Friday, January 18, 2013

Pentagon revamps approach to U.S. Army's next combat vehicle

WASHINGTON (Reuters) - The Pentagon on Thursday restructured the U.S. Army's Ground Combat Vehicle program, saying budget pressures and technical issues had prompted it to delay the multibillion-dollar program by six months and scrap plans to develop prototype vehicles.

The new approach requires the Army to pick just one winning bidder to develop and build the new infantry fighting vehicle after a full and open competition, according to a memo signed by the Pentagon's chief weapons buyer, Frank Kendall. A copy of the memo was obtained by Reuters.

A United States Marine stands by his post in front of the Pentagon in Washington February 29, 2012. REUTERS/Gary Cameron

Teams led by BAE Systems Plc and General Dynamics Corp each won contracts in 2011 to develop ground combat vehicles designed from scratch for battlefields characterized by roadside bombs. Those contracts will now be extended by six months, under the memo dated Thursday.

Kendall told the Army to submit an updated acquisition strategy and revised cost estimates for his approval before it can launch the competition with a request for proposals in the first quarter of fiscal year 2014, which begins October 1. A contract award would come in late fiscal 2014, the memo said.

Industry executives said the Pentagon's new approach would save money by eliminating the expected work on prototypes by two or more companies and moving directly into a more traditional engineering and design phase by one contractor.

The delay in the program means the Army would move into full production of the new vehicles in fiscal 2019, instead of early fiscal 2018 as expected.

The long-term fate of the program remains in question given uncertainty about future Pentagon budget levels and whether Congress will avert $500 billion in military spending reductions that are due to kick in on March 1 and be phased in over a decade. Those cuts would come on top of $487 billion in cuts already slated to take effect over the next decade.

It also remains unclear if the Army will be allowed to buy all 1,894 vehicles currently planned for the program, especially given changes in the military's overall strategy and plans to reduce the size of the Army.

(Reporting by Phil Stewart and Andrea Shalal-Esa)

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Friday, January 18, 2013

Pentagon revamps approach to U.S. Army's next combat vehicle