Pentagon could take $500M hit for FCS cancelation

It’s been nearly three years since former Defense Secretary Robert Gates ordered the cancelation of the Army’s ambitious Future Combat Systems program, but the hits keep coming. The latest: The Defense Department may end up paying nearly half a billion dollars in termination fees for the comprehensive effort once considered to be the heart of the Army’s future force.

Those fees come as the option of cutting high-cost programs has become popular amid drastic budget cuts; it would come in addition to approximately $19 billion the Army invested in the program before it was shut down, according to the Washington Post.

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The fees are to end agreements with FCS’ prime contractors, which were awarded to Boeing and SAIC in 2000. Now, termination negotiations are still ongoing and could go through July 2013.

DOD officials have cited poor contract structure and planning as critical problems for the doomed program, which comprised a number of different air, ground, manned and unmanned vehicles and systems linked by a complex network. Before its cancelation, FCS’ costs had ballooned to an estimated $200 billion.

Cancellation of the program’s vehicle component will likely cost around $164 million, the Post reported.

In November 2011, Frank Kendall, then DOD acting undersecretary for acquisition, called FCS “irrevocably damaged” by “poor systems engineering.”

“It was the fundamental design of the thing that was flawed and in my view that did not reflect what had been learned,” Gates told Defense News in June 2011.

DOD has salvaged some parts of FCS – including a ground combat vehicle, incremental brigade modernization and a tactical network – spinning them off into separate programs altered to fit a changing defense landscape. But with funding a scarcity, that future remains uncertain as well.

“Key questions remain on whether the Army will continue development or terminate other efforts from Future Combat Systems… [and] on whether the Army has yet clearly defined its internal roles and responsibilities for management of its tactical network, and how it will proceed with development of fundamental parts of the network--the advanced radios and waveforms,” the Government Accountability Office noted in a March 2011 report.