Canceled "Future Combat System" Springs to Life With a New Name -- But the Same Old Contractors

Last year the Obama administration canceled the Army's Future Combat System (FCS), a new family of wheeled, armored vehicles to move troops around the battlefield, as part of its restructuring of defense spending. But the military still needs something to replace aging troop transports such as the M2 Bradley, and last week the Army accepted proposals for a new program, the Ground Combat Vehicle (GCV). Unsurprisingly, the very same contractors that headed up FCS development -- Boeing (BA) and SAIC -- are also bidding on the GCV program.

FCS suffered from cost and schedule issues, and also had the misfortune of predating the Iraq and Afghanistan wars, which meant that its armor wasn't optimized to deal with threats like mines and IEDs (improvised explosive devices such as roadside bombs). FCS had hoped to improve battlefield survivability with speed and new data sharing networks, while the much older Bradley was intended to move with tanks so it was fully tracked and more heavily armored. The GCV most likely will be similar since it must perform a like role.

Recently, Defense Secretary Robert Gates has stepped up his rhetoric, emphasizing the DoD's plans to focus more on current operations and improving capability for existing wars rather then spending huge sums on development of new equipment that might not work out as promised. Of course, DoD still needs to invest in improved weapons and new technology. An ideal budget would balance both aims. In the 1990s, the Clinton administration starved then current forces while plowing money into new weapons that had limited production. Gates is arguing for doing the opposite.

Three different teams turned in their GCV proposals last week. This is an attractive contract for the bidders as it offers steady, long term production to replace hundreds of Bradleys in current use.

The teams are all made up of the large U.S. defense contractors. One is led by General Dynamics (GD) supported by Lockheed Martin (LMT) and Raytheon (RTN). The second by BAE Systems (BAE) with Northrop Grumman (NOC). BAE is the current manufacturer of the M2 and provides overhaul and maintenance support. The third and final team is that of Boeing (BA) and SAIC (SAIC).

The new contract is worth a few billion dollars in development spending alone. The production piece could be in the tens of billions if the DoD proceeds. The fact that so many big U.S. and European defense contractors are bidding indicates just what a big piece of business GCV could turn into. The thinking seems to be that this program is unlikely to be cut even if the defense budget shrinks. It probably also suggests some concern that future big weapons contracts may be few and far between.

Something similar to this is happening with the new presidential transport helicopter. The Lockheed Martin VH-71 solution was canceled also because of cost and schedule problems, but the Navy is starting over with a whole new aircraft -- one that will be neither cheap nor easy to build.

Photo from The National Guard's flickr photostream