Army Contracting Suffers ‘Pervasive Instability,’ Lawmakers Say

The U.S. Army must improve the way it buys weapons systems to avoid the “pervasive instability” that’s overtaken its procurement, lawmakers said.

The Army made modifications to six of its top 10 acquisition programs after the House and Senate appropriations committees reviewed the fiscal 2012 budget request. The resulting “programmatic perturbations” caused more than $1 billion in excess funding, according to the report accompanying the defense appropriations bill.

In addition, the Army informed congressional defense committees of more than $309 million in excess funding from program cancellations and asked to transfer more than $282 million to 10 systems, according to the report.

“This magnitude of change in funding across a multitude of programs, identified after submitting the budget only ten months prior, indicates a pervasive instability in Army programs,” the document states.

While “ten years of continuous war can force out-of-cycle changes, the Army’s acquisition challenges precede the post- September 11, 2001, war efforts,” the report says.

The Army from 1995 through 2009 spent $32 billion on 22 weapons programs that were eventually canceled, according to a report released earlier this year and written by Gilbert Decker, former Army acquisition executive, and Louis Wagner, former head of Army Material Command.

The track record “indicates a lack of focus and discipline in the requirements generation process that must be corrected,” the report states.

Canceled Radios

The Army on Oct. 13 canceled the Joint Tactical Radio System’s Ground Mobile Radios because of cost growth. It was the most expensive part of the system at $19.5 billion and was developed by an industry team led by Chicago-based Boeing Co. (BA)

Future Combat Systems, a program estimated to cost $159 billion before being canceled in 2009, was “irrevocably damaged” by an unrealistic schedule that drove poor systems engineering, Frank Kendall, the Pentagon’s acting top weapons buyer, said last month.

The Army has begun vetting program requirements for technical maturity and affordability before awarding contracts, “but the conferees are concerned that this is a short-term correction to a larger institutional problem,” the report states.

The lawmakers praised the Army for organizing so-called network integration evaluations, semi-annual exercises designed to test new communications equipment in simulated combat environments, even as they questioned the service’s ability to formulate realistic requirements.

“The evaluations are causing the Army to reevaluate, restructure, and even terminate several programs that began years ago with established requirements,” the report states.

The report urges Army Secretary John McHugh to adopt recommendations from the Decker-Wagner report and to take a similar look at the requirements-generation process.

“Improvement must begin with clearly documented, stable, and affordable requirements,” the report states.

To contact the reporters on this story: Brendan McGarry in Washington at bmcgarry2@bloomberg.net; Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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