US Army left program's oversight to Raytheon-group

WASHINGTON Feb 12 (Reuters) - Despite clear Pentagon guidelines, the U.S. Army failed to properly oversee a $623 million Raytheon Co (RTN.N) missile program, relying instead on the company's own inadequate plan, according to an audit by the Pentagon's inspector general released on Tuesday.

As a result, the Army could not track the performance of Raytheon, which in turn led to unnecessary cost increases, said the nonprofit Project on Government Oversight, or POGO.

The group released the Pentagon audit after obtaining it under a federal Freedom of Information Act request.

In its audit, the Pentagon's internal watchdog agency said it had found "material internal control weaknesses" in how the Army handled the Surface-Launched Advanced Medium Range Air-to-Air Missile program.

The SLAMRAAM missile program is being developed to protect U.S. ground troops from air attacks.

The Pentagon's inspector general said the Army had failed to define what exactly was required from the new missile system, and did not have a detailed plan to measure technical progress.

The Army eventually restructured the program due to "contractor technical difficulties" and "increased contract costs" that stemmed in large part from the Army's mismanagement of the program and its dependence on Raytheon's inadequate systems engineering management plan, POGO said.

Raytheon's plan lacked criteria for the Army to review and manage progress on technical, cost and schedule goals, directly violating Pentagon rules created in February 2004.

The audit said the Army had drafted its own management plan once the inspector general's audit began in 2007, but even that plan was inadequate.

The audit also said that even if SLAMRAAM could fully meet all its key performance parameters, it could "still be of little value, if it cannot meet system effectiveness requirements." Further details about that point were redacted from copies of the audit.

The inspector general also criticized the Pentagon's Defense Contract Management Agency for failing to live up to its own rules for oversight of programs.

"As is often the case, the problem is not with the rules, but that so few people follow them," said Nick Schwellenbach, national security investigator for POGO. "The all-too-predictable result is contractor failure."

For example, the Defense Contract Management Agency did not provide formal reports about a 67 percent increase in subcontractor costs to its own officials overseeing the overall SLAMRAAM program, and its informal reports lacked critical information about cost and schedule.

The report also cited problems with the security of the weapon program's information technology systems. (Reporting by Andrea Shalal-Esa; Editing by Lisa Von Ahn)