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Hearings Focus on $100 Billion Army Plan

By Renae Merle
Washington Post Staff Writer
Tuesday, March 15, 2005

The Army's $100 billion Future Combat System, an ambitious program of land and air vehicles connected by wireless computers, will be getting fresh scrutiny from Congress starting this week.

Sen. John McCain (R-Ariz.), new chairman of the Senate Armed Services subcommittee for air and land combat, is expected to raise questions at a hearing today about the procurement authority being used to fund the program. And a House Armed Services subcommittee has scheduled a hearing on the FCS and other Army programs for tomorrow.

Chicago-based Boeing Co. has a $21 billion contract to manage development of the massive Army modernization program, under what is called "other transaction authority," or OTA, rather than a normal procurement contract. The provision was designed for much smaller contracts, to attract commercial equipment makers by eliminating some of the auditing and other restrictions built into traditional contracts, procurement experts say.

McCain, a former Navy pilot and prisoner of war in Vietnam, is a longtime member of the Armed Services panel and has been a vocal critic of what he considers "pork" in Pentagon budgets. He led a successful attack last year on Boeing's $23 billion program to lease, rather than sell, refueling tankers to the Air Force. The subcommittee chair gives him another platform to focus attention on personal interests.

He also has scheduled a hearing Wednesday on a wider federal inquiry of Pentagon procurement that grew out of a corruption investigation in the tanker case. That probe led to guilty pleas from two Boeing executives, including one who admitted negotiating a job with the company while serving as the Air Force's chief negotiator on the program.

Among the scheduled witnesses is Paul J. McNulty, the U.S. attorney in Alexandria, who announced the creation of the Procurement Fraud Working Group to investigate procurement fraud following the Boeing convictions.

The Future Combat System's vast network of computers aims to help soldiers make quicker, better battlefield decisions. It would replace the current fleet of tanks and other armored ground vehicles with a mix of high-tech manned and unmanned ground and aerial vehicles.

The effort has been dogged by questions about its complexity and the pace of progress on the futuristic drones and ground vehicles. The renovation will require more than 30 million lines of software code. Last year, the Army restructured the complex program. It added an armed unmanned robotic vehicle, a recovery and maintenance vehicle, two classes of unmanned aerial vehicles and an intelligent munitions system, also known as a "smart mine," which a soldier could turn on and off remotely or program to deactivate in 30 days.

Army officials said FCS began under the Defense Advanced Research Projects Agency, which uses OTAs extensively for its projects. That structure was retained when the Army negotiated the multibillion-dollar Boeing contract last year because it was deemed "the right approach for the management structure required for such a large complex program," said Maj. Desiree Wineland, an Army spokeswoman. She noted that Defense Department and Government Accountability Office representatives have been involved in the management process.

The mechanism, along with other changes in acquisition, has provided the Army needed flexibility to accelerate development of critical technology for the wars in Iraq and Afghanistan, Wineland said. When the Future Combat System enters production, the Army will transition to a traditional contract, she added.

OTAs were originally authorized in 1989 to attract commercial companies unfamiliar with the Pentagon's complex contract process, procurement experts said. By eliminating requirements for detailed accounting systems, the Pentagon hoped the manufacturers would sell their technology to the military for less than traditional weapons makers.

As the authority gained popularly, the Pentagon began to use the flexible contracts with traditional defense firms. Between 1990 and 1998, 75 percent of the contractors using OTA contracts to participate in research projects were traditional defense companies or nonprofit universities or organizations, according to a 1999 Pentagon inspector general report.

In 2002, Defense Secretary Donald H. Rumsfeld encouraged the use of the technique to "encourage flexible acquisition practices" in the development of the missile defense system.

"Whenever these things work out well, they are highly efficient streamlined mechanisms," said Steve Schooner, professor of government procurement law at George Washington University. "The problems with using OTAs is you don't have a control mechanism to work with when things go poorly."

Sen. John McCain (R-Ariz.) has scheduled several hearings on military procurement.

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