Army Modernization: Steps Needed to Ensure Army Futures Command Fully Applies Leading Practices

In order for the Army to maintain its technological edge over potential adversaries, it plans to invest in near- and long-term modernization efforts. However, the Army has struggled with modernization initiatives in the past. For example, the Future Combat System was canceled after a cost of $21 billion and delivery of few new capabilities.

The National Defense Authorization Act for Fiscal Year 2018 included a provision for GAO to report on the Army's modernization strategy. This report assesses (1) the status of the Army's near- and long-term modernization efforts; and (2) the extent to which the Army has applied leading practices to these efforts. GAO reviewed Army directives, procedures, and policies; and compared the Army's efforts with leading practices for requirements and technology development, effective cross-functional teams, and mergers and organizational transformations.

Since 2017, when the Army announced its initiative to update its forces and equipment with improved capabilities—known as modernization—it has

established and assigned eight cross-functional teams to pilot how to address these needs;

established the Army Futures Command as the focal point for modernization efforts, with a four-star general to oversee it; and

realigned over $1 billion in science and technology funding to support modernization efforts within the $7.5 billion expected to be spent over the next 5 years.

To date, the Army has generally applied leading practices identified by GAO to its modernization efforts. For example, the cross-functional team pilots generally applied leading practices for determining requirements and technology development and for establishing effective teams. Similarly, as the Army began the process of establishing the Army Futures Command, it has started to apply the leading practices for mergers and organizational transformations by establishing a clearly defined mission and providing a clear consistent rationale for the command. However, GAO identified other areas where the Army has not fully applied leading practices to its modernization efforts including the following:

Under the modernization effort, the Army plans to begin weapon systems development at a lower level of maturity than what is recommended by leading practices. GAO has raised concerns about this type of practice for almost two decades for other Army acquisitions, because proceeding into weapon systems development at earlier stages of technology maturity raises the risk that the resulting systems could experience cost increases, delivery delays, or failure to deliver desired capabilities. Taking this approach for acquisitions under the modernization effort raises similar concerns for the Army's six prioritized capability needs.

The Army has not developed a plan for capturing the lessons learned from the cross-functional team pilots, and therefore may miss an opportunity to leverage the experience of these teams in applying leading practices.

GAO is making four recommendations, including that the Army follow leading practices for maturing technologies to a higher level than currently planned and develop a plan to capture lessons learned from the cross-functional teams. DOD concurred with all the recommendations.

The Army has determined that in order for it to maintain its technological  edge over potential adversaries, it must update or upgrade multiple  weapon systems—a broad-based effort it refers to as modernization. This  modernization effort hinges upon the development of new capabilities  through the Department of Defense (DOD) acquisition process. GAO has  found that this acquisition process includes developing a clear description  of the specific capabilities and characteristics of the system—referred to  as requirements. Another key component of the acquisition process is the  identification of technologies capable of meeting those requirements and  developing them to a level of maturity sufficient for integration into a  system in a cost-effective and timely way. Our past work has found that a  formal weapons system acquisition program—with dedicated funding and  specific timelines for completing system development—should be initiated  only after requirements are well-defined and technologies are  demonstrated as sufficiently mature.

The Army’s past efforts at modernization have included several weapon  system acquisition programs that were ultimately cancelled—after years  of development and billions of dollars spent. The cancellation of these  programs was due to, among other things, problems with the  development of requirements for these systems and the integration of  new technologies into acquisition programs before they reached a  sufficiently high-level of maturity. The failure to deliver these new weapon  systems resulted in a continued reliance on the aging systems that had  been targeted for replacement. Army officials have acknowledged that  improvements to the processes used to develop requirements and mature  technologies are critical if the Army is to achieve the goals it has set for its  new modernization efforts.

Section 1061 of the National Defense Authorization Act for Fiscal Year  2018 included a provision for GAO to report on the Army’s modernization  strategy. This report is the second that we have issued in response to  this mandate and assesses (1) the status of the Army’s efforts to  establish new acquisition organizations while balancing near- and long- term modernization; and (2) the extent to which the Army has applied  leading practices to do so.

To assess the Army’s efforts to establish new acquisition organizations  and to balance near- and long-term modernization, we reviewed orders  and directives the Army used to establish new acquisition organizations— such as the Army Futures Command—geared toward modernization  efforts. We also reviewed Army directives, procedures, and policies to  understand changes in Army acquisition practices since 2016. We  reviewed the Army’s 2018 Modernization Strategy report and other  documents, such as strategic portfolio reviews and budgets, to identify  the steps the Army is taking to balance its modernization efforts in the  near- and long-term. We also discussed these topics with relevant Army  officials to get their perspectives on Army modernization efforts.

To assess the extent to which Army has applied leading practices, we  reviewed our prior work on requirements and technology development,  effective cross-functional teams, and mergers and organizational  transformations that have identified relevant leading practices that might  apply to the Army’s modernization efforts. To assess the extent to which  the Army has applied these practices as part of its modernization efforts,  we analyzed Army documentation and spoke with cognizant Army  officials. See appendix I for more information on our objectives, scope  and methodology.

We conducted this performance audit from January 2018 to January 2019  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Senior Army leadership has acknowledged that the service must change  how it develops requirements and acquires weapon systems in order to  be successful in future wars. However, the Army’s history of failed, costly  weapon system procurements to replace aging weaponry is due, in part,  to requirements that could not be met and the immaturity of key  technologies. Many of these programs failed to provide any capability to  the warfighter despite the time and funding expended. Some examples of  these cancelled programs are listed in table 1 below.

In the fall of 2017, the Army began a new modernization effort to rapidly  develop and field new capabilities. As a part of this effort, the Army’s  then-Acting Secretary and the Chief of Staff in an October 3, 2017  memorandum identified six priorities to guide Army modernization: next generation combat vehicle, air and missile defense, and  soldier lethality.

Given that modernization is an ongoing process, and with Army  expectations that some capabilities will be delivered sooner than others,  we have divided Army modernization into two timeframes for the  purposes of this report:

Near-term modernization: from fiscal years 2019 to 2023, including  buying existing systems and technologies to fill the Army’s urgent  needs.

Long-term modernization: fiscal year 2024 and beyond, including  the development of new systems and technologies to meet  anticipated needs and maintain superiority over major adversaries.

In September 2018, we addressed the Army’s efforts for near-term  modernization. We found that the Army had set decisively defeating  near-peer adversaries as an overarching objective, but had not  established processes for evaluating its modernization efforts against this  objective. We also found that the Army had not yet completed a cost  analysis of its near-term modernization efforts. To address these issues,  we recommended that the Army develop a plan to finalize processes for  evaluating the contributions of its near-term investments to the ability to  decisively defeat a near-peer adversary; and finalize and report to  Congress its cost analysis of near-term investments. DOD concurred with  both of these recommendations.

As we have previously reported, the Army’s long-term modernization  efforts as well as those of the other DOD military services will depend  upon adequate and effective investments in science and technology.  These are investments that focus on increasing fundamental knowledge  of new capabilities, applying that knowledge, and demonstrating the  technological feasibility of capabilities.

As with all the military services in DOD, the Army’s acquisition process  generally includes a number of phases including: (1) the materiel solution  analysis phase, (2) the technology maturation and risk reduction phase,  (3) the engineering and manufacturing development phase, and (4) the  production and deployment phase. In this report we refer to these phases  more simply as materiel solution analysis, technology development,  system development, and production.

Before these phases begin, the Army must establish requirements to  guide the acquisition process. Requirements describe the capability  desired to be achieved through the use of operational performance  attributes—the testable and measurable characteristics—necessary to  the design of a proposed system and for establishing a program’s cost,  schedule, and performance baselines. These requirements include the  key performance parameters and system attributes that guide a  program’s development, demonstration, and testing. The Army approval  authority for all Army warfighting capability requirements is the Army  Chief of Staff.

At the end of the initial three phases, the Army holds a milestone review,  as shown in figure 1 below, to assess an acquisition program’s readiness  to proceed to the next phase, consistent with relevant DOD policies and  federal statutes.

The Assistant Secretary of the Army for Acquisition, Logistics, and  Technology is generally the Army’s milestone decision authority. The  process is also subject to intermediate reviews by senior Army staff.

We have issued several reports related to the Army’s modernization  efforts that assess areas regarding requirements and technology  development, effective cross-functional teams, and mergers and  organizational transformations:

Requirements and Technology Development. In our extensive  work issued over two decades on requirements and technology  development, we have emphasized the importance of promoting  leading practices such as communication between end-users and  requirements developers; prototyping capabilities as part of  technology and product development; and maturing technology to a  certain threshold before approving product development.

Cross-Functional Teams. In February 2018, we identified eight  leading practices that effective cross-functional teams should have: effective communication mechanisms; well-defined goals common to the team, team leader, and an inclusive team environment where all team members have  collective responsibility and individual accountability for the team’s  work; a well-defined team structure with project-specific rules and autonomy to make decisions rapidly;  senior managers who view their teams as a priority;  commitment to the team’s goals; and  leaders empowered to make decisions and provide feedback and  developmental opportunities.

Mergers and Organizational Transformations. In July 2003, we  found that the key to successful mergers and organizational  transformations is to recognize the “people” element and implement  strategies to help individuals maximize their full potential while  simultaneously managing the risk of reduced productivity and  effectiveness that often occurs as a result of changes. We identified  nine leading practices new organizations should follow including  ensuring top leadership drives the transformation and establishing a  communication strategy, among others.

Army Is Establishing New Organizations to Lead Modernization Efforts and Prioritizing Solutions to Address Near-term Capability Gaps while Identifying Long-term Needs

The Army’s cross-functional team pilots and early efforts by the Army  Futures Command have prioritized closing near-term capability gaps, and  have begun planning the transition to long-term capabilities. The cross- functional teams were pilot programs to improve the quality and  timeliness of requirements and technology development. These cross- functional teams are transitioning from independent organizations to  organizations within the Army Futures Command, which will also  subsume other existing Army organizations tasked with modernization.  Army Futures Command is in the process of establishing its policies,  processes, and functions as well as its relationships with other Army  organizations. It plans to reach full capability by July 2019. The Army has  already identified near-term priorities and realigned over $1 billion in  science and technology funding for long-term modernization. Army  Futures Command will be responsible for continuing this prioritization.

Army Established Cross- Functional Teams to Pilot Its Modernization Efforts

In an attempt to increase the efficiency of its requirements and technology  development efforts, the Army established cross-functional team pilots for  modernization. A directive from the then-acting Secretary of the Army on  October 6, 2017, established eight multi-disciplinary cross-functional  teams on a pilot basis. The eight cross-functional team pilots were  assigned to address the six priority areas, as outlined in table 2.

These cross-functional team pilots were intended to:  take steps toward achieving the six modernization priorities;  leverage expertise from industry and academia;  identify ways to use experimentation, prototyping, and  demonstrations; and  identify opportunities to improve the efficiency of requirements  development and the overall defense systems acquisition process.

Cross-functional team pilots were structured to help achieve these goals.  Each cross-functional team pilot consisted of core staff and subject matter  experts from across the Army. To facilitate the rapid approval of  requirements, each cross-functional team pilot was led by a general  officer or a senior civilian official who could communicate directly with the  highest levels of the Army. The goal of staffing these teams was to  ensure that each team had individuals who specialized in acquisition,  requirements, science and technology, test and evaluation, resourcing,  contracting, cost analysis, sustainment, and military operations. The goal  of bringing different experts together was to facilitate collaboration and  immediate opportunities for stakeholders to provide input as opposed to  the more traditional requirements development process, in which input  has typically been provided separately. Officials told us that, while all of  these subject matter experts may have provided input on the  requirements development process in the past, placing them on a single  team offered the promise of streamlining those efforts and could eliminate  the need for multiple reviews. Figure 2 below compares the requirements  development process under cross-functional teams to how the Army has  traditionally developed requirements.

The cross-functional team locations chosen by senior Army leadership  coincide with the locations of related Army organizations or industry hubs,  which could help to facilitate this exchange of ideas among technical  experts, and inform prototyping and experimentation. For example, the  cross-functional team pilot for the Future Vertical Lift was stationed at  Redstone Arsenal where the Army’s existing research, development, and  engineering center for aviation is located.

In congressional testimony, the Commander of Army Futures Command  stated that in order to achieve their near- and long-term modernization  objectives, they will have to reduce their requirements development  timelines from 3 to 5 years to less than 1 year. According to cross- functional team members we spoke with, the cross-functional team pilots  were able to demonstrate progress toward achieving the goals set out for  them. Specifically, cross-functional team pilots  completed requirements documentation for one of the Mounted  Assured Positioning, Navigation and Timing System’s capabilities in  less than a year;  replaced small airborne radio with completion of directed requirement  for the Integrated Tactical Network in less than 60 days; and  completed requirements documentation for a soldier lethality  capability in 15 days as opposed to the expected 4 months.

Army Futures Command Scheduled to Become Fully Operational by July 2019

The Army has taken initial steps to consolidate all its modernization  efforts under one authority, in addition to its initiation of the cross- functional team pilots. In particular, the Secretary of the Army established  the Army Futures Command through the issuance of a general order on  June 4, 2018. According to Army documentation, the intent of the new  command is to provide unity of command, accountability, and  modernization at the speed and scale required to prevail in future  conflicts. This organization is led by a four-star general like its  organizational peers: Army Materiel Command, Training and Doctrine  Command, and Forces Command. Establishing Army Futures Command  is the most significant institutional change to the Army since it  reorganized in 1973 in the wake of the Vietnam War.

The Army is in the process of establishing the new command, but has just  begun to define its organizational structures. According to the 2018 Army  general order, Army Futures Command reached initial operating  capability in July 2018. According to Army Futures Command officials and  documentation, the new organization is charged with integrating several  existing requirements and technology development organizations—such  as Army Capabilities Integration Center in Fort Eustis, Virginia and  Research, Development, and Engineering Command headquartered in  Aberdeen, Maryland—as well as the cross-functional team pilots. The  cross-functional team pilots are in the process of being integrated into the  new command and, according to Army officials, will continue to be  responsible for managing the Army’s six modernization priorities. In  addition, Army Futures Command will be supported by a number of  operational and administrative offices to assist the components with  executing their missions. According to Army officials and documentation,  the new command will be organized around three major components:

Futures and Concepts: responsible for identifying and prioritizing  capability and development needs and opportunities. This  organization subsumed the Army Capabilities Integration Center on  December 7, 2018—formerly part of Army Training and Doctrine  Command, which focuses primarily on the education and training of  soldiers.

Combat Development: responsible for conceptualizing and  developing solutions for identified needs and opportunities. This  organization will subsume Research, Development and Engineering  Command—currently a part of Army Materiel Command, which  focuses primarily on sustainment.

Combat Systems: responsible for refining, engineering, and  producing new capabilities. The acquisition program offices will  communicate with the new command through this organization to  ensure integration of acquisition functions. However, the program  offices will continue to report to the Assistant Secretary of the Army  for Acquisition, Logistics and Technology.

Army Futures Command will be headquartered in Austin, Texas, and  existing organizations are not expected to change their locations.  According to Army officials and documentation, the Army chose Austin  because of its proximity to science, technology, engineering, and  mathematics talent, as well as private sector innovators that officials  believe will assist the command in achieving its modernization goals.  According to senior Army leadership we spoke with, the new command  headquarters will have around 300 staff in place by July 2019, a  workforce that may grow to 500 employees—100 military and 400  civilians. Our analysis of Army’s plans for initial staffing at the Army  Futures Command headquarters, based on data from July 1, 2018, found  that about one-third of headquarters staff would be involved directly in  modernization efforts, such as engineers and operations specialists, and  the remainder would consist of support staff, including legal counsel and  contracting professionals. Figure 3 shows the locations of the known  major Army Futures Command components, the 8 cross-functional teams  being integrated under Army Futures Command, and its new  headquarters.

Although initial steps have been taken to establish the new command,  key steps have not yet been completed. The Army stated in the executive  order establishing the command that it will consider Army Futures  Command fully operational once it is sufficiently staffed with operational  facilities, secure funding, and the ability to execute its assigned mission,  roles, and responsibilities. At full operating capability, officials told us  Army Futures Command will also have finalized the organizational  structure and the reporting responsibilities of its various components.  However, Army Futures Command has not yet established policies and  procedures detailing how it will execute its assigned mission, roles, and  responsibilities. For example, we found that it is not yet clear how Army  Futures Command will coordinate its responsibilities with existing  acquisition organizations within the Army that do not directly report to it.  One such organization is the Office of the Assistant Secretary of the Army  for Acquisition, Logistics and Technology—the civilian authority  responsible for the overall supervision of acquisition matters for the  Army—and the acquisition offices it oversees. To mitigate concerns about  coordination, in August 2018, the Army issued a directive signed by the  Secretary of the Army designating the military deputy of this office as an  advisor to Army Futures Command, a designation aimed at establishing a  means of coordination. Army Futures Command officials have also stated  that the Assistant Secretary of the Army for Acquisition, Logistics and  Technology will retain full acquisition authorities as required by law. Army  documentation shows that further policies and procedures are expected  to be issued in 2019.

The Army’s Efforts Have Balanced Modernization by Prioritizing Mitigation of Near-term Capability Gaps while Identifying Long- term Needs

The Army recognizes the need to balance near-term and long-term  modernization over time. To do so, the Army has balanced its  modernization efforts by funding the closure of near-term capability gaps,  and identifying long-term needs to be funded. Since announcing the  modernization efforts in 2017, the Army has directed more funding toward  closing near-term capability gaps. For example, as part of the planning for  the fiscal year 2019 budget process, the Army identified 67 high-priority  programs, such as the M-1 Abrams tank and the AH-64 Apache  helicopter, with capability gaps in need of further investment. To support  these priorities, the Army identified a need for $16 billion in increased  funding in fiscal years 2019 through 2023. The 2018 Army Modernization  Strategy report identified the need for additional resources for near-term  efforts, including plans to spend billions of dollars for acquisition of  maneuverable short range air defense capabilities in fiscal years 2020  through 2024. The same report described plans to spend hundreds of  millions of dollars over the same period for prototyping technologies for  the Next-Generation Combat Vehicle, a longer-term capability.

The Army has also begun to plan research and development efforts for its  long-term modernization needs. The Army identified long-term capabilities  for all of the modernization priorities, as well as dates that science and  technology efforts should transition to programs of record. Army officials  stated that, ultimately, multiple programs of record may be considered for  each capability area. For example, the Army identified science and  technology efforts to develop an advanced powertrain for the Next  Generation Combat Vehicle and identified planned transition dates to the  program in fiscal years 2020 and 2023. The 2018 Army Modernization  Strategy report provides additional details on long-term modernization  efforts for three of its six priorities: Future Vertical Lift, Soldier Lethality,  and Next-Generation Combat Vehicle. Figure 4 below presents a timeline  for some of the proposed capabilities within each of the six priorities.

The Army has realigned some resources to support its long-term  modernization priorities. In identifying long-term capabilities, we found  that the Army has evaluated its science and technology portfolio to  determine alignment with the six modernization priorities. For example, as  part of an October 2017 review for the office of the Deputy Under  Secretary of the Army, the eight cross-functional team pilots examined  science and technology investments to identify which efforts contributed  to the priorities and which efforts did not contribute to them. According to  this review and Army officials, the Army realigned over $1 billion in  funding toward the priorities for fiscal years 2019 through 2023, for a total  of $7.5 billion directed at these priorities. The review preserved $2.3  billion in funding for basic research for the same time period. According to  Army officials, similar science and technology reviews will be conducted  annually to help cross-functional teams manage their respective  programs’ progress and identify further opportunities for investment.

To fund future modernization efforts, both the science and technology  review and the review for the fiscal year 2020 budget process also  identified opportunities to reduce funding for, or eliminate, some existing  programs. For example, plans for the air and missile defense portfolio  include an option to divest from legacy short range air defense programs  in fiscal year 2029 if its Indirect Fires Protection Capability program  becomes fully operational. This aligns with statements from Army officials  that program decisions will be driven not by specific schedules but by the  maturity of replacement capabilities.

New Organizations Have Generally Applied Leading Practices but the Army Futures Command Has Taken Limited Steps to Fully Apply These Practices

The Army has generally applied leading practices for technology  development and establishing effective cross-functional teams, and has  begun to apply leading practices for mergers and organizational  transformations for the Army Futures Command. During the Army’s pilot  phase for its eight cross-functional teams, the teams took actions  consistent with leading practices for technology development, such as  bringing together requirements developers and warfighters, planning  prototype demonstrations, and maturing technology prior to beginning an  acquisition program. The Army’s pilot teams also applied eight leading  practices we have identified for establishing effective cross-functional  teams to varying degrees. In addition, senior Army leadership has been  clear in its support for the new command and has clearly outlined a  timeframe for its establishment, actions that are in line with the leading  practices for mergers and organizational transformations we have  identified in prior work. Whether further application of these leading  practices will continue under the new command is unclear as the role of  the cross-functional teams has not yet been formalized and Army Futures  Command has not yet taken all the steps needed to reach full operational  capability.

Cross-Functional Team Pilots Generally Applied Leading Practices for Technology Development, but Plan to Move into System Development Early

We found that the Army’s eight cross-functional team pilots generally  applied leading practices identified in our prior work when it came to their  requirements and technology development efforts. As we found in April  2018, positive outcomes result from taking a knowledge-based approach  to product development that demonstrates high levels of knowledge  before making significant resource commitments. Our review of the  Army’s cross-functional team pilots found that they have generally applied  leading practices to the following two areas:

Promoted communication between end-users and requirements  developers. The Army directive that established the cross-functional  team pilots as well as these teams’ charters state that teams will  follow a methodology of collaboration between warfighters and  developers to prepare capability documents. An official from the  Synthetic Training Environment cross-functional team told us that  involving industry representatives and warfighters helps the cross- functional team get “closer to what ‘right’ looks like” early in the  requirements development process. By promoting communication  between industry representatives and warfighters, the cross-functional  teams helped ensure that developer resources better matched end- user needs.

Planned to prototype capabilities as part of technology and  product development. The Army directive establishing the cross- functional team pilots states that cross-functional teams should  incorporate iterative experimentation and technical demonstrations to  inform capability requirements. As an illustration of this practice,  officials from the Future Vertical Lift cross-functional team told us that  they will hold a “fly off” between two competitive prototypes of the  Future Attack Reconnaissance Aircraft in fiscal year 2023 before  choosing a design for follow-on testing and integration in fiscal year  2024.

However, we are concerned that the Army has plans to mature  technology to a level lower than the threshold recommended by leading  practices before beginning system development. Specifically, we found  that the Army’s October 2017 science and technology review identified a  goal of demonstrating new technologies in a relevant environment, such  as a highly realistic laboratory setting, before transitioning them to specific  platforms or programs. As an example, the Soldier Lethality cross- functional team began maturing technology for the next generation squad  automatic rifle to this level of maturity to prepare it for the transition to  product development, scheduled for the end of fiscal year 2019. Under  leading practices that we identified, prototypes should be demonstrated in  an operational or realistic environment—not simply in a relevant  environment—prior to starting system development to ensure that they  work as intended for the end-user.

The Army’s choice to start a formal acquisition program at lower levels of  technology maturity raises concerns that are consistent with those we  have raised in the past. Our past work indicates that by demonstrating  technologies only in a relevant rather than an operational environment,  the Army increases the risk that new capabilities will not perform as  intended and require further technological maturation while in system  development. This could raise costs and extend timelines for delivery of  equipment to the warfighter. For example, almost two decades ago in a  1999 report, we recommended demonstrating technologies in an  operational environment prior to system development and DOD  concurred with that recommendation. We have also reported the  importance of achieving this level of maturity on an annual basis since  2003, most recently in 2018, in our assessment of DOD’s major weapon  system acquisition programs. In addition, we again reiterated this leading  practice in 2016 in our technology readiness assessment guide.

While DOD has a policy, based in statute, that generally requires major  defense acquisition programs to, at a minimum, demonstrate  technologies in a relevant environment before system development, that  policy does not preclude the cross-functional teams from pursuing a  higher level of maturity. Such an approach would be consistent with  leading practices that recommend maturing technologies to a higher  level. By applying these leading practices, the cross-functional teams  could better ensure that prototypes are demonstrated in an operational or  realistic environment prior to starting system development to ensure that  they work as intended for the end-user.

Cross-Functional Team Pilots Demonstrated Some Leading Practices for Effective Teams, but Few Steps Taken to Incorporate these Practices in New Command

Our prior work has identified eight leading practices that organizations  should use for establishing effective cross-functional teams. In  reviewing the Army’s eight cross-functional team pilots, we found that  they have applied these practices to varying degrees. Table 3 describes  these leading practices.

All eight Army cross-functional team pilots fully applied four of these  leading practices.

Well-defined team goals. We found that each cross-functional team  pilot charter clearly defined its team’s goals. For example, the Long- Range Precision Fires cross-functional team charter states that it will  rapidly integrate and synchronize the requirements development  process to deliver cutting edge capabilities to the operating force as  the best possible return on investment for warfighters. In addition,  senior Army leadership approved the charters containing each team’s  goals, ensuring that the goals defined for the teams were linked to the  Army’s larger goal of modernization.

Open and regular communication. Members of all eight cross- functional team pilots shared information with each other, sought  feedback, and communicated with team leaders and senior Army  leadership. For example, officials from the Next Generation Combat  Vehicle cross-functional team told us that ongoing dialogue with  senior Army leadership resulted in numerous rounds of refined  guidance. The cross-functional team took that guidance, reconvened,  assessed options, and then presented another round of updates to  Army senior leadership. Moreover, the directive establishing the  cross-functional team pilots requires that they develop capability  documents, informed by experimentation and technical  demonstrations, to ensure that planned capabilities are  technologically feasible, affordable, and therefore can eventually be  provided to soldiers. According to Army officials, developing such  documents requires open and regular communication between team  members who have expertise in diverse fields such as contracting,  cost analysis, and testing.

Autonomy. The eight cross-functional team pilots’ charters show, and  interviews with members confirm, that teams are granted substantial  autonomy by senior Army leadership. The cross-functional team  charters give teams the authority to solve internal problems through  market research, prototyping, technical demonstrations, and user  assessments. For example, the Synthetic Training Environment cross- functional team and senior Army leadership stressed to us the  importance of experimentation as an opportunity to “fail early and fail  cheap.” According to cross-functional team members, this allows  cross-functional teams to move on and avoid expensive and time- consuming failures later in the acquisition process, as has happened  with Army in the past. Furthermore, cross-functional teams can reach  out to subject matter experts needed to develop requirements without  having to obtain permission from senior Army leadership.

Committed team members. All eight cross-functional team pilots  include members with expertise in diverse fields who are committed to  achieving team goals. For example, the Network cross-functional  team charter states that the team should consist of experienced and  committed subject matter experts executing disciplined initiatives and  willing to take prudent risks. In addition, the directive establishing the  cross-functional teams states that they should leverage industry and  academia where appropriate to increase knowledge and expertise.  Staffing information provided by multiple cross-functional teams  demonstrates the diversity of expertise the Army has applied to these  efforts. Cross-functional team members also provided us with multiple  examples of how their teams have leveraged outreach with industry  and academia to improve their understanding of requirements and  technology.

Additionally, we found that the eight cross-functional team pilots have at  least partially applied the following four leading practices.

Senior management support. Senior Army leaders, including the  Secretary and the Chief of Staff, have championed the cross- functional team pilots in public statements. Although an Army official  told us that he was aware of a member of a cross-functional team  (who left the team) receiving a civilian achievement award, we did not  find any documentary evidence of senior Army leaders providing  incentives or recognition to members of the eight cross-functional  team pilots. Because many members of cross-functional teams,  including some leaders of these teams, work in a number of different  roles, they do not have a consistent chain of command that can  provide incentives or recognition across all of their activities. The  “dual-hatted” nature of team members—in which they work for their  parent organization as well as the cross-functional team pilot—may  further complicate full application of this leading practice.

Empowered team leaders. The team leaders of all eight cross- functional team pilots are empowered to make decisions and regularly  interact with senior Army leaders. While an Army official stated that  team leaders and Army leadership provide guidance to cross- functional team members, we did not find any documentary evidence  of these leaders providing feedback to members of those teams.  However, many members of the cross-functional teams, including  directors, are only temporarily assigned to cross-functional team pilots  because they work in other functions simultaneously.

Well-defined team structure. While most cross-functional team pilots  have established operating procedures and organizational structures,  we found that some have not provided training to their members on  the operations of cross-functional teams and how they relate to other  organizations. Our previous work identified appropriate training as a  key characteristic of a well-defined team structure. Most cross- functional team charters do not address the issue of training. Through  our discussions with the cross-functional teams, we found the  following with respect to training:

An official from the Soldier Lethality cross-functional team told us  that team members received training and planned to attend further  training to enhance creative and “outside-the-box” thinking.

The director of the Network cross-functional team told us that,  even though he did not receive training, he was able to leverage  his previous experience leading matrixed organizations.

The Long-Range Precision Fires cross-functional team told us that  members started their work without any training and this posed a  challenge as they were unfamiliar with each other’s roles and  work.

Inclusive team environment. The founding documents for the cross- functional team pilots themselves generally did not address attributes  of this leading practice, such as having team members that support  and trust one another. However, discussions with team members  indicate some teams have invested in creating such an environment.  The Soldier Lethality cross-functional team members stated that  working in a cross-functional team as opposed to working as separate  individuals in disparate offices, allowed them write requirements  faster. It also created an atmosphere in which members got to know  each other’s experiences and trust each other’s views. Officials from  the Synthetic Training Environment cross-functional team told us they  spent their first week gaining an understanding of each team  member’s role on the team to foster such inclusivity.

As previously described, the cross-functional team pilots were an effort to  achieve several goals including to identify ways the Army could increase  efficiency in requirements and technology development. According to  Army officials, the teams have shown initial progress in doing so,  delivering requirements—and in some cases developing capabilities for  delivery in the next two years—to the warfighter in shorter than  anticipated timeframes. However, the Army has not yet definitively  established the cross-functional teams’ roles, responsibilities, and how  they will operate within Army Futures Command. As a result, it is unclear  if the Army will benefit from the experience and expertise of these teams  applying leading practices as they transition into Army Futures Command.

Until the Army takes formal steps to institutionalize the beneficial  practices used by the cross-functional teams during the pilot phase such  as autonomy, proactive decision making, and access to senior leadership  it will be missing a valuable opportunity to integrate these practices into  the new command.

Army Futures Command Does Not Have a Formal Plan to Identify and Share Lessons Learned from Cross-Functional Team Pilots

The Army directive that established the cross-functional teams directed  each team pilot to capture best practices and lessons learned and report  them to the Army office that oversaw their efforts. Officials from the  cross-functional teams described to us lessons they learned and planned  to pass on to their oversight office for the benefit of Army Futures  Command. For example, officials from the Air and Missile Defense cross- functional team stated that having direct access to the Under Secretary  and the Vice Chief of Staff of the Army is important for obtaining quick  decisions, which save time and money in getting capabilities to the  warfighter.

While officials from Army Futures Command told us that they intend to  collect lessons learned from the cross-functional team pilots, they do not  yet have a formal plan to identify and incorporate lessons learned. Since  the cross-functional team pilots were established to experiment with new  approaches, it is important that they take steps to capture the lessons  they have learned—positive and negative—so they can be shared as  these teams are integrated into Army Futures Command. If the Army fails  to institutionalize these lessons learned in the new command, it risks  losing the benefits from the experiences of these pilots thereby either  repeating past mistakes or failing to benefit from past practices that  worked well. If it can capture the lessons learned, it has an opportunity to  accelerate the progress these teams made during their pilot phase and  spread the benefits across all the cross-functional teams and across a  wider range of specific military capabilities they are pursuing. In our  discussions with Army Futures Command officials they agreed that  formalizing and implementing a plan to collect and incorporate lessons  learned would be beneficial.

Incorporating Leading Practices for Organizational Transformations Could Benefit Army Futures Command

Army officials told us that the establishment of Army Futures Command  represents a dramatic organizational transformation in how the Army will  develop weapon systems and platforms. In our previous work on mergers  and organizational transformations in federal agencies, we have identified  several leading practices, as shown in table 4 below, that can help  agencies undertaking such transformational efforts.

As the Army is standing up Army Futures Command, it has begun to  apply some of the leading practices for mergers and organizational  transformations. For example, senior Army officials have provided a clear  and consistent rationale for establishing the new command in official  directives and in public appearances. They have also clearly described  the mission of the Army Futures Command and established a timeline for  its implementation. However, the command has not yet formalized and  institutionalized its authorities, responsibilities, policies and procedures  nor taken steps to apply these or other leading practices.

While we observed a strong organizational unity of purpose and  collaboration from the current senior leadership in the Army for the Army  Futures Command, this could change as the Army’s leadership changes.  For example, according to law, the tenure of the Chief of Staff of the Army  is generally limited to 4 years and the current Chief of Staff has already  served 3 years. Furthermore, the Secretary of the Army is appointed by  the President, subject to the advice and consent of the Senate, and  therefore may change with new presidential administrations and during  administrations. For example, the past 6 people, prior to the current  secretary, confirmed as the Secretary of the Army served an average of  959 days—about 2 and one-half years. The current secretary has already  served about 1 year. Further, senior Army officials told us that they expect  changes at both top and mid-tier leadership within the new command will  periodically occur as a result of the Army’s normal system of rotations for  officers. For example, a senior military official in Army Futures Command  told us that they expect commanders of components will rotate every 4  years. Therefore, because this modernization effort is expected to span a  decade or longer, continued support from current and future senior Army  officials, such as the Chief of Staff and the Secretary of the Army, will be  essential to ensure the success of the new command into the future.

We have previously reported in our work on internal controls that it is  important to establish the organizational structure necessary to enable an  entity to plan, execute, control, and assess the organization in achieving  its objectives as well as respond to potential changes in, among other  things, personnel. By fully applying key principles of major mergers and  organizational transformations as the Army completes the process of  establishing the Army Futures Command, the Army can better ensure the  new command realizes its goals for modernization through development  of well-defined requirements, incorporation of mature technologies, and  development of systems that provide the warfighter with the capabilities  needed for future conflicts.

The Army has made substantial changes to how it intends to coordinate  and oversee modernization efforts, due at least in part to the lost years  and billions of dollars from past efforts to modernize. The Army has taken  positive steps to improve its current modernization efforts and has already  seen some initial successes. The creation of the new command, the  integration of the cross-functional teams to better refine requirements and  cultivate technologies, the realignment of several existing organizations,  and the shifting of personnel gives the Army a unique opportunity to take  advantage of leading practices and its own lessons learned.

The Army, however, faces some key challenges. In particular, the Army’s  intent to transition technologies to weapon systems before technologies  are matured is inconsistent with leading practices, risks delays in  equipping the warfighter, and can potentially lead to cost overruns. In  addition, the cross-functional team pilots have demonstrated some initial  successes in shortening the requirements development process—and,  more generally, in collaborating across the Army—but it is not clear what  steps the Army Futures Command plans to take to incorporate the  experience and expertise of these teams in applying leading practices  and thereby sustain these benefits. Further, the Army lacks a formal plan  to identify and incorporate lessons learned from the cross-functional  teams as Army Futures Command becomes fully operational and could  thereby miss an opportunity to leverage the experience of these teams on  past practices that worked well and those that did not. Finally, as the  Army finalizes the roles, authorities, and responsibilities for the Army  Futures Command it can benefit from applying leading practices related  to mergers and organizational transformations. This can help ensure that  Army Futures Command realizes its goals for modernization including  unity of command, accountability, and modernization at the speed and  scale required to prevail in future conflicts.

We are making four recommendations to the Secretary of the Army:

The Secretary of the Army should ensure that the Commanding  General of Army Futures Command applies leading practices as they  relate to technology development, particularly that of demonstrating  technology in an operational environment prior to starting system  development. (Recommendation 1)

The Secretary of the Army should ensure that the Commanding  General of Army Futures Command takes steps to incorporate the  experiences of the cross-functional teams in applying leading  practices for effective cross-functional teams. (Recommendation 2)

The Secretary of the Army should ensure that the Commanding  General of Army Futures Command executes a process for identifying  and incorporating lessons learned from cross-functional team pilots  into the new command. (Recommendation 3)

The Secretary of the Army should ensure that the Commanding  General of Army Futures Command fully applies leading practices for  mergers and organizational transformations as roles, responsibilities,  policies and procedures are finalized for the new command.  (Recommendation 4)

We provided a draft of this report to the Department of Defense for review  and comment. In its written comments, reproduced in appendix II, the  Department concurred with all four of our recommendations and made  certain technical comments which we incorporated as appropriate.

In concurring with our recommendation on demonstrating technology in  an operational environment, the Department of Defense requested that  we reword the recommendation to reflect that technology maturity be  considered with other factors, such as risk assessment and troop  availability. We understand the Department’s desire for flexibility, but  continue to believe that reaching higher levels of technological maturity,  through demonstrating technologies in an operational environment prior  to beginning system development adds significant value by reducing risk;  something that could help the Army deliver capabilities it believes are  urgently needed. As such, we made no change to the recommendation.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense, the Secretary of the Army, the  Commander of Army Futures Command, and other interested parties. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or ludwigsonj@gao.gov. Contact points for our  Office of Congressional Relations and Public Affairs may be found on the  last page of this report. GAO staff that made significant contributions to  this report are listed in appendix III.

Appendix I: Objectives, Scope and Methodology

Section 1061 of the National Defense Authorization Act for Fiscal Year  2018 included a provision for GAO to report on the Army’s modernization  strategy. This report assesses (1) the status of the Army’s efforts to  establish new acquisition organizations while balancing near- and long- term modernization; and (2) the extent to which the Army has applied  leading practices to do so.

To assess the status of the Army’s efforts to establish new acquisition  organizations we reviewed the Army general orders and directives that  established these organizations. This review included documentation  such as:

Army General Order 2018-10 that established the Army Futures  Command, as well as reassigned existing organizations, such as the  Army Capabilities Integration Center from the Training and Doctrine  Command and the eight cross-functional team pilots to the new  command.

Army Directive 2017-24 that established the cross-functional team  pilots and provided guidance on how they should operate to improve  the quality and speed of materiel development activities.

Army Directive 2017-22 that provided guidance for implementation of  acquisition reform policy/initiatives to reflect modernization such as  directive 2017-29 to improve the integration of science and technology  into concept, capability, and materiel development.

Army Regulation 73-1 (Test and Evaluation Policy)

Army Regulation 70-1 (Army Acquisition Policy)

Army Regulation 71-9 (Warfighting Capabilities Determination)

Training and Doctrine Command Regulation 71-20 (Concept  Development, Capabilities Determination, and Capabilities  Integration)

Headquarters, Department of the Army Executive Order 176-18  (Establishment of Army Futures Command)

We also interviewed the Under Secretary of the Army, officials from Army  Futures Command and related organizations like the Office of Process  Innovation and Integration, members of the eight cross-functional teams,  the Army Capabilities Integration Center, and the Army Research,  Development, and Engineering Command.

To assess the balance of modernization priorities between near-term and  long-term, we reviewed documentation related to those lines of effort  including:  the 2018 Army Modernization Strategy report—which describes the  rationale behind modernization and the efforts for each priority,  the Strategic Portfolio Analysis Review for Fiscal Year 2020—which is  a part of the budget process to determine priorities, align science and  technology efforts to capabilities, and plan milestones,  the Deputy Under Secretary of the Army and Research and  Development Command Science and Technology Review of October  2017—which describes the science and technology priorities for each  cross-functional team and realigns funding through identifying  opportunities to divest, and

Strategic Capability Roadmaps—which provide a timeline for the  development and fielding of the capabilities being developed by some  of the cross-functional teams.

To review these documents, we created a data collection instrument to  capture the efforts as they related to each of the eight cross-functional  teams and consolidate the different sources of information. We first  collected information about the capabilities in which cross-functional team  officials indicated their involvement. For these capabilities, we recorded  planned milestones and the date that the capability would first be  operational. We also recorded whether or not the capability was new or  an incremental upgrade, the science and technology efforts to develop  that capability, and whether or not those efforts contributed to other  capabilities. We then collected data related to the general efforts of the  cross-functional teams. These efforts included divestment opportunities,  and the amounts of funding aligned to the associated modernization  priority. We also interviewed officials from the cross-functional teams, the  office of Army G-8, and other Army offices.

To address the extent to which the Army’s cross-functional team pilots  applied leading practices for technology development, we

Reviewed cross-functional team charters, the 2018 Army  Modernization Strategy report, Fiscal Years 2019 and 2020 Strategic  Portfolio Analysis, the Army’s Fiscal Year 2019 President’s Budget,  and the Army’s October 2017 Science and Technology Review to  identify actions related to the development of near- and long-term  capabilities for the Army’s six modernization priorities that align with  the eight cross-functional teams.

Interviewed cross-functional team officials to learn about technology  development activities they conducted or planned to conduct  regarding these priorities.

Selected leading practices from our body of work on weapons  systems acquisitions based on which ones are most relevant to where  the cross-functional teams’ activities fit within the broader weapons  systems acquisition process.

Consolidated relevant data from Army documentation and statements  from Army officials regarding their technology development efforts in a  record of analysis containing a description of leading practices for  technology development identified in our prior work.

Compared Army documentation and cross-functional team officials’  statements against leading practices for technology development  identified in our prior work, specifically promoting communication  between requirement developers’ and end-users, prototyping  technologies, and maturing technology to a specific threshold.

To address the extent to which cross-functional team pilots applied  leading practices for establishing effective cross-functional teams, we

Reviewed Army Directive 2017-24, which established the cross- functional teams, as well as each team’s charter.

Interviewed officials from each cross-functional team and other Army  offices regarding the collaborative, communicative, and technology  development efforts of these teams.

Consolidated and analyzed data from Army documentation and  statements from Army officials related to leading practices for  establishing effective cross-functional teams, identified in our prior  work.

Compared the content of the Army documents and statements from  cross-functional team officials against leading practices identified in  our prior work to determine whether cross-functional teams had  demonstrated actions consistent with these practices. We then had a  second analyst check the same documents and statements to verify  our initial result.

To address the extent to which Army Futures Command applied leading  practices for mergers and organizational transformations and  incorporated lessons learned from the cross-functional team pilots, we

Reviewed Headquarters Department of the Army Executive Order  176-18, which established the Army Futures Command, and Army  Directive 2017-33, which established the Modernization Task Force.

Interviewed senior Army officials involved in the establishment of the  new command and cross-functional team officials.

We selected leading practices identified by GAO for mergers and  organizational transformations in our prior work because the  establishment of Army Futures Command represents the largest  organizational transformation the Army has undertaken since 1973  and includes merging existing Army organizations into a new  command.

Although Army Futures Command is not yet fully operational, we  analyzed Army documentation and officials’ statements regarding the  new command against leading practices identified in our prior work  and the lessons learned from the cross-functional teams to assess  whether it had applied these leading practices.

Appendix II: Comments from the Department of Defense

Appendix III: GAO Contact and Staff Acknowledgments

In addition to the contact named above, J. Kristopher Keener (Assistant  Director), Joe E. Hunter (Analyst-in-Charge), Jenna Blair, Emily Bond,  Matthew T. Crosby, Cale Jones, Kevin O’Neill, John Pendleton, John  Rastler, A. Maurice Robinson, and Roxanna Sun made significant  contributions to this review.

To keep its technological edge, the Army has started to modernize its equipment, such as long-range precision weapons and next-generation combat vehicles. It created the Army Futures Command to improve the process.

Historically, the Army has struggled to get new equipment on time and on budget. While the Army is following many of our leading practices, one exception is that it intends to move new technologies into weapons systems before testing in a realistic environment. Moving forward without this testing can delay delivery and increase costs as development continues.

We made recommendations to help the Army realize its modernization goals.