Saturday, January 18, 2014

US Army's GCV Program Downgraded To Study Project

Congress has cut $492 million from the White House's request for the US Army's Ground Combat Vehicle (GCV) program for fiscal 2014, effectively ending the program as a major acquisition initiative for the ground service.

The White's House's original request was $592 million, which was winnowed to $100 million in the omnibus appropriations bill the Senate passed last week and sent to the White House for the president's signature.

While the Army has made noises about canceling the program for several months, the final Senate bill was an unforeseen dramatic turn in a program that Army leaders have long said was critical to its modernization efforts.

An industry source told Defense News on Jan. 17 that the two competing GCV contractors -- BAE Systems and General Dynamics -- will run out of funds to keep working on the program by June unless the Army can find a way to fund the rest of the current six-month technology development phase of the program, which it extended by six months last year.

In April, General Dynamics was awarded a six-month, $180 million extension to complete work on the technology development phase of the program, while BAE was awarded $160 million. The funding began in December.

Sources have said the Army has received guidance from the Pentagon to keep the GCV program alive -- though not to actually produce vehicles -- just enough so the government could continue to work on technology development.

One industry official who asked to remain anonymous said the technologies that the service might be most interested in are advanced fire control systems or "maybe a hybrid engine" concept, based on industry's talks with Army officials.

The official said that not canceling the GCV outright makes sense, as "the worst thing you can do is cancel the contract, because then you owe the contractor all kinds of money."

The engineering and manufacturing development portion of the competition -- slated to result in the selection of one vendor -- was scheduled to kick off this coming June.

"When you're this close to a milestone decision, the best thing to do is conduct the milestone, then say you're not going to move on to the next phase of the program," the official said.

"The Army can't afford anything new," said Loren Thompson of the Lexington Institute, Arlington, Va. "It can afford mods, it can afford upgrades, but clean sheet designs have fallen out of the modernization plan. There's no GCV, no Armed Aerial Scout -- it's all a continuation of the Army's 'Big 5' during the Reagan years."

In the 1980s, the Army invested heavily in Apache and Black Hawk helicopters, the Abrams tank, the Bradley fighting vehicle and the Patriot missile defense system. All of those systems are expected to remain in the Army inventory for years, or decades, to come.

The technology development phase of the GCV program kicked off in August 2011 with the awarding of contracts to BAE Systems for $449 million and General Dynamics Land Systems for $439 million for continued work on the program.

Plans have called for the Army to buy 1,894 vehicles, with the service claiming the average unit production cost for the GCV would fall into the $9 million to $10.5 million range. The Pentagon's Office of Cost Assessment and Program Evaluation disputed those figures, estimating the average unit cost could actually be as high as $17 million.
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