
term Needs                      the fiscal year 2019 budget process, the Army identified 67 high-priority
                                programs, such as the M-1 Abrams tank and the AH-64 Apache
                                helicopter, with capability gaps in need of further investment. To support
                                these priorities, the Army identified a need for $16 billion in increased
                                funding in fiscal years 2019 through 2023. The 2018 Army Modernization
                                Strategy report identified the need for additional resources for near-term
                                efforts, including plans to spend billions of dollars for acquisition of
                                maneuverable short range air defense capabilities in fiscal years 2020
                                through 2024. The same report described plans to spend hundreds of



                                Page 14                                GAO-19-132 Army Long-Term Modernization
                                        millions of dollars over the same period for prototyping technologies for
                                        the Next-Generation Combat Vehicle, a longer-term capability.

                                        The Army has also begun to plan research and development efforts for its
                                        long-term modernization needs. The Army identified long-term capabilities
                                        for all of the modernization priorities, as well as dates that science and
                                        technology efforts should transition to programs of record. Army officials
                                        stated that, ultimately, multiple programs of record may be considered for
                                        each capability area. For example, the Army identified science and
                                        technology efforts to develop an advanced powertrain for the Next
                                        Generation Combat Vehicle and identified planned transition dates to the
                                        program in fiscal years 2020 and 2023. The 2018 Army Modernization
                                        Strategy report provides additional details on long-term modernization
                                        efforts for three of its six priorities: Future Vertical Lift, Soldier Lethality,
                                        and Next-Generation Combat Vehicle. Figure 4 below presents a timeline
                                        for some of the proposed capabilities within each of the six priorities.

Figure 4: Timeline of Proposed Army Modernization Capabilities




                                        Note: These represent the latest planned initial operations.
                                        a
                                         The Army did not provide documentation of the date for its Alternative Waveforms.




                                        Page 15                                               GAO-19-132 Army Long-Term Modernization
                         The Army has realigned some resources to support its long-term
                         modernization priorities. In identifying long-term capabilities, we found
                         that the Army has evaluated its science and technology portfolio to
                         determine alignment with the six modernization priorities. For example, as
                         part of an October 2017 review for the office of the Deputy Under
                         Secretary of the Army, the eight cross-functional team pilots examined
                         science and technology investments to identify which efforts contributed
                         to the priorities and which efforts did not contribute to them. According to
                         this review and Army officials, the Army realigned over $1 billion in
                         funding toward the priorities for fiscal years 2019 through 2023, for a total
                         of $7.5 billion directed at these priorities. The review preserved $2.3
                         billion in funding for basic research for the same time period. According to
                         Army officials, similar science and technology reviews will be conducted
                         annually to help cross-functional teams manage their respective
                         programs’ progress and identify further opportunities for investment.

                         To fund future modernization efforts, both the science and technology
                         review and the review for the fiscal year 2020 budget process also
                         identified opportunities to reduce funding for, or eliminate, some existing
                         programs. For example, plans for the air and missile defense portfolio
                         include an option to divest from legacy short range air defense programs
                         in fiscal year 2029 if its Indirect Fires Protection Capability program
                         becomes fully operational. This aligns with statements from Army officials
                         that program decisions will be driven not by specific schedules but by the
                         maturity of replacement capabilities.


                         The Army has generally applied leading practices for technology
New Organizations        development and establishing effective cross-functional teams, and has
Have Generally           begun to apply leading practices for mergers and organizational
                         transformations for the Army Futures Command. During the Army’s pilot
Applied Leading          phase for its eight cross-functional teams, the teams took actions
Practices but the        consistent with leading practices for technology development, such as
                         bringing together requirements developers and warfighters, planning
Army Futures             prototype demonstrations, and maturing technology prior to beginning an
Command Has Taken        acquisition program. The Army’s pilot teams also applied eight leading
                         practices we have identified for establishing effective cross-functional
Limited Steps to Fully   teams to varying degrees. In addition, senior Army leadership has been
Apply These              clear in its support for the new command and has clearly outlined a
                         timeframe for its establishment, actions that are in line with the leading
Practices                practices for mergers and organizational transformations we have
                         identified in prior work. Whether further application of these leading
                         practices will continue under the new command is unclear as the role of


                         Page 16                                 GAO-19-132 Army Long-Term Modernization
                           the cross-functional teams has not yet been formalized and Army Futures
                           Command has not yet taken all the steps needed to reach full operational
                           capability.


Cross-Functional Team      We found that the Army’s eight cross-functional team pilots generally
Pilots Generally Applied   applied leading practices identified in our prior work when it came to their
                           requirements and technology development efforts. As we found in April
Leading Practices for
                           2018, positive outcomes result from taking a knowledge-based approach
Technology Development,    to product development that demonstrates high levels of knowledge
but Plan to Move into      before making significant resource commitments. Our review of the
System Development         Army’s cross-functional team pilots found that they have generally applied
Early                      leading practices to the following two areas:

                           •   Promoted communication between end-users and requirements
                               developers. The Army directive that established the cross-functional
                               team pilots as well as these teams’ charters state that teams will
                               follow a methodology of collaboration between warfighters and
                               developers to prepare capability documents. An official from the
                               Synthetic Training Environment cross-functional team told us that
                               involving industry representatives and warfighters helps the cross-
                               functional team get “closer to what ‘right’ looks like” early in the
                               requirements development process. By promoting communication
                               between industry representatives and warfighters, the cross-functional
                               teams helped ensure that developer resources better matched end-
                               user needs.
                           •   Planned to prototype capabilities as part of technology and
                               product development. The Army directive establishing the cross-
                               functional team pilots states that cross-functional teams should
                               incorporate iterative experimentation and technical demonstrations to
                               inform capability requirements. As an illustration of this practice,
                               officials from the Future Vertical Lift cross-functional team told us that
                               they will hold a “fly off” between two competitive prototypes of the
                               Future Attack Reconnaissance Aircraft in fiscal year 2023 before
                               choosing a design for follow-on testing and integration in fiscal year
                               2024.
                           However, we are concerned that the Army has plans to mature
                           technology to a level lower than the threshold recommended by leading
                           practices before beginning system development. Specifically, we found
                           that the Army’s October 2017 science and technology review identified a
                           goal of demonstrating new technologies in a relevant environment, such
                           as a highly realistic laboratory setting, before transitioning them to specific



                           Page 17                                  GAO-19-132 Army Long-Term Modernization
platforms or programs. As an example, the Soldier Lethality cross-
functional team began maturing technology for the next generation squad
automatic rifle to this level of maturity to prepare it for the transition to
product development, scheduled for the end of fiscal year 2019. Under
leading practices that we identified, prototypes should be demonstrated in
an operational or realistic environment—not simply in a relevant
environment—prior to starting system development to ensure that they
work as intended for the end-user.

The Army’s choice to start a formal acquisition program at lower levels of
technology maturity raises concerns that are consistent with those we
have raised in the past. Our past work indicates that by demonstrating
technologies only in a relevant rather than an operational environment,
the Army increases the risk that new capabilities will not perform as
intended and require further technological maturation while in system
development. This could raise costs and extend timelines for delivery of
equipment to the warfighter. For example, almost two decades ago in a
1999 report, we recommended demonstrating technologies in an
operational environment prior to system development and DOD
concurred with that recommendation. We have also reported the
importance of achieving this level of maturity on an annual basis since
2003, most recently in 2018, in our assessment of DOD’s major weapon
system acquisition programs. In addition, we again reiterated this leading
practice in 2016 in our technology readiness assessment guide.

While DOD has a policy, based in statute, that generally requires major
defense acquisition programs to, at a minimum, demonstrate
technologies in a relevant environment before system development, that
policy does not preclude the cross-functional teams from pursuing a
higher level of maturity. Such an approach would be consistent with
leading practices that recommend maturing technologies to a higher




Page 18                                 GAO-19-132 Army Long-Term Modernization
                           level. 10 By applying these leading practices, the cross-functional teams
                           could better ensure that prototypes are demonstrated in an operational or
                           realistic environment prior to starting system development to ensure that
                           they work as intended for the end-user.


Cross-Functional Team      Our prior work has identified eight leading practices that organizations
Pilots Demonstrated Some   should use for establishing effective cross-functional teams. 11 In
Leading Practices for      reviewing the Army’s eight cross-functional team pilots, we found that
                           they have applied these practices to varying degrees. Table 3 describes
Effective Teams, but Few   these leading practices.
Steps Taken to
Incorporate these
Practices in New
Command




                           10
                             Technology readiness levels are a tool, developed by National Aeronautics and Space
                           Administration, to determine the readiness of technologies to be incorporated into a
                           weapon or another type of system. Readiness levels are measured along a scale of one to
                           nine, starting with paper studies of the basic concept, proceeding with laboratory
                           demonstrations, and ending with a technology that has proven itself on the intended
                           product. GAO’s leading practices work has shown that a Technology Readiness Level 7—
                           which corresponds to demonstrating all critical technologies in form, fit, and function within
                           a realistic environment—is the level of technology maturity that constitutes a low risk for
                           starting development. DOD’s policy, however, permits development to start at a lower
                           technology maturity level—Technology Readiness Level 6, which corresponds to
                           demonstrating technology in a relevant environment. DOD’s policy is based on a statute
                           that generally prohibits a major defense acquisition program from receiving approval for
                           development start until the milestone decision authority certifies—based on an
                           independent review and technical risk assessment—that the technology in the program
                           has been demonstrated in a relevant environment. 10 U.S.C. § 2366b(a)(2). Under certain
                           circumstances, this requirement may be waived. Id. § 2366b(d).
                           11
                            GAO, Defense Management: DOD Needs to Take Additional Actions to Promote
                           Department-Wide Collaboration, GAO-18-194 (Washington, D.C.: Feb. 28, 2018).




                           Page 19                                          GAO-19-132 Army Long-Term Modernization
Table 3: Leading Practices for Establishing Effective Cross-Functional Teams

Leading practice              Description                                        Selected Key characteristics
Open and regular              Efficient cross-functional teams have effective    •   Team members should openly share
communication                 communication mechanisms.                              information within the team.
                                                                                 •   Teams should proactively seek feedback and
                                                                                     information from stakeholders.
                                                                                 •   Teams should have open and regular
                                                                                     communication with team members, team
                                                                                     leaders, and management.
Well-defined team goals       Effective cross-functional teams have clear,       •   Team goals should be clear, well defined,
                              updated, and well-defined goals common to              linked, updated, and commonly shared with
                              the team, team leader, and management.                 team members, team leaders and senior
                                                                                     leaders (management).
                                                                                 •   Team objectives should have linkages to the
                                                                                     organization’s goals.
Inclusive team Environment    Effective cross-functional teams invest in a       •   Teams should invest in a team culture with
                              supportive and inclusive team environment              shared values of inclusiveness and collective
                              where all team members have collective                 responsibility.
                              responsibility and individual accountability for   •   Individual team members should participate and
                              the team’s work.                                       be accountable for the team’s work.
Well-defined team structure   Effective cross-functional teams have well-        •   Teams should have a well-defined structure,
                              defined team operations with project-specific          project-specific rules, and procedures.
                              rules and procedures established for each          •   Teams should have appropriate training and
                              team.                                                  learning environments.
Autonomy                      Effective cross-functional teams are               •   Teams should be empowered to make
                              independent and have the ability to make               decisions.
                              decisions independently and rapidly.               •   Teams should be able to creatively solve
                                                                                     problems.
Senior management support     Effective cross-functional teams have senior       •   Senior management should support cross-
                              managers who view the teams as a priority              functional teams as a priority and provide
                              within the organization and provide these              access to resources and rewards.
                              teams with resources and rewards to                •   Senior management should provide career
                              recognize their work.                                  advancement opportunities.
Committed cross-functional    Effective cross-functional teams have              •   Team members should have a wide diversity of
team members                  members committed to the team’s goals.                 knowledge and expertise.
                                                                                 •   Team members should be committed to working
                                                                                     toward achieving the team’s goals.
Empowered cross-functional    The selected cross-functional team leader          •   Team leaders should be empowered to provide
team leader                   should provide clear guidance for team                 clear guidance and be proactive in decision
                              members, be proactive and empowered to                 making.
                              make decisions, and provide feedback and           •   Team leaders should provide feedback and
                              developmental opportunities to team members.           developmental opportunities to team members.
                                                                                 •   Team leaders should regularly interact with
                                                                                     senior management.
Source: GAO. | GAO-19-132




                                          Page 20                                         GAO-19-132 Army Long-Term Modernization
All eight Army cross-functional team pilots fully applied four of these
leading practices.

•   Well-defined team goals. We found that each cross-functional team
    pilot charter clearly defined its team’s goals. For example, the Long-
    Range Precision Fires cross-functional team charter states that it will
    rapidly integrate and synchronize the requirements development
    process to deliver cutting edge capabilities to the operating force as
    the best possible return on investment for warfighters. In addition,
    senior Army leadership approved the charters containing each team’s
    goals, ensuring that the goals defined for the teams were linked to the
    Army’s larger goal of modernization.
•   Open and regular communication. Members of all eight cross-
    functional team pilots shared information with each other, sought
    feedback, and communicated with team leaders and senior Army
    leadership. For example, officials from the Next Generation Combat
    Vehicle cross-functional team told us that ongoing dialogue with
    senior Army leadership resulted in numerous rounds of refined
    guidance. The cross-functional team took that guidance, reconvened,
    assessed options, and then presented another round of updates to
    Army senior leadership. Moreover, the directive establishing the
    cross-functional team pilots requires that they develop capability
    documents, informed by experimentation and technical
    demonstrations, to ensure that planned capabilities are
    technologically feasible, affordable, and therefore can eventually be
    provided to soldiers. According to Army officials, developing such
    documents requires open and regular communication between team
    members who have expertise in diverse fields such as contracting,
    cost analysis, and testing.
•   Autonomy. The eight cross-functional team pilots’ charters show, and
    interviews with members confirm, that teams are granted substantial
    autonomy by senior Army leadership. The cross-functional team
    charters give teams the authority to solve internal problems through
    market research, prototyping, technical demonstrations, and user
    assessments. For example, the Synthetic Training Environment cross-
    functional team and senior Army leadership stressed to us the
    importance of experimentation as an opportunity to “fail early and fail
    cheap.” According to cross-functional team members, this allows
    cross-functional teams to move on and avoid expensive and time-
    consuming failures later in the acquisition process, as has happened
    with Army in the past. Furthermore, cross-functional teams can reach
    out to subject matter experts needed to develop requirements without
    having to obtain permission from senior Army leadership.


Page 21                                 GAO-19-132 Army Long-Term Modernization
•   Committed team members. All eight cross-functional team pilots
    include members with expertise in diverse fields who are committed to
    achieving team goals. For example, the Network cross-functional
    team charter states that the team should consist of experienced and
    committed subject matter experts executing disciplined initiatives and
    willing to take prudent risks. In addition, the directive establishing the
    cross-functional teams states that they should leverage industry and
    academia where appropriate to increase knowledge and expertise.
    Staffing information provided by multiple cross-functional teams
    demonstrates the diversity of expertise the Army has applied to these
    efforts. Cross-functional team members also provided us with multiple
    examples of how their teams have leveraged outreach with industry
    and academia to improve their understanding of requirements and
    technology.
Additionally, we found that the eight cross-functional team pilots have at
least partially applied the following four leading practices.

•   Senior management support. Senior Army leaders, including the
    Secretary and the Chief of Staff, have championed the cross-
    functional team pilots in public statements. Although an Army official
    told us that he was aware of a member of a cross-functional team
    (who left the team) receiving a civilian achievement award, we did not
    find any documentary evidence of senior Army leaders providing
    incentives or recognition to members of the eight cross-functional
    team pilots. Because many members of cross-functional teams,
    including some leaders of these teams, work in a number of different
    roles, they do not have a consistent chain of command that can
    provide incentives or recognition across all of their activities. The
    “dual-hatted” nature of team members—in which they work for their
    parent organization as well as the cross-functional team pilot—may
    further complicate full application of this leading practice.
•   Empowered team leaders. The team leaders of all eight cross-
    functional team pilots are empowered to make decisions and regularly
    interact with senior Army leaders. While an Army official stated that
    team leaders and Army leadership provide guidance to cross-
    functional team members, we did not find any documentary evidence
    of these leaders providing feedback to members of those teams.
    However, many members of the cross-functional teams, including
    directors, are only temporarily assigned to cross-functional team pilots
    because they work in other functions simultaneously.
•   Well-defined team structure. While most cross-functional team pilots
    have established operating procedures and organizational structures,



Page 22                                  GAO-19-132 Army Long-Term Modernization
    we found that some have not provided training to their members on
    the operations of cross-functional teams and how they relate to other
    organizations. Our previous work identified appropriate training as a
    key characteristic of a well-defined team structure. Most cross-
    functional team charters do not address the issue of training. Through
    our discussions with the cross-functional teams, we found the
    following with respect to training:
    •     An official from the Soldier Lethality cross-functional team told us
          that team members received training and planned to attend further
          training to enhance creative and “outside-the-box” thinking.
    •     The director of the Network cross-functional team told us that,
          even though he did not receive training, he was able to leverage
          his previous experience leading matrixed organizations.
    •     The Long-Range Precision Fires cross-functional team told us that
          members started their work without any training and this posed a
          challenge as they were unfamiliar with each other’s roles and
          work.
•   Inclusive team environment. The founding documents for the cross-
    functional team pilots themselves generally did not address attributes
    of this leading practice, such as having team members that support
    and trust one another. However, discussions with team members
    indicate some teams have invested in creating such an environment.
    The Soldier Lethality cross-functional team members stated that
    working in a cross-functional team as opposed to working as separate
    individuals in disparate offices, allowed them write requirements
    faster. It also created an atmosphere in which members got to know
    each other’s experiences and trust each other’s views. Officials from
    the Synthetic Training Environment cross-functional team told us they
    spent their first week gaining an understanding of each team
    member’s role on the team to foster such inclusivity.
As previously described, the cross-functional team pilots were an effort to
achieve several goals including to identify ways the Army could increase
efficiency in requirements and technology development. According to
Army officials, the teams have shown initial progress in doing so,
delivering requirements—and in some cases developing capabilities for
delivery in the next two years—to the warfighter in shorter than
anticipated timeframes. However, the Army has not yet definitively
established the cross-functional teams’ roles, responsibilities, and how
they will operate within Army Futures Command. As a result, it is unclear
if the Army will benefit from the experience and expertise of these teams
applying leading practices as they transition into Army Futures Command.



Page 23                                   GAO-19-132 Army Long-Term Modernization
                             Until the Army takes formal steps to institutionalize the beneficial
                             practices used by the cross-functional teams during the pilot phase such
                             as autonomy, proactive decision making, and access to senior leadership
                             it will be missing a valuable opportunity to integrate these practices into
                             the new command.


Army Futures Command         The Army directive that established the cross-functional teams directed
Does Not Have a Formal       each team pilot to capture best practices and lessons learned and report
                             them to the Army office that oversaw their efforts. 12 Officials from the
Plan to Identify and Share
                             cross-functional teams described to us lessons they learned and planned
Lessons Learned from         to pass on to their oversight office for the benefit of Army Futures
Cross-Functional Team        Command. For example, officials from the Air and Missile Defense cross-
Pilots                       functional team stated that having direct access to the Under Secretary
                             and the Vice Chief of Staff of the Army is important for obtaining quick
                             decisions, which save time and money in getting capabilities to the
                             warfighter.

                             While officials from Army Futures Command told us that they intend to
                             collect lessons learned from the cross-functional team pilots, they do not
                             yet have a formal plan to identify and incorporate lessons learned. Since
                             the cross-functional team pilots were established to experiment with new
                             approaches, it is important that they take steps to capture the lessons
                             they have learned—positive and negative—so they can be shared as
                             these teams are integrated into Army Futures Command. If the Army fails
                             to institutionalize these lessons learned in the new command, it risks
                             losing the benefits from the experiences of these pilots thereby either
                             repeating past mistakes or failing to benefit from past practices that
                             worked well. If it can capture the lessons learned, it has an opportunity to
                             accelerate the progress these teams made during their pilot phase and
                             spread the benefits across all the cross-functional teams and across a
                             wider range of specific military capabilities they are pursuing. In our
                             discussions with Army Futures Command officials they agreed that
                             formalizing and implementing a plan to collect and incorporate lessons
                             learned would be beneficial.




                             12
                              Department of the Army, Cross-Functional Team Pilot In Support of Materiel
                             Development, Army Directive 2017-24, 8.j.(4), (Washington, D.C.: Oct. 6, 2017).




                             Page 24                                       GAO-19-132 Army Long-Term Modernization
Incorporating Leading                         Army officials told us that the establishment of Army Futures Command
Practices for                                 represents a dramatic organizational transformation in how the Army will
                                              develop weapon systems and platforms. In our previous work on mergers
Organizational
                                              and organizational transformations in federal agencies, we have identified
Transformations Could                         several leading practices, as shown in table 4 below, that can help
Benefit Army Futures                          agencies undertaking such transformational efforts. 13
Command
Table 4: Leading Practices for Mergers and Organizational Transformations

Leading practice                                                Implementation step
Ensure top leadership drives the transformation.                •   Define and articulate a succinct and compelling reason for change.
                                                                •   Balance continued delivery of services with merger and
                                                                    transformation activities.
Establish a coherent mission and integrated strategic           •   Adopt leading practices for results-oriented strategic planning and
goals to guide the transformation.                                  reporting.
Focus on a key set of principles and priorities at the outset   •   Embed core values in every aspect of the organization to reinforce
of the transformation.                                              the new culture.
Set implementation goals and a timeline to build                •   Make public implementation goals and timeline.
momentum and show progress from day one.                        •   Seek and monitor employee attitudes and take appropriate follow-up
                                                                    actions.
                                                                •   Identify cultural features of merging organizations to increase
                                                                    understanding of former work environments.
                                                                •   Attract and retain key talent.
                                                                •   Establish an organization-wide knowledge and skills inventory to
                                                                    exchange knowledge among merging organizations.
Dedicate an implementation team to manage the                   •   Establish networks to support the implementation team.
transformation process.                                         •   Select high-performing team members.
Use the performance management system to define                 •   Adopt leading practices to implement effective performance
responsibility and assure accountability for change.                management systems with adequate safeguards.
Establish a communication strategy to create shared             •   Communicate early and often to build trust.
expectations and report related progress.                       •   Ensure consistency of message.
                                                                •   Encourage two-way communication.
                                                                •   Provide information to meet specific needs of employees.
Involve employees to obtain their ideas and gain their          •   Use employee teams.
ownership for the transformation.                               •   Involve employees in planning and sharing performance information.
                                                                •   Incorporate employee feedback into new policies and procedures.
                                                                •   Delegate authority to appropriate organizational levels.
Build a world-class organization.                               •   Adopt leading practices to build a world-class organization.
Source: GAO. | GAO-19-132


                                              13
                                               GAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers and
                                              Organizational Transformations, GAO-03-669 (Washington, D.C.: (July 2, 2003).




                                              Page 25                                          GAO-19-132 Army Long-Term Modernization
As the Army is standing up Army Futures Command, it has begun to
apply some of the leading practices for mergers and organizational
transformations. For example, senior Army officials have provided a clear
and consistent rationale for establishing the new command in official
directives and in public appearances. They have also clearly described
the mission of the Army Futures Command and established a timeline for
its implementation. However, the command has not yet formalized and
institutionalized its authorities, responsibilities, policies and procedures
nor taken steps to apply these or other leading practices.

While we observed a strong organizational unity of purpose and
collaboration from the current senior leadership in the Army for the Army
Futures Command, this could change as the Army’s leadership changes.
For example, according to law, the tenure of the Chief of Staff of the Army
is generally limited to 4 years and the current Chief of Staff has already
served 3 years. 14 Furthermore, the Secretary of the Army is appointed by
the President, subject to the advice and consent of the Senate, and
therefore may change with new presidential administrations and during
administrations. 15 For example, the past 6 people, prior to the current
secretary, confirmed as the Secretary of the Army served an average of
959 days—about 2 and one-half years. The current secretary has already
served about 1 year. Further, senior Army officials told us that they expect
changes at both top and mid-tier leadership within the new command will
periodically occur as a result of the Army’s normal system of rotations for
officers. For example, a senior military official in Army Futures Command
told us that they expect commanders of components will rotate every 4
years. Therefore, because this modernization effort is expected to span a
decade or longer, continued support from current and future senior Army
officials, such as the Chief of Staff and the Secretary of the Army, will be
essential to ensure the success of the new command into the future.

We have previously reported in our work on internal controls that it is
important to establish the organizational structure necessary to enable an
entity to plan, execute, control, and assess the organization in achieving
its objectives as well as respond to potential changes in, among other
things, personnel. 16 By fully applying key principles of major mergers and
14
 10 U.S.C. § 3033(a)(1).
15
 10 U.S.C. § 3013.
16
 GAO, Standards of Control for the Federal Government, GAO-14-704G (Washington,
D.C.: September 2014).




Page 26                                    GAO-19-132 Army Long-Term Modernization
              organizational transformations as the Army completes the process of
              establishing the Army Futures Command, the Army can better ensure the
              new command realizes its goals for modernization through development
              of well-defined requirements, incorporation of mature technologies, and
              development of systems that provide the warfighter with the capabilities
              needed for future conflicts.


              The Army has made substantial changes to how it intends to coordinate
Conclusions   and oversee modernization efforts, due at least in part to the lost years
              and billions of dollars from past efforts to modernize. The Army has taken
              positive steps to improve its current modernization efforts and has already
              seen some initial successes. The creation of the new command, the
              integration of the cross-functional teams to better refine requirements and
              cultivate technologies, the realignment of several existing organizations,
              and the shifting of personnel gives the Army a unique opportunity to take
              advantage of leading practices and its own lessons learned.

              The Army, however, faces some key challenges. In particular, the Army’s
              intent to transition technologies to weapon systems before technologies
              are matured is inconsistent with leading practices, risks delays in
              equipping the warfighter, and can potentially lead to cost overruns. In
              addition, the cross-functional team pilots have demonstrated some initial
              successes in shortening the requirements development process—and,
              more generally, in collaborating across the Army—but it is not clear what
              steps the Army Futures Command plans to take to incorporate the
              experience and expertise of these teams in applying leading practices
              and thereby sustain these benefits. Further, the Army lacks a formal plan
              to identify and incorporate lessons learned from the cross-functional
              teams as Army Futures Command becomes fully operational and could
              thereby miss an opportunity to leverage the experience of these teams on
              past practices that worked well and those that did not. Finally, as the
              Army finalizes the roles, authorities, and responsibilities for the Army
              Futures Command it can benefit from applying leading practices related
              to mergers and organizational transformations. This can help ensure that
              Army Futures Command realizes its goals for modernization including
              unity of command, accountability, and modernization at the speed and
              scale required to prevail in future conflicts.




              Page 27                                GAO-19-132 Army Long-Term Modernization
                      We are making four recommendations to the Secretary of the Army:
Recommendations for
Executive Action      •   The Secretary of the Army should ensure that the Commanding
                          General of Army Futures Command applies leading practices as they
                          relate to technology development, particularly that of demonstrating
                          technology in an operational environment prior to starting system
                          development. (Recommendation 1)
                      •   The Secretary of the Army should ensure that the Commanding
                          General of Army Futures Command takes steps to incorporate the
                          experiences of the cross-functional teams in applying leading
                          practices for effective cross-functional teams. (Recommendation 2)
                      •   The Secretary of the Army should ensure that the Commanding
                          General of Army Futures Command executes a process for identifying
                          and incorporating lessons learned from cross-functional team pilots
                          into the new command. (Recommendation 3)
                      •   The Secretary of the Army should ensure that the Commanding
                          General of Army Futures Command fully applies leading practices for
                          mergers and organizational transformations as roles, responsibilities,
                          policies and procedures are finalized for the new command.
                          (Recommendation 4)

                      We provided a draft of this report to the Department of Defense for review
Agency Comments       and comment. In its written comments, reproduced in appendix II, the
and Our Evaluation    Department concurred with all four of our recommendations and made
                      certain technical comments which we incorporated as appropriate.

                      In concurring with our recommendation on demonstrating technology in
                      an operational environment, the Department of Defense requested that
                      we reword the recommendation to reflect that technology maturity be
                      considered with other factors, such as risk assessment and troop
                      availability. We understand the Department’s desire for flexibility, but
                      continue to believe that reaching higher levels of technological maturity,
                      through demonstrating technologies in an operational environment prior
                      to beginning system development adds significant value by reducing risk;
                      something that could help the Army deliver capabilities it believes are
                      urgently needed. As such, we made no change to the recommendation.


                      We are sending copies of this report to the appropriate congressional
                      committees, the Secretary of Defense, the Secretary of the Army, the
                      Commander of Army Futures Command, and other interested parties. In



                      Page 28                                GAO-19-132 Army Long-Term Modernization
addition, the report is available at no charge on the GAO website at
http://www.gao.gov.

If you or your staff have any questions about this report, please contact
me at (202) 512-4841 or ludwigsonj@gao.gov. Contact points for our
Office of Congressional Relations and Public Affairs may be found on the
last page of this report. GAO staff that made significant contributions to
this report are listed in appendix III.




Jon Ludwigson
Acting Director
Contracting and National Security Acquisitions




Page 29                                GAO-19-132 Army Long-Term Modernization
Appendix I: Objectives, Scope and
              Appendix I: Objectives, Scope and
              Methodology



Methodology

              Section 1061 of the National Defense Authorization Act for Fiscal Year
              2018 included a provision for GAO to report on the Army’s modernization
              strategy. 1 This report assesses (1) the status of the Army’s efforts to
              establish new acquisition organizations while balancing near- and long-
              term modernization; and (2) the extent to which the Army has applied
              leading practices to do so. 2

              To assess the status of the Army’s efforts to establish new acquisition
              organizations we reviewed the Army general orders and directives that
              established these organizations. This review included documentation
              such as:

              •   Army General Order 2018-10 that established the Army Futures
                  Command, as well as reassigned existing organizations, such as the
                  Army Capabilities Integration Center from the Training and Doctrine
                  Command and the eight cross-functional team pilots to the new
                  command.
              •   Army Directive 2017-24 that established the cross-functional team
                  pilots and provided guidance on how they should operate to improve
                  the quality and speed of materiel development activities.
              •   Army Directive 2017-22 that provided guidance for implementation of
                  acquisition reform policy/initiatives to reflect modernization such as
                  directive 2017-29 to improve the integration of science and technology
                  into concept, capability, and materiel development.
              •   Army Regulation 73-1 (Test and Evaluation Policy)
              •   Army Regulation 70-1 (Army Acquisition Policy)
              •   Army Regulation 71-9 (Warfighting Capabilities Determination)
              •   Training and Doctrine Command Regulation 71-20 (Concept
                  Development, Capabilities Determination, and Capabilities
                  Integration)



              1
              See Pub. L. No. 115-91, § 1061(e) (2017).
              2
               This report fulfills part of GAO’s statutory mandate required by subparagraph (C) of
              section 1061(e)(2) of the National Defense Authorization Act for Fiscal Year 2018.
              Subparagraphs (A) and (B) of section 1061(e)(2) of the same Act required GAO to assess
              the Army’s near-term modernization efforts, which we addressed in GAO, Army
              Modernization: Actions Needed to Measure Progress and to Fully Identify Near-Term
              Costs, GAO-18-604SU, (Washington, D.C.: Sept. 28, 2018) and is for official use only.




              Page 30                                      GAO-19-132 Army Long-Term Modernization
Appendix I: Objectives, Scope and
Methodology




•   Headquarters, Department of the Army Executive Order 176-18
    (Establishment of Army Futures Command)
We also interviewed the Under Secretary of the Army, officials from Army
Futures Command and related organizations like the Office of Process
Innovation and Integration, members of the eight cross-functional teams,
the Army Capabilities Integration Center, and the Army Research,
Development, and Engineering Command.

To assess the balance of modernization priorities between near-term and
long-term, we reviewed documentation related to those lines of effort
including:

•   the 2018 Army Modernization Strategy report—which describes the
    rationale behind modernization and the efforts for each priority,
•   the Strategic Portfolio Analysis Review for Fiscal Year 2020—which is
    a part of the budget process to determine priorities, align science and
    technology efforts to capabilities, and plan milestones,
•   the Deputy Under Secretary of the Army and Research and
    Development Command Science and Technology Review of October
    2017—which describes the science and technology priorities for each
    cross-functional team and realigns funding through identifying
    opportunities to divest, and
•   Strategic Capability Roadmaps—which provide a timeline for the
    development and fielding of the capabilities being developed by some
    of the cross-functional teams.
To review these documents, we created a data collection instrument to
capture the efforts as they related to each of the eight cross-functional
teams and consolidate the different sources of information. We first
collected information about the capabilities in which cross-functional team
officials indicated their involvement. For these capabilities, we recorded
planned milestones and the date that the capability would first be
operational. We also recorded whether or not the capability was new or
an incremental upgrade, the science and technology efforts to develop
that capability, and whether or not those efforts contributed to other
capabilities. We then collected data related to the general efforts of the
cross-functional teams. These efforts included divestment opportunities,
and the amounts of funding aligned to the associated modernization
priority. We also interviewed officials from the cross-functional teams, the
office of Army G-8, and other Army offices.




Page 31                                 GAO-19-132 Army Long-Term Modernization
Appendix I: Objectives, Scope and
Methodology




To address the extent to which the Army’s cross-functional team pilots
applied leading practices for technology development, we

•   Reviewed cross-functional team charters, the 2018 Army
    Modernization Strategy report, Fiscal Years 2019 and 2020 Strategic
    Portfolio Analysis, the Army’s Fiscal Year 2019 President’s Budget,
    and the Army’s October 2017 Science and Technology Review to
    identify actions related to the development of near- and long-term
    capabilities for the Army’s six modernization priorities that align with
    the eight cross-functional teams.
•   Interviewed cross-functional team officials to learn about technology
    development activities they conducted or planned to conduct
    regarding these priorities.
•   Selected leading practices from our body of work on weapons
    systems acquisitions based on which ones are most relevant to where
    the cross-functional teams’ activities fit within the broader weapons
    systems acquisition process.
•   Consolidated relevant data from Army documentation and statements
    from Army officials regarding their technology development efforts in a
    record of analysis containing a description of leading practices for
    technology development identified in our prior work.
•   Compared Army documentation and cross-functional team officials’
    statements against leading practices for technology development
    identified in our prior work, specifically promoting communication
    between requirement developers’ and end-users, prototyping
    technologies, and maturing technology to a specific threshold. 3
To address the extent to which cross-functional team pilots applied
leading practices for establishing effective cross-functional teams, we

•   Reviewed Army Directive 2017-24, which established the cross-
    functional teams, as well as each team’s charter.




3
 GAO, Weapons Systems Annual Assessment: Knowledge Gaps Pose Risks to
Sustaining Recent Positive Trends, GAO-18-360SP (Washington, D.C.: Apr. 25, 2018);
Weapons Systems: Prototyping Has Benefitted Acquisition Programs, but More Can Be
Done to Support Innovation Initiatives, GAO-17-309 (Washington, D.C.: June 27, 2017);
and Best Practices: Using a Knowledge-Based Approach to Improving Weapon
Acquisition, GAO-04-386SP (Washington D.C.: Jan. 1, 2004).




Page 32                                      GAO-19-132 Army Long-Term Modernization
Appendix I: Objectives, Scope and
Methodology




•   Interviewed officials from each cross-functional team and other Army
    offices regarding the collaborative, communicative, and technology
    development efforts of these teams.
•   Consolidated and analyzed data from Army documentation and
    statements from Army officials related to leading practices for
    establishing effective cross-functional teams, identified in our prior
    work.
•   Compared the content of the Army documents and statements from
    cross-functional team officials against leading practices identified in
    our prior work to determine whether cross-functional teams had
    demonstrated actions consistent with these practices. 4 We then had a
    second analyst check the same documents and statements to verify
    our initial result.
To address the extent to which Army Futures Command applied leading
practices for mergers and organizational transformations and
incorporated lessons learned from the cross-functional team pilots, we

•   Reviewed Headquarters Department of the Army Executive Order
    176-18, which established the Army Futures Command, and Army
    Directive 2017-33, which established the Modernization Task Force. 5
•   Interviewed senior Army officials involved in the establishment of the
    new command and cross-functional team officials.
•   We selected leading practices identified by GAO for mergers and
    organizational transformations in our prior work because the
    establishment of Army Futures Command represents the largest
    organizational transformation the Army has undertaken since 1973
    and includes merging existing Army organizations into a new
    command.
•   Although Army Futures Command is not yet fully operational, we
    analyzed Army documentation and officials’ statements regarding the
    new command against leading practices identified in our prior work




4
 GAO, Defense Management: DOD Needs to Take Additional Actions to Promote
Department-Wide Collaboration, GAO-18-194 (Washington, D.C.: Feb. 28, 2018).
5
 Department of the Army, Enabling Modernization Task Force, Army Directive 2017-33
(Washington, D.C.: Nov. 7, 2017).




Page 33                                     GAO-19-132 Army Long-Term Modernization
Appendix I: Objectives, Scope and
Methodology




    and the lessons learned from the cross-functional teams to assess
    whether it had applied these leading practices. 6




6
 GAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers and
Organizational Transformations, GAO-03-669 (Washington, D.C.: July 23, 2003).




Page 34                                      GAO-19-132 Army Long-Term Modernization
Appendix II: Comments from the Department
             Appendix II: Comments from the Department
             of Defense



of Defense




             Page 35                                     GAO-19-132 Army Long-Term Modernization
Appendix II: Comments from the Department
of Defense




Page 36                                     GAO-19-132 Army Long-Term Modernization
Appendix II: Comments from the Department
of Defense




Page 37                                     GAO-19-132 Army Long-Term Modernization
Appendix III: GAO Contact and Staff
                  Appendix III: GAO Contact and Staff
                  Acknowledgments



Acknowledgments


                  Jon Ludwigson, (202) 512-4841 or Ludwigsonj@gao.gov
GAO Contact
                  In addition to the contact named above, J. Kristopher Keener (Assistant
Staff             Director), Joe E. Hunter (Analyst-in-Charge), Jenna Blair, Emily Bond,
Acknowledgments   Matthew T. Crosby, Cale Jones, Kevin O’Neill, John Pendleton, John
                  Rastler, A. Maurice Robinson, and Roxanna Sun made significant
                  contributions to this review.




(102574)
                  Page 38                               GAO-19-132 Army Long-Term Modernization
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