The May 2006 document, marked “for official use only,” was compiled by the Defense Department's Cost Analysis Improvement Group. It is one of several reports required by the fiscal year 2006 Defense Authorization Act, and the law prevented the Army from spending 30 percent of the money budgeted for its largest development and procurement program until the reports were delivered.

At a May 2003 Defense Acquisition Board review of the Army's largest acquisition program, the CAIG pegged the cost of FCS at $175 billion.

“Since that estimate was prepared, the Army has made significant structural changes to the program, resulting in substantial increases in costs,” the new CAIG report states, noting the program's restructuring in 2004 that extended the program's time line and added a series of “spin-outs” as well as several platforms to the program's scope.

Those changes helped boost the CAIG estimate of the total cost for FCS in 2006 to between $295 billion and $307.2 billion. The range reflects risk in the cost of the program's research, development, testing and evaluation phase, states the report, obtained last week by Inside the Army.

But the cost increase is still far above a $161 billion estimate detailed in the Pentagon's Selected Acquisition Reports from late 2005. That estimate included the cost of research and development, procurement, military construction and acquisition-related operation and maintenance costs, according to the 2005 SAR document. It reported on the program in current-year dollars that are adjusted for inflation. The CAIG uses constant, or FY-03 dollars.

The CAIG report breaks down the estimates by account: $118 billion for procurement, $87.9 billion for operation and maintenance, $56.3 billion for personnel and $300 million for construction. RDT&E could cost between $31.8 billion and $44 billion, the report states.

The May 2006 CAIG report cites RDT&E as an area of risk because of the size and complexity of the FCS software development program.

“Current estimates project that more than 60 million source lines of code will be developed, reused or integrated by more than 100 contractors,” the report says. Two major factors increase the software development risk, the report notes: productivity rates and the required level of software-to-hardware integration.

Other areas of cost risk include the development schedule and staffing, according to the report.

After comparing FCS's schedule with a dozen Army acquisition programs over the last 30 years, the CAIG found that “there is a high probability that additional engineering staffing will be required to support development activities through platform critical design review,” the report states. “There is also a strong likelihood that several more years will be needed beyond the Army's current plan to achieve initial operational capability.”

The program's network transport layer is also at risk, the report says, because the program is so connected to the availability of the Joint Tactical Radio System and the Warfighter Information Network-Tactical.

“Delays in these programs are likely to cause either delays in the FCS development schedule or the fielding of an FCS system that does not satisfy all currently stated network operational requirements,” states the document that was first reported by Bloomberg News.

The program remains “on cost and on schedule,” according to an Army statement e-mailed to ITA July 7. The service “vigorously disputes” the CAIG's O&M estimates, saying they should be half as large.