Big costs looming for Army modernization: auditors

By Andrea Shalal-Esa

WASHINGTON (Reuters) - The U.S. Army faces costs of at least $190 billion through 2013 to expand its force, restructure units and replace worn or damaged weapons -- plus up to $200 billion more for a huge modernization program, nonpartisan congressional auditors said on Thursday.

Cost projections for restructuring and rebuilding the Army could still grow, depending on the situation in Iraq and Afghanistan, the Government Accountability Office, the congressional audit agency, said in one of two reports released at a House Armed Services subcommittee hearing.

It said the Army had already signaled it would probably need additional funding, but oversight was complicated by the fact that the Army had been requesting funding in both the regular budget and a series of supplemental war budgets.

"Without integrating the full costs for Army equipment needs in a single budget, decision makers may have difficulty seeing the complete picture of the Army's funding needs and the potential for trade-offs among competing defense priorities," Janet St. Laurent, managing director of GAO for defense capabilities and management, told the hearing.

She also noted that the already huge restructuring and rebuilding costs did not include the Army's anticipated spending on its Future Combat Systems modernization effort, which is being managed by Boeing Co and SAIC.

In a separate report, Paul Francis, director of acquisition and sourcing managing for GAO, said the Army projects its FCS program will cost $160.9 billion, but separate cost estimates by a Pentagon cost estimating team and the private Institute for Defense Analyses put the cost as high as $200 billion.

The Army's need to replace worn out equipment and buy new weapons for the additional 74,000 troops it plans to add to its forces, have already resulted in big orders for companies like General Dynamics and BAE Systems, which make ground vehicles and munitions companies like ATK.

Rep. Neil Abercrombie, the Hawaii Democrat who heads the Air and Land Forces Subcommittee, said lawmakers needed to study the Army's budget issues carefully, since the high level of war spending could taper off in coming years.

"It is imperative to begin to consider these issues now, rather than continue to put billions into programs that may be desirable, but are not realistic or affordable given the Army's many other needs in coming years," he told the hearing.

"The fact that the Army is trying to do all those things at once, during two major wars, requires this subcommittee and Congress to look at the big picture, not just the merits of any one particular program," he said.

Francis said the Army continued to make key decisions about technologies in the FCS program -- slated to include 14 major weapons systems linked by computer networks -- before they were tested and evaluated. Many of the 44 critical technologies in the program had not yet been proven, he said, adding, "We still don't know yet if FSC is going to work."

He said Congress had required the Pentagon to conduct a make-or-break review of the FCS program in 2009, but about 60 percent of the funding would have already been committed at the point -- even before prototypes for a variety of new manned and unmanned ground vehicles and other weapons had been tested.

Lt. Gen. Ross Thompson, a top Army acquisition official, told lawmakers that the Army and the Pentagon conducted yearly reviews of FCS and were already laying the groundwork for the congressionally mandated "go, no-go" decision in 2009.

He said the Army had also examined 67 complementary weapons programs under development to ensure that they would be able to work together with FCS once it was fielded. He said the Army would continue to push to get FCS equipment to soldiers as soon as possible, but only after required testing.

Thompson also said the Army had tested body armor for soldiers under dozens of contracts valued at over $5 billion, despite a critical report by the Pentagon's internal watchdog last week that said data on testing and approval of initial body armor kits were not included in 13 of 28 Army contracts reviewed.