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Some Good News on Army SARs

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Here are some highlights of the latest Selected Acquisition Report data provided by the Pentagon the other day. It's noteworthy that some key Army programs have price declines and that those that increased did so because of quantity increases rather than any fundamental price problems.

FBCB2 (Force XXI Battle Command Brigade and Below) Program costs increased $685.0 million (+25.5 percent) from $2,686.1 million to $3,371.1 million, due primarily to a quantity increase of 28,895 systems from 44,568 to 73,463 systems to support Operation Iraqi Freedom and Operation Enduring Freedom (+$683.0 million) and associated schedule, engineering, and estimating allocations* (+$99.0 million). There was an additional increase in other support for retrofit of Type I encryption for the increased quantities (+$114.1 million). These increases were partially offset by lower unit costs from beneficial contract pricing of the increased quantities(-$131.3 million) and lower estimates for the aviation A- kits (i.e., modification kits) based on current contract data (-$45.7 million).

FCS (Future Combat System) Program costs decreased $2,609.9 million (-1.6 percent) from $161,930.1 million to $159,320.2 million, due primarily to the application of revised escalation indices (-$1,331.0 million) and a correction of previously reported costs that were overstated due to the use of incorrect escalation indices (-$913.2 million). There were additional decreases in other support (-$190.6 million) and Congressional statutory reductions and budget decrements (-$146.5 million).

GMLRS (Guided Multiple Launch Rocket System) Program costs decreased $764.2 million (-11.3 percent) from $6,772.5 million to $6,008.3 million, due primarily to lower estimates of hardware costs for the Unitary variant at the production decision (Milestone C) (-$496.6 million) and an acceleration in the procurement buy profile (-$68.9 million). Because of the shorter buy schedule, there were lower estimates for systems engineering/program management costs (-$84.5 million), engineering services (-$44.8 million), and Government production verification testing (-$19.4 million).

LUH (Light Utility Helicopter) Program costs increased $208.4 million (+11.1 percent) from $1,881.8 million to $2,090.2 million, due primarily to a quantity increase of 23 aircraft from 322 to 345 aircraft ($139.3 million). There was an additional cost increase for modifications to address issues identified during the Initial Operational Test (+$171.1 million). These modifications included ARC-231 secure radios and cabin ventilation kits for all 345 aircraft, engine inlet (air) filters for 66 aircraft, and medical evacuation kits for 84 aircraft.

STRYKER Program costs increased by $2,560.2 million (+19.5 percent) from $13,130.9 million to $15,691.1 million, due primarily to a quantity increase of 640 vehicles from 2,887 to 3,527 vehicles (+$1,907.2 million) and associated schedule, engineering, and estimating allocations* (+$621.8 million), and spares and support associated with the quantity increase (+$425.1 million), There were additional increases for survivability enhancements (+$502.6 million), revised testing and management costs (+$375.7 million), and updated MILCON estimates (+$340.9 million). These increases were partially offset by a change in the mix of models procured and new cost estimates (-$797.1 million) and removal of Stryker Product Improvement Program funding (-$816.0 million).

-- Christian

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