oversight

Defense Acquisitions: Comanche Program Cost, Schedule, and Performance Status

Published by the Government Accountability Office on 1999-08-24.

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

                   United States General Accounting Office

GAO                Report to the Honorable
                   Peter A. DeFazio, House of
                   Representatives


August 1999
                   DEFENSE
                   ACQUISITIONS

                   Comanche Program
                   Cost, Schedule, and
                   Performance Status




GAO/NSIAD-99-146
United States General Accounting Office                                                                  National Security and
Washington, D.C. 20548                                                                            International Affairs Division



                                    B-280314                                                                                         Letter

                                    August 24, 1999

                                    The Honorable Peter A. DeFazio
                                    House of Representatives

                                    Dear Mr. DeFazio:

                                    The Comanche helicopter program, with a total projected cost of
                                    $48 billion, is the Army’s largest aviation acquisition program. It began in
                                    1983 as an effort to replace the Army’s fleet of aging light utility,
                                    reconnaissance, and attack helicopters. Since then, the program has been
                                    restructured five times, and it is still in development. The first four times, it
                                    was restructured because of concerns over program affordability and
                                    changing requirements. As a result, planned procurement quantities were
                                    reduced, development was delayed, and unit costs increased. In July 1998,
                                    the Army restructured the program for the fifth time.

                                    As you requested, we reviewed the status of the Comanche program.
                                    Specifically, we assessed (1) risks in the Army’s restructured plans for
                                    developing and testing the Comanche, (2) changes in the Comanche’s
                                    performance capabilities and requirements, (3) current cost estimates for
                                    development, and (4) the Comanche’s impact on the Army’s overall aviation
                                    modernization efforts.



Results in Brief                    The Comanche’s restructured program contains significant risks1 of cost
                                    overruns, schedule delays, and degraded performance because it would
                                    (1) begin the engineering and manufacturing development phase before
                                    some key mission equipment technologies have matured and have been
                                    integrated into the flight-test aircraft; (2) compress the flight-test schedule,
                                    increasing the amount of concurrent developmental and operational
                                    testing; and (3) begin initial production before initial operational testing
                                    starts, resulting in concurrency between development testing and initial
                                    production. The program is proceeding to the next development phase
                                    with high levels of uncertainty. Successful commercial firms generally do


                                    1
                                     Risk is a measure of the probability that a planned objective will not be met and of the consequences of
                                    failing to achieve that outcome.




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        not proceed into product development and production with such high
        levels of uncertainty.2

        The Army is proposing changes to the aircraft that would adversely impact
        some of the Comanche’s planned performance capabilities. While their
        exact impact is unknown, these changes will increase the risk that the
        Comanche’s planned performance goals will not be achieved. For example,
        to meet increased range requirements for certain missions, the Army plans
        to use external fuel tanks that would likely reduce the helicopter’s planned
        stealth, cruising speed, maneuverability, and other performance
        capabilities. Plans to add the Longbow fire control radar system would
        provide enhanced target acquisition capabilities but would add weight and
        drag that would reduce other performance capabilities.

        The Army acknowledges that it will not achieve its goal of executing the
        Comanche’s restructured development program within the planned funding
        estimate of about $4.4 billion for fiscal years 1999 through 2006. An
        analysis by the Department of Defense’s (DOD) Cost Analysis Improvement
        Group in November 1998, found that total program costs would be about
        $150 million (3.4 percent) higher than the Army’s current estimate. The
        Group also believes that insufficient near-term funding could lead to a 6- to
        12-month schedule delay, which could add between $275 million and
        $425 million to the program’s overall development costs. Further, the
        Army’s accelerated technology development and testing plans increase the
        risk of additional schedule delays and cost increases.

        The Army continues to single out the Comanche as the centerpiece of its
        aviation modernization plan. The Comanche program, as currently
        planned, would absorb an increasingly larger share of the Army’s total
        aviation budget and would account for about 64 percent of the budget in
        fiscal year 2008. According to the Army, its modernization plan provides
        the best balance between capabilities and resources. The plan recognizes
        that because of funding constraints, some program modernization
        requirements must be traded off. As a result, older helicopters will have to
        be retained longer than originally planned, some helicopter upgrades will
        be foregone, and lower quantities of some helicopters will have to be
        procured.



        2
         Defense Acquisition: Best Commercial Practices Can Improve Program Outcomes
        (GAO/T-NSIAD-99-116, Mar. 17, 1999).




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             Given the risks and uncertainties associated with the Comanche
             development program, this report recommends that the Secretary of
             Defense reevaluate the Army’s highly concurrent restructured plan that
             accelerates the milestone II decision date for entering the engineering and
             manufacturing development phase. It also recommends an evaluation of
             the cost, schedule, and performance impacts resulting from changes in
             operational requirements and weight growth. In commenting on this
             report, DOD partially concurred with our recommendations. DOD stated
             that the Comanche overarching integrated product team considers the
             issues raised in our report as part of its acquisition oversight and review
             process and, therefore, no additional evaluations are necessary to satisfy
             our recommendations. According to DOD, the Comanche program
             manager’s approach to the management of risk and concurrency is
             considered prudent and appropriate. We are concerned that DOD’s
             acquisition oversight and review process continues to approve program
             development and production plans that contain significant cost and
             schedule risks. Accordingly, as DOD undertakes its reviews of the
             program, we plan to continue monitoring the results of the reviews.



Background   The Comanche helicopter program began in 1983 with the aim of building a
             family of high-technology, low-cost aircraft that would replace the Army’s
             light helicopter fleet of approximately 5,000 aircraft, including the AH-1
             Cobra, OH-6 Cayuse, OH-58 Kiowa, and UH-1 Iroquois (Huey). The Army
             subsequently decided to develop only a single Comanche aircraft capable
             of conducting either armed reconnaissance or attack missions. Critical to
             achieving the Comanche’s desired capabilities is the successful
             development of advanced technologies, especially for the mission
             equipment package, which accounts for over half of the aircraft’s cost. The
             reconnaissance portion of the package includes the target acquisition
             system, the night vision piloting system, the helmet-mounted display, and
             the integrated communication and navigation systems. The attack portion
             includes the Longbow radar, survivability and early warning equipment, the
             Doppler navigation system, external stores, and weapons.

             The Comanche is designed to have capabilities that overmatch an enemy. It
             will have weapon bays, landing gear, and a 20-mm gun that all retract into
             the fuselage and will be capable of carrying Longbow Hellfire and Stinger
             missiles, and Hydra rockets internally or externally. The aircraft is
             expected to have improved speed and agility; aircrew visibility; and
             reliability, availability, and maintainability over the current reconnaissance




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                       and attack fleet. It is also designed for low observability (stealth) and is
                       expected to be capable of deploying over long ranges without refueling.

                       The program entered the demonstration and validation phase3 of
                       development in June 1988. Between 1988 and 1998, the program was
                       restructured five times, the development schedule was extended from 1996
                       to 2006, and planned quantities were reduced from 2,096 to 1,292. Under
                       the latest restructuring, in July 1998, the Army decided to retain the
                       2 prototype aircraft already built but acquire 14 rather than 16 aircraft. The
                       two prototypes and six preproduction aircraft would be used for
                       developmental testing and eight preproduction aircraft would be used for
                       initial operational testing and evaluation. The Army plan also accelerated
                       the start of the engineering and manufacturing development phase
                       19 months to March 2000. Initial operational testing and evaluation of the
                       aircraft is now scheduled for February through August 2006, and delivery
                       of the low-rate initial production aircraft is to begin in January 2007. The
                       full-rate production decision and initial operational capability deadline of
                       December 2006 have not been changed. The Army’s planned cost estimate
                       for completing the restricted Comanche developmental program was about
                       $4.4 billion.



The Army’s             Under the Army’s latest restructured development plan, the Comanche
                       program would advance to the engineering and manufacturing
Restructured Plan      development phase before some key mission equipment technologies have
Contains Significant   matured and are integrated into the aircraft and tested. Additionally, the
                       Army’s plan would (1) compress the flight-test schedule into the last 3 years
Risks                  of development, increasing concurrent developmental and operational
                       testing and (2) begin initial production before initial operational testing is
                       started, increasing concurrency between testing and production.4 As a
                       result, the restructured program contains significant risk that some
                       technologies may not be mature enough and may not be integrated and
                       tested prior to the scheduled start of low-rate initial production. Testing
                       could identify design changes that may be required after production has
                       started, leading to costly retrofits.


                       3
                        This phase is now called the program definition and risk reduction phase.
                       4
                        Developmental testing verifies that design, technology, and technical performance of the helicopter
                       will support operational testing. A Combined Test Team (of government and contractor personnel) is
                       responsible for Comanche developmental testing. Operational testing, conducted by the user of the
                       weapon system, assesses the system’s performance in an operational environment.




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Mission Equipment        The risk that the technologies required for the Comanche’s mission
Technology Development   equipment package and associated avionics would not mature as planned
                         has been a major concern since the program’s inception. In an effort to
Risk
                         reduce risk, the Army’s previous development plans called for the mission
                         equipment package to be integrated and tested on a prototype helicopter
                         prior to the milestone II decision5 to enter the engineering and
                         manufacturing development phase. Under the current restructured
                         program, the Army plans to enter the engineering and manufacturing
                         development phase 19 months earlier than planned, while delaying
                         integration and flight testing of the mission equipment package. Therefore,
                         the reconnaissance mission equipment package will not be integrated and
                         flight tested on a prototype helicopter prior to the milestone II decision. As
                         a result, decisionmakers will not have important test results needed for
                         assessing the state of the Comanche’s technologies for the milestone II
                         decision.

                         In our recent work in the defense acquisition reform area, we found a
                         number of lessons that can be learned from best commercial practices and
                         applied to DOD’s major system acquisitions. One in particular is that
                         commercial firms generally obtain a higher level of knowledge before they
                         transition from technology development to product development and, later,
                         to production. The restructured program will squeeze more work into the
                         Comanche’s engineering and manufacturing development phase and then
                         reduce the amount of time available for the remainder of the work. This
                         contrasts with best practices of leading commercial firms, which learn
                         more about a product’s technology, design, and producibility much earlier
                         than DOD does in the acquisition programs we reviewed. Such knowledge
                         reduces the risks of cost overruns, schedule delays, and performance
                         shortfalls.

                         One of the purposes of the program definition and risk reduction phase of
                         development is to demonstrate that technology risks are well in hand
                         before the next decision point—milestone II. Some reconnaissance
                         mission equipment technologies for the Comanche helicopter remain
                         immature and untested. According to Army assessments, the
                         helmet-mounted display and two key elements of the electro-optical sensor
                         system—the integrated communication, navigation, and identification


                         5
                          The purpose of the milestone II decision is to determine whether the results of the program definition
                         and risk reduction phase warrant entry into the engineering and manufacturing development phase,
                         which validates the production process and demonstrates system capability through testing.




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                    avionics and the forward-looking infrared—have a moderate to high
                    developmental risk. None of these technologies has been tested on a
                    Comanche prototype. For example, the technology for the Comanche’s
                    integrated communication, navigation, and identification avionics
                    subsystem, which has been under development since 1981, has been
                    demonstrated only in the laboratory, and flight-test hardware will not be
                    flown on the Comanche preproduction aircraft until late 2003, over 3-1/2
                    years after the engineering and manufacturing development phase is
                    scheduled to begin. Flight tests of a production version of the subsystem
                    are not scheduled until 2004.

                    In November 1998, DOD’s Cost Analysis Improvement Group noted that
                    mission equipment package development was relatively immature.
                    According to the Group, “there has not been any MEP [mission equipment
                    package] flight testing to date and [there are] several technological
                    challenges remaining.” Compared with some leading commercial products,
                    the Comanche, like many DOD programs, is proceeding with less available
                    knowledge about key factors of product development. This increases the
                    risk that costs may be higher than planned, product development may take
                    longer, and performance may be lower than planned.


Mission Equipment   Throughout the Comanche’s development, the Army and others have
Integration Risks   emphasized that there are significant risks associated with the integration
                    of mission equipment subsystems into the aircraft.6 In its 1994 independent
                    review, a panel convened by the Institute for Defense Analyses identified
                    integration of the mission equipment package as the most challenging
                    aspect of the mission equipment package. The review stressed the
                    importance of sufficient testing and user involvement because integration
                    must be performed properly in order to achieve the desired combat
                    effectiveness.7 Although some system integration is scheduled to start in
                    late 2001, some key elements of the mission equipment package will not be
                    fully integrated, tested, and demonstrated until much later. For example,
                    the Comanche is not scheduled to complete a full demonstration of its
                    integrated mission equipment package, including the fire control radar and


                    6
                     Comanche system integration involves the integration of its weapon systems and battlefield
                    information systems into a total weapon system that provides maximum effectiveness with minimum
                    crew workload.
                    7
                     The review panel made these observations about the Army’s efforts to “streamline” the Comanche’s
                    development by combining the first two phases of development into one.




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                           external fuel and armament management system, on a preproduction
                           aircraft until December 2006, about 4 months after completion of initial
                           operational testing and evaluation. The analyses of this demonstration may
                           not be available in time for consideration when the full-rate production
                           decision is made in December 2006.


Compressed and             The restructured test schedule increases the risk that the Comanche
Concurrent Test Schedule   helicopter will not be adequately tested prior to the full-rate production
                           decision. Under the restructured program, the Comanche’s initial
Increases Program Risk
                           operational capability date is still scheduled for December 2006, even
                           though the preproduction test aircraft will be delivered 19 months later
                           than previously planned. This results in the flight-test schedule being
                           compressed into the last 3 years of development, which increases the
                           amount of concurrency between developmental and operational testing
                           and between testing and initial production. Such high concurrency
                           increases the risk of costly design changes and retrofits.

Compressed Test Schedule   The first Comanche prototype was scheduled to complete 174 flight-test
                           hours between January 4, 1996, and January 9, 1999. However, only
                           128 flight-test hours were completed--an average of 3.5 hours per month.
                           According to a program official, the Comanche flight-test program is
                           behind schedule because of periodic developmental problems and funding
                           constraints.

                           The first preproduction aircraft for testing is scheduled for delivery in
                           October 2003, 19 months later than previously planned. By retaining the
                           December 2006 initial operational capability date, the 19-month delay in
                           acquiring test aircraft will compress the majority of the Comanche’s
                           flight-test schedule into the last 3 years of development, shortening the
                           available time for completing all test events before the full-rate production
                           decision. As a result, the restructured program calls for an aggressive
                           flight-test schedule, flying each of the 14 preproduction aircraft 17 hours a
                           month. According to a consultant who reviewed the Comanche program
                           for DOD, helicopter test programs typically achieve 10 to 12 flight-test
                           hours per month. In its initial assessment of the proposed restructured
                           program, DOD’s Cost Analysis Improvement Group noted that (1) the delay
                           in acquiring test aircraft increases the risk that the test program will not be
                           completed on time with all necessary test points achieved and (2) any
                           delays in the delivery of mission equipment package subsystems would
                           directly impact flight-test progress.




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Concurrent Testing and   To achieve program test objectives within the compressed time frame, the
Production               Army restructured the Comanche test program in such a way that it will
                         increase the amount of concurrent developmental and operational testing
                         and concurrency between testing and initial production. Developmental
                         testing is scheduled to run to December 2006, while the initial operational
                         test and evaluation is scheduled to start in February 2006 and to be
                         completed in August 2006.

                         The Army plans to conduct initial operational testing with eight of the
                         preproduction aircraft. It will award the low-rate initial production
                         contract as early as February 2005, and the first low-rate initial production
                         aircraft will not be delivered until January 2007. Therefore, the Army will
                         buy low-rate initial production aircraft about a year before the initial
                         operational test and evaluation starts and deliver these aircraft about
                         5 months after it is completed. According to DOD, a program has high
                         concurrency when it proceeds to low-rate initial production before
                         significant initial operational testing and evaluation is completed. DOD
                         guidance states that such programs typically have a higher risk of
                         production items having to be retrofitted to make them work properly and
                         of system design not being thoroughly tested. In its assessment of the
                         Comanche preproduction program, DOD’s Cost Analysis Improvement
                         Group reported that the revised program schedule increases the level of
                         concurrency and limits opportunities to make configuration changes based
                         on results of the flight-test program. We previously reported that weapon
                         systems that enter initial production before completing adequate testing
                         often required significant and sometimes costly modifications to achieve
                         satisfactory performance.8



Modifications Increase   The Comanche’s performance requirements continue to evolve. To meet
                         newly established mission requirements, the Army plans to make
Risk That Comanche       modifications that will adversely impact some of the Comanche’s planned
Will Not Meet            performance capabilities. These capabilities, which distinguish the
                         Comanche from other Army helicopters, include its low observability
Performance              (stealth), lethality, high cruising speed, and maneuverability. The extent to
Requirements             which modifications would reduce operational performance is not yet
                         known. We have found that successful commercial firms do not proceed to
                         product development until there is near certainty that their product design


                         8
                           Weapons Acquisition: Low-Rate Initial Production Used to Buy Weapon Systems Prematurely
                         (GAO/NSIAD-95-18, Nov. 21, 1994).




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will meet performance requirements and they have gone a long way to
ensure that the item can be produced.

The Army’s draft update of the Comanche’s operational requirements
document includes two new extended range mission scenarios that are
beyond the range of the Comanche’s currently planned internal fuel
capability. To meet new range requirements, the Army has decided to add
auxiliary fuel tanks, either externally or in the internal weapon bays when
the Comanche is used in those particular mission scenarios. While both
solutions would reduce the Comanche’s planned operational performance,
program officials could not tell us to what extent performance would be
impacted. Adding wings with external fuel tanks would increase weight
and drag, decrease cruise speed, impact aircraft maneuverability, and lower
some of its planned stealth characteristics. Furthermore, placing fuel tanks
in one or both weapon bays would, according to a program official,
preclude carrying most if not all the weapons in the bays. This would
maintain stealth characteristics but would reduce or eliminate the
Comanche’s internal weapon load and therefore its lethality.

A major element of the restructured program is the accelerated
development and integration of a smaller and lighter electronic version of
the Longbow fire control radar. The radar is expected to provide enhanced
target acquisition capabilities, but its size, shape, and weight would
increase the Comanche’s radar signature and drag, reducing its stealth,
range, and maneuverability. Although the Army has not yet decided on the
shape of the radar, it expects the radar would reduce the Comanche’s
cruising speed by about 11 knots. Program office officials could not tell us
to what extent adding the radar, wings, and external fuel tanks would
impact the Comanche’s overall performance.

Other weight increases would further reduce the Comanche performance
capabilities, such as range, vertical rate of climb, endurance, cruising
speed, maneuverability, and agility. Because it recently added 132 pounds
of additional equipment to meet new operational requirements, the Army
raised the Comanche’s empty weight design goal from 8,690 to
8,822 pounds and lowered the required range for deploying without
refueling from 1,260 to 1,206 nautical miles.

The Army currently has a weight reduction program in place for the
Comanche. However, the Comanche Combined Test Team, which was set
up to manage testing under the development program, noted in August
1998 that implementing changes to the aircraft to address problems



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                        discovered during developmental testing would make it very difficult not to
                        increase the aircraft’s weight. Because of its continuing concern over
                        weight growth, the program office is now planning to modify the
                        Comanche’s rotor to provide more lift capability.



Restructured Program    According to the Cost Analysis Improvement Group’s evaluation of the
                        restructured program’s planned cost estimates, the Army will not meet the
Will Not Meet Funding   Comanche program’s developmental funding objective. The Army
Objective               acknowledges that it will not achieve its goal of executing the Comanche’s
                        restructured development program within the planned funding estimate of
                        about $4.4 billion for fiscal years 1999 through 2006.

                        The Army’s Cost and Economic Analysis Center, which determines the
                        Army’s official cost position, concluded that allowing for inflation, the
                        program office’s $4.4-billion estimate was reasonable. But DOD’s Cost
                        Analysis Improvement Group concluded that the estimate was generally
                        optimistic and that the restructured program would require $4.55 billion,
                        about $150 million (3.4 percent) more then the program office estimated.
                        The Group also said that if funding was not increased, a 6- to 12-month
                        program delay would occur, adding between $275 million and $425 million
                        to program costs.

                        The Group noted significant differences between its estimate of Comanche
                        funding requirements and the Army’s for fiscal year 2000 and in four of the
                        six following fiscal years. For example, the Army estimated funding
                        requirements for fiscal year 2000 and 2001 at $433 million and $574 million,
                        respectively. The Group estimated these requirements at $484 million and
                        $657 million, or $134 million more for the 2 years. The Group believes that
                        more funding for the Comanche’s airframe and mission equipment package
                        development is needed in fiscal years 2000 and 2001, before fabrication and
                        assembly. The program office, however, believes the funds could be made
                        available after fabrication and assembly and that the total shortfall may
                        only be $109 million.

                        Since the Group made its assessment in 1998, DOD has reduced proposed
                        funding for the development program to reflect inflation rate decreases.
                        According to the program office, the reduction aggravates the funding
                        shortfall and, as a result, its assessment of the cost risk has increased from
                        low to moderate. At the time of our review, the program office noted that
                        the funding reduction could result in one preproduction aircraft being
                        eliminated, deliveries of other aircraft being delayed, and the initial



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                     operational capability date being delayed. The program office has since
                     signed a Memorandum of Understanding with the Comanche developers
                     defining the engineering and manufacturing development phase. It will
                     include the design and fabrication of 13 rather than 14 preproduction
                     aircraft. While this may decrease cost risks, it will further increase the
                     risks that the flight-test program will not be completed on time with all
                     necessary test points achieved. The program office also plans to increase
                     the average monthly flight-test hours from 17 to 18 per aircraft and further
                     delay delivery and flight testing of the preproduction aircraft by several
                     more months.



Impact of Comanche   The Army continues to single out the Comanche as the centerpiece of its
                     aviation modernization strategy. As development and production costs
on Army’s Aviation   increase, the Comanche’s share of the Army’s overall aviation budget also
Modernization        increases. In 1994, we reported that the Army had chosen to use most of its
                     available aircraft modernization resources to procure the Comanche
                     helicopter and upgrade the Apache, thus forcing the Army to retain aging
                     utility and cargo aircraft.9 According to the 1998 Army aviation
                     modernization plan, the Comanche is still the centerpiece, and “older,
                     obsolescing aircraft will remain in the inventory into the foreseeable
                     future.”

                     The plan points out that “continued pressures on the defense budget have
                     forced the Army to trade off aviation modernization requirements . . . and
                     consider reduced aircraft resourcing strategies.” According to program
                     office officials, the plan was developed as the best balance between
                     capabilities and resources, and while it is not the preferred approach, it is
                     the optimum one based on available resources. In December 1998, the
                     program office estimated that while the Army’s aviation budget would
                     fluctuate from fiscal year 1999 through 2008, the Comanche’s share of the
                     budget would consistently increase. For example, while the Army aviation
                     budget was estimated to decrease from $2 billion to $1.9 billion between
                     fiscal year 1999 and 2000, the Comanche’s share of the budget would
                     increase from $368 million to $433 million or from 19 percent to 23 percent
                     of the Army’s aviation budget. The Comanche’s share of the total projected
                     Army aviation budget of $3.3 billion is expected to rise to about 64 percent
                     in fiscal year 2008, when its annual production cost would be over


                     9
                      Army Aviation: Modernization Strategy Needs to Be Reassessed (GAO/NSIAD-95-9, Nov. 24, 1994).




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$2 billion. Various Army aviation officials provided the following examples
of how the Comanche’s funding requirements have impacted
modernization efforts in other Army aviation programs.

• The Army decided to reduce the number of advanced Apache Longbow
  helicopters it plans to upgrade from 758 to 530 and end that program
  earlier than planned because it could not afford to have a second
  production line in progress when Comanche initial production starts in
  2005.
• The Army will not achieve its utility helicopter requirements because of
  funding imbalances in the Army’s 1998 aviation modernization plan. The
  plan identified an unfunded requirement for an additional 90 Black
  Hawk helicopters to fill shortages in the Army’s utility helicopter fleet.
  But because of its inability to fund its requirement for new utility
  helicopters, the Army has decided to keep the Huey helicopter in service
  until at least fiscal year 2020. In its report accompanying the Fiscal
  Year 1998 National Defense Authorization Bill, the Senate Armed
  Services Committee noted that utility helicopter requirements were
  identified but not resourced in a balanced manner and cited the
  readiness of the National Guard utility fleet as a serious concern. In
  1994, we reported that as a consequence of its strategy to develop the
  Comanche, the Army had decided against funding other aviation
  program requirements, including modernization of the Huey light utility
  helicopter. Since then, the Army has had to ground its Huey helicopters
  on two occasions because of safety concerns.
• As a stop gap measure until the Comanche is fielded, the Army procured
  a limited number of Kiowa Warrior helicopters to provide
  reconnaissance capability until fiscal year 2009, when the Army planned
  to transfer the Kiowa Warrior to the reserves. Although the Kiowa
  Warrior has operational deficiencies, the Army now plans to retain it in
  the active forces until fiscal year 2022 because there will not be enough
  Comanche helicopters to replace them. According to the 1998 Army
  aviation modernization plan, “long-term retention of these aircraft will
  require safety and sustainment upgrades to keep these aircraft viable.
  The Army estimates that a minimum of 190 aircraft will require
  additional refurbishment beyond what is currently planned. A Kiowa
  Warrior program office official said that the Army has not requested
  funding for the Kiowa Warrior since 1988, and does not plan to request
  funding for future refurbishment upgrades for the 190 aircraft, which are
  estimated to cost about $1.7 billion.




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Conclusions           The Comanche’s restructured program continues to contain significant
                      risks of cost overruns, schedule delays, and reduced performance. The
                      program is proceeding into product development without some key
                      technologies being mature and prior to critical mission equipment and
                      component capabilities being integrated and tested in the aircraft. The
                      Army is proposing changes to the aircraft that will increase, to an unknown
                      degree, the risk that some key performance capabilities will not be met. It
                      is also proceeding into product development when uncertainties and risks
                      are high and not consistent with best practices of commercial firms. To pay
                      for the program, the Army has reduced the number of advanced Apache
                      Longbow helicopters it plans to modify and is buying and upgrading fewer
                      other replacement aircraft. This will force the Army to retain older aircraft
                      for a longer period of time.



Recommendations       We recommend that the Secretary of Defense reevaluate the Army’s
                      decisions to (1) accelerate the Comanche program’s milestone II decision
                      and (2) implement a development program with high concurrency. The
                      reevaluation should demonstrate how the Army specifically plans to:

                      • minimize the risk associated with the technology being developed for
                        inclusion in the mission equipment package prior to the milestone II
                        decision and
                      • ensure that major mission equipment package systems can be
                        successfully integrated and tested in the Comanche in order to meet
                        developmental and operational test schedule requirements.

                      We also recommend that the Secretary of Defense require the Secretary of
                      the Army, before the milestone II decision, to evaluate and report on the
                      extent to which increased operational requirements and weight growth
                      would impact key performance capabilities, such as stealth and
                      maneuverability, and how the Army intends to manage the program’s cost
                      and schedule to accommodate any adverse impacts, if found.



Agency Comments and   DOD partially concurred with our first recommendation calling for a
                      Secretary of Defense reevaluation of the Army’s plans. It noted that it
Our Evaluation        exercises oversight of the Comanche program through the DOD acquisition
                      process. Further, it considered the acceleration of the milestone II
                      decision, as well as the program manager’s approach to the management of
                      risk and concurrency, to be prudent and appropriate at this point in


                      Page 13                                    GAO/NSIAD-99-146 Defense Acquisition
              B-280314




              program development. Specifically, DOD noted that integrated product
              teams review the issues raised in our first recommendation on a recurring
              basis and that the overarching integrated product team will revisit them
              again at least two more times before the milestone II decision. DOD
              believes the overarching product team reviews comply with our
              recommendations.

              DOD also partially concurred with our second recommendation calling for
              an evaluation and report, prior to the milestone II decision, on the impact
              of increased operational requirements and weight growth on the program’s
              cost, schedule, and performance. DOD stated that the Army has been
              directed to ensure that upgraded operational requirements are reviewed by
              the Joint Requirements Oversight Council prior to the milestone II
              decision. DOD further stated that the program’s overarching integrated
              product team will consider all the issues mentioned in the recommendation
              prior to the milestone II decision and that no additional report is required
              to satisfy the recommendation.

              We recognize that integrated product teams and overarching integrated
              product teams are an integral part of DOD’s acquisition oversight and
              review process. However, we are concerned that the oversight and review
              process continues to accept program plans that contain significant risks
              that are not generally accepted by leading commercial firms. Accordingly,
              as DOD undertakes its reviews of the program, we plan to continue
              monitoring the results of these reviews.

              DOD’s comments are reprinted in appendix I. DOD also provided some
              technical comments, which we incorporated in the report where
              appropriate.



Scope and     To assess the risk in the Army’s plans for developing and testing the
              Comanche, we examined and compared program schedules, acquisition
Methodology   plans, and acquisition strategies and discussed potential changes with
              Comanche program officials. We reviewed flight-test plans schedules and
              reports and discussed key issues with program officials. We reviewed
              program documents related to risk and analyzed program risks and
              development problems by comparing them with various test schedules and
              plans.

              To assess changes in performance capabilities and requirements, we
              analyzed actual and projected performance and compared it with the



              Page 14                                    GAO/NSIAD-99-146 Defense Acquisition
B-280314




Comanche’s operational requirements, system specifications, and
projected mission scenarios. We also obtained and evaluated Army
documents describing the way the Army plans to operate in the future. We
compared the Comanche’s planned capabilities against the operational
plans identified in those documents.

To assess the status of current cost estimates for the Comanche, we
reviewed program documentation, interviewed officials, and performed
analyses of program costs. Our analyses focused on the impact of
restructuring decisions on the Comanche program. To assess the
Comanche’s impact on the Army’s overall aviation modernization efforts,
we reviewed program documents, interviewed officials, and performed
analyses of the program’s impact on the Army’s overall aviation plans. Our
analyses focused on the impact of the Comanche’s costs on the Army’s
ability to procure other aircraft and incorporate technological upgrades in
its helicopter fleet.

In performing our work, we obtained documents and interviewed officials
from the Offices of the Secretary of Defense and of the Army, Washington,
D.C.; the U.S. Army Aviation and Missile Command, Huntsville, Alabama;
the Training and Doctrine Command and the Aviation Technical Test
Center, Fort Rucker, Alabama; the Operational Test and Evaluation
Command, Alexandria, Virginia; the Evaluation Analysis Center, Aberdeen,
Maryland; the Boeing-Sikorsky Joint Project Office, Philadelphia,
Pennsylvania; and the Longbow-Limited Corporation, Baltimore, Maryland.

We conducted our review from April 1998 to May 1999 in accordance with
generally accepted government auditing standards.


As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after its
issue date. At that time, we will send copies of this report to Senator John
W. Warner, Chairman, and Senator Carl Levin, Ranking Minority Member,
Senate Committee on Armed Services; Representative Floyd D. Spence,
Chairman, and Representative Ike Skelton, Ranking Minority Member,
House Committee on Armed Services; Senator Ted Stevens, Chairman, and
Senator Robert C. Byrd, Ranking Minority Member, Senate Committee on
Appropriations; and Representative C.W. Bill Young, Chairman, and
Representative David R. Obey, Ranking Minority Member, House
Committee on Appropriations. We are also sending copies of this report to
the Honorable William Cohen, Secretary of Defense; the Honorable Louis



Page 15                                      GAO/NSIAD-99-146 Defense Acquisition
        B-280314




        Caldera, Secretary of the Army; and the Honorable Jacob Lew, Director,
        Office of Management and Budget. Copies of this report will be made
        available to others on request.

        If you have any questions regarding this report, please contact me on
        (202) 512-4841. GAO contacts and key contributors to this report are listed
        in appendix II.

        Sincerely yours,




        Louis J. Rodrigues
        Director, Defense Acquisitions Issues




Leter   Page 16                                   GAO/NSIAD-99-146 Defense Acquisition
Page 17   GAO/NSIAD-99-146 Defense Acquisition
Appendix I

Comments From the Department of Defense                        Appenx
                                                                    Idi




             Page 18         GAO/NSIAD-99-146 Defense Acqusition
                            Appendix I
                            Comments From the Department of Defense




See pp. 13 and 14.




See pp. 13 and 14.




                     Lert   Page 19                                   GAO/NSIAD-99-146 Defense Acqusition
Appendix II

GAO Contacts and Staff Acknowledgments                                                            AppenIx
                                                                                                        di




GAO Contacts         James F. Wiggins, 202/512-4530
                     Robert J. Stolba, 202/512-8963



Acknowledgments      In addition to those named above, Raymond W. Allen, Leon S. Gill,
                     William E. Petrick, Jr., and John P. Swain made key contributions to this
                     report.




(707348)      Lert   Page 20                                    GAO/NSIAD-99-146 Defense Acqusition
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