Army to restructure $20.9 billion contract for Future Combat System


WASHINGTON - The Army will announce today that it is restructuring its multibillion-dollar contract for the Future Combat System after Congress raised concerns about lax oversight and cost overruns in what is supposed to be the linchpin of the service's 21st-century force, officials said yesterday.

Army Secretary Francis J. Harvey will announce tighter controls, three-times-a-year reviews and the creation of an Army office to manage the $20.9 billion program. Harvey has agreed to approve all major changes to the system. An outside panel of advisers also will be assembled to conduct periodic independent cost, schedule and technical assessments.

The combat system is designed to be used by a brigade-size unit of 3,000 to 5,000 soldiers, and it promises to give troops a more detailed view of the battlefield by linking them to a network ranging from armored vehicles and unmanned drones to robots and sensors. The Army had hoped to have the system in place within a decade.

Sen. John McCain, the Arizona Republican who is chairman of a subcommittee overseeing air- and land-based military programs, pressed Harvey in a letter last week to consider more stringent action. "I am concerned that the Army has not adequately protected taxpayers' interests," he said.

The total cost of the Future Combat System is expected to exceed $133 billion, up about 45 percent from an earlier price tag of $92 billion.

Paul L. Francis, an official with the Government Accountability Office, the watchdog agency of Congress, told lawmakers recently that the system's cost was growing but it was not delivering the promised product. Of the 53 crucial technologies in the system, 52 are unproven.

McCain said he wanted the contract shifted from its current status, known as "Other Transaction Authority," to a more stringent contract with specific safeguards on price information, cost accountability and conflicts of interest.

The Armed Services Committee continues to investigate why the contract for the Future Combat System was placed under the Other Transaction Authority, which McCain said is designed for small research or limited prototype contracts.

"It is certainly inappropriate for the Army to use OTA, and it may be illegal," said one Senate staffer familiar with the investigation. "There should have been Army oversight. There should have been congressional oversight."

In a statement last night, Harvey defended the decision.

"The OTA was appropriate for the earlier phases" of the Future Combat System, Harvey said. But now, "we need a contractual arrangement that best ensures FCS is properly positioned in the [future] force and that its technologies are spiraled in as soon as possible."

One Pentagon official who works on the Future Combat System, and requested anonymity, said the decision to use OTA was to attract smaller, relatively unknown defense contractors to work on the futuristic program without being burdened with the additional costs, regulations and red tape associated with the more regulated Federal Acquisition Regulation contract.

The official noted that the Future Combat System has contracted with a Massachusetts-based company known as iRobot, which has already produced small, remote-controlled vehicles being used in Iraq and Afghanistan. "The tradeoff for oversight is flexibility and acceleration" of programs, said the Pentagon official.

Still, the Senate staffer noted that the lead contractor on the Future Combat System is Boeing Co., the Chicago-based defense contractor, and others involved include most of the defense industry's heavyweights, such as Science Applications International Corp., Lockheed Martin, TRW, General Dynamics and Raytheon.

Randy Harrison, a Boeing spokesman, had little comment on the Army's pending decision, saying, "We'll do what the customer asks us to do; that's about it."

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