To GCV Or Not To GCV?


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Prospects for the procurement of America's next super-tank, and implications for the would-be suppliers

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To GCV Or Not To GCV?

  1. 1. Hasik Analytic LLC To GCV or not to GCV? Prospects for the procurement of America's next super-tank, and implications for the would-be suppliers Defense-Industrial Research Memorandum #2011-06, 2 September 2011 James Hasik +1-512-299-1269 The US Army recently got the go-ahead to budget $890 million for the development of the Ground Combat Vehicle (GCV), a very heavy replacement for the M2 Bradley. While the goals are laudable, the costs are impressive, and the program will not possibly attain the production run planned. It may not attain a production run at all. We analyze the costs and requirements to argue that the program is not particularly cost-effective. We then consider several scenarios with sticky quantities in the range of either zero or somewhere between 800 to 1400 vehicles eventually procured. Finally, we evaluate the impact on interested contractors, namely General Dynamics, BAE Systems, and the team of SAIC, Boeing, Rheinmetall, and KMW. THE PERFORMANCE PREFERENCES First, let's review what the Ground Combat Vehicle (GCV) is supposed to be. The full details are contained only in a classified annex to the RFP, but the specification is said to include • the off-road mobility of the Bradley • the over-the-road mobility of the Stryker (LAV-III) • the blast protection of an MRAP • ballistic protection better than that of a Bradley, and with modular armor for better yet • more firepower than a Bradley, suggesting both a missile launcher and at least a 30 mm cannon • seating for twelve (commander, driver, gunner, and nine passengers)
  2. 2. Defense-Industrial Research Memorandum 2011-06 Hasik Analytic LLC At least no one is asking that all this be air-transportable in a C-130. After an unhelpful experience with that requirement in the Interim Armored Vehicle (or Stryker) program, and a real disaster with it in the Future Combat System program, the Army is merely specifying transportability by C-17. That puts an effective upper weight limit on the whole bag at 70 tons, which may have been the basis for a report last year on Reuters’ that the GCV would necessarily weigh 70 tons. As I wrote last year about this issue, if you give a mouse a cookie, he’ll quite likely fill the parametric space. Still, this is not quite, as I had suggested once, an effort to stuff ten pounds of kit into a five pound bag. Rather, it's more like ordering a twenty-pound sack that no one has seen before. As the Army noted in its review of options on the market, this combination of requirements is not found in an existing vehicle. SOLUTIONS FROM THE SHELF, REJECTED To put this all together, the Army Department recently awarded development contracts to two leading choices: $450 million will be going to BAE Systems, and $440 million to General Dynamics, for several years of work. The third bidder was the team of SAIC, Boeing, Rheinmetall, and Krauss-Maffei Wegmann (KMW, or as they say im Deutschland, Kay-Em-Vay). Left out of a twenty or thirty billion dollar program (more on that to follow), that group has protested that decision to the US Government Accountability Office (GAO). Melissa Koskovich, a spokeswoman for SAIC, said that their team believed that "the government relied on evaluation criteria outside its published request for proposals," that is did not consider "integrating existing, proven technology into a comprehensive solution," and that "several aspects of the bid may have been discounted because of a lack of familiarity with their non-American origin." [1] Right. German tanks. No one's heard of those. Actually, the Army admits that it rejected the baseline Puma in an earlier study. Back in January, Inside Defense reported that The Army considered nine systems to compete with a conceptual Ground Combat Vehicle in an analysis of alternatives now being studied by the Defense Department, according to government documents. The five primary vehicles that were evaluated include the M2A3 Bradley II Infantry Fighting Vehicle, a modernized version of the Stryker, a variant of the M2A3 Bradley used in Iraq and a XM1230 Caiman Plus Mine Resistant Ambush Protected vehicle, the documents state... Five secondary vehicles included two foreign-made platforms referred to only as "Vehicle X" and "Vehicle Y", the M1126 Stryker Infantry Fighting Vehicle, the M1A2 SEP TUSK Abrams and a modernized version of the Abrams. [2] The identity of vehicle X was subsequently leaked as that of the Puma. The identity of the other vehicle is less clear, but I have heard strong suggestions that it was neither of page 2 of 10 2 September 2011
  3. 3. Defense-Industrial Research Memorandum 2011-06 Hasik Analytic LLC the more popular tracked troop carriers on the market: the CV90 from BAE Systems AB, or the ASCOD II (Ulan/Pizarro) from General Dynamics (Steyr/Santa Bárbara). That strongly suggests that Y was the Namer, a project of the Israeli Army's Ordnance Corps. I will discuss these options in some detail, because their rejection says a lot about where the Army is going (or not going in a hurry) with the GCV. The Namer is indeed another massive vehicle—fully sixty tons—built actually from the same chassis as Israel's Merkava IV tanks. Presumably this is what the US Army meant in examining the Abrams as a GCV candidate—removing the turret and rebuilding the interior for troop space. The Namer is already in service: Battalion 13 of the Golani Brigade has already been fully outfitted, and the other battalions will receive their vehicles over the next few years. [3] This latest version has also recently begun production with US assistance funds (for the Israeli Army) by General Dynamics Land Systems at the US Army's tank plant (er, Joint Systems Manufacturing Center) in Lima, Ohio. GD will be building 600 Namers over the next eight years, alongside any work that it may receive in the GCV program. [4] I will return to this contract with GD at the end, for it has significant implications for this competition. For now, I will note that the Namer offers an impressive performance package: • the off-road mobility of a Merkava tank, probably roughly comparable to that of a Bradley • excellent blast protection with its heavily armored floors: unlike early-model Merkavas, late-model Merkavas proved very survivable against mine blasts in 2006 in Lebanon [5] • the ballistic protection of a Merkava tank, just with a lower profile • firepower only for close combat—machine guns, a grenade launcher, and that 60 mm mortar that the Israeli Army likes to stick on its tanks • room for a crew of three • room for nine passengers Lacking, clearly, are the high road speed of a Stryker, and the cannon and anti-tank missile launcher of the Bradley. Addressing the former problem without adding a gas turbine engine is pretty challenging. Addressing the latter problem wouldn't be all that difficult: there are several large remote mounts like that on the market, including one from Rafael in Israel. The Puma is a project for the Bundeswehr by KMW and Rheinmetall Landsysteme GmbH, as partners in the consortium PSM (an abbreviation for the oddly Anglo-Saxon Project and Systems Management). What we here in the US call initial operational capability (IOC) occurred late last year with a small set of vehicles. The vehicle offers • the off-road mobility of a Bradley, more or less • pretty decent blast protection with its double armored floors. That might not be MRAP-performance, but only so much can be done with low-riding flat bottoms without massive weight (as in the Namer) page 3 of 10 2 September 2011
  4. 4. Defense-Industrial Research Memorandum 2011-06 Hasik Analytic LLC • better ballistic protection than a Bradley, with modular armor that takes the maximum combat weigh to almost 41 tons (which leads to the unusual air-transportability profile of four panzers in five A400Ms) • more firepower than a Bradley, with its 30 mm cannon (including airbursting ammunition) and antitank missiles (and in a remotely operated turret for more internal space and greater survivability) • room for a crew of three What the Puma distinctly lacks are the two things that led the Army away from the Bradley, and towards the Stryker, back in 1999: • room for nine passengers (the Puma seats on six; the Bradley six or seven) • that high road speed, in what presumably must be a tracked vehicle, just to manage the off-road mobility The first issue was probably addressable. We should not just breezily wave a hand and insist oh, KMW can just stretch it, maybe make a station wagon version. But all the same, if KMW can build one for nine, it could build one for twelve. Stretching that design, however, and however it would be done, would produce a vehicle of more than 50 tons, which is still transportable by C-17. THE QUESTION OF COST As I wrote a year ago, all that capability in one package was part of what made the Puma so expensive. The consortium’s contract with the Defense Ministry in Berlin for 410 Pumas exceeds €3 billion, or roughly $10.4 million per vehicle at today’s exchange rates. That’s a bit above the going rate for a schützenpanzer, even if it is an impressive vehicle. The first phase of GD's contract for the Namer calls for production of at least 100 vehicles for $400 million [6], which suggests a price of just under $4 million each. Without the overwhelming electronics content of a weapons suite like that of the Puma or Bradley, that seems possible. At this point it is worth asking whether prior rejection of the Puma—and every other on- the-shelf idea—contributed to rejection of the SAIC-Boeing-PSM bid. Frankly, I imagine that the Army Department may have just been really put off by the idea of getting SAIC and Boeing together involved on another long-term ground vehicle development program. That's not an indictment of either company; it's just a strong possibility of perception. If so, the partners in PSM just picked the wrong dance card. But whatever the real reason, as it turns out, price was probably not the issue. After BAE and GDLS have run through $890 million in combined development money, one is scheduled to begin production of some 1800 vehicles starting in 2017. The Army had initially anticipated that each vehicle would cost $9-10.5 million, rather as much as a Puma, but for a much bigger vehicle. Adjusting that view, the Army now thinks that the unit price will fall somewhere within $11-13 million. The Pentagon's Cost Analysis page 4 of 10 2 September 2011
  5. 5. Defense-Industrial Research Memorandum 2011-06 Hasik Analytic LLC and Program Evaluation (CAPE) shop, using some parametric techniques, think that the figure will be more like $16-17 million. And for a ground combat vehicle, it's fair to ask whether that price is just bizarre. [7] If we use CAPE's estimate (and CAPE is much more reliable on these things that the Army), we're talking about a $30 billion program. In layman's parlance, it's three supercarriers. THE ANALYSTS AND THE ARMY THEY HAVE That's why Byron Callan of Capital Alpha is "skeptical that this program will survive," why Loren Thompson of the Lexington Institute says that "you can feel the doubt" in the air, and why Stephen Dagget of the Congressional Research Service thinks that "the Army is going to give up the Ground Combat Vehicle" along with the Joint Light Tactical Vehicle in later budgets. Rich Smith of the Motley Fool just flatly asks "does the country with the world's biggest military, a country $14.3 trillion in debt, really need to spend $23 billion on a new super tank?" [8] US Senator Carl Levin says there will definitely be a GCV, [9] but he would say that. He's from Michigan. Loren further argues that pursuing a program with more, newer technologies to insert might keep the government more interested. [10] Otherwise, the vehicle may not offer so much more than the Bradley—apart from remarkably better ballistic and blast protection. But that's quite possibly the distinguishing characteristic: American troops still fall to improvised mines, but they hardly lack for mobility or firepower today. Moreover, given the dreadful track record of acquisition management at the Army Department in the past 20 years, I suspect that swinging for the fences wouldn't make the Army's political supervisors more comfortable. This issue of price must also be seen within the context of the Army's future role in American military activities. As Michael O'Hanlon of the Brookings Institution put in to CNN this past week, "America is simply too tired, its finances too broke, and its Army and Marine Corps too overused of late," to countenance an invasion of Syria. Or anywhere else, I would add. Further, the aftermath of the Libyan campaign is not helping the Army's cause. Consider the record of American campaigns overseas since the end of the Cold War, as shown in the table on the next page. With this perspective, as one widely-read blogger asks, "why on Earth would we deploy a large conventional infantry force for constabulary duty in another protracted ground war given the lessons (re)learned in Iraq and Afghanistan?" [11] This isn't grand strategy, but basically, it's the actually-small Small Wars that garner support—and that even tend to end well, at least for American interests. So, on the short end of the Pacific-first plan, the Army is now considering a plan to shrink its ground force from 45 combat brigades to 35 or 30. The National Guard would keep all 28 of its brigades—that outfit is just way too cost-effective. The mix of heavy, medium (Stryker), and light brigades to survive in the Regular Army, though, is currently under consideration on the Army Staff. [12] The figure of 30 is billed as the worst case, page 5 of 10 2 September 2011
  6. 6. Defense-Industrial Research Memorandum 2011-06 Hasik Analytic LLC but given the likelihood of a long-term Pentagon real budget of around $400 billion annually [13], it's more like a planning assumption. American Military Expeditions From the End of the Cold War FUTURE FORCE STRUCTURE AND OUTCOMES FOR THE PROGRAM The composition of the Army's ground force as a whole and the heavy brigades themselves is important for understanding the prospects of the GCV program. The Army was already planning on reducing its lineup of heavy brigades to just fifteen, all to be eventually equipped with the M1A3 Abrams, the M109A6 Paladin, and this future GCV. Each of these heavy brigades today has, alongside its four companies of tanks and two batteries of howitzers, four companies of mechanized infantry in 14 infantry fighting vehicles (today, that's three platoons of four M2 Bradleys each, plus two for the company commander and his second). If this table of organization and equipment (TO&E) continues forward, that would suggest a requirement of just 56 GCVs per heavy brigade. The Army's equipping plan from last year indicates 62 GCVs per brigade, so the service may have found a few additional uses for them within the formation. In any case, 15 x 62 is just 930, or not much more than 1000 GCVs, after factoring in training, prepositioning, war reserve, and other marginal requirements. The National Guard has another six heavy brigades (one each headquartered in Pennsylvania, North Carolina, Idaho, Mississippi, Washington, and Tennessee) and could thus take more GCVs, presuming that the Guard maintains its group of heavy brigades. Military police Year Campaign Aims accomplished? US public satisfaction? US invasion force? Friendly local force involved? 1989 Panama √ √ Modest — 1991 Iraq √ √ Large — 1993 Somalia X X Small — 1994 Haiti √ √ Modest — 1995 Bosnia √ √ — Yes 1999 Kosovo √ √ Threatened Yes 2001 Afghanistan uncertain declining Small Yes 2003 Iraq uncertain X Large — 2011 Libya seemingly √ — Yes page 6 of 10 2 September 2011
  7. 7. Defense-Industrial Research Memorandum 2011-06 Hasik Analytic LLC and engineers are rather more useful to state governors, so we shouldn't count on that indefinitely. But if it does, that another 6 x 62, or 372 GCVs, for a total in the forces of 1302. Again, with all the marginal requirements, we have a plan for just over 1400 vehicles. Note how that's not 1800 vehicles, even in the best case—that higher figure may have corresponded to the requirement for the Army to maintain seventeen heavy brigades. But when the 170th and 172nd Brigades return from Germany in the next few years, they will most likely disband, taking the total to fifteen. Note further that even the estimate of 1000 GCVs depends on the Army not cutting a single heavy brigade in its reduction from 45 to 35 or 30. There has been some recent suggestion that as the Army drops to 30 brigades, it might add a third line battalion to each of the surviving heavy and light brigades. Each currently has two, plus a cavalry squadron for reconnaissance, screening, and actual fighting when necessary. The Stryker brigades have three of the former, and the dichotomy has been difficult to square conceptually for some time. Whether this plan would apply to the Guard or not is another question, but assuming that it does, adding a third line battalion with two mechanized infantry companies would add increase the plan by roughly 2 X 30 GCVs per brigade. However, it seems very unlikely that the Army would increase the absolute number of heavy battalions as its cuts the number of brigades by a third, so I will not address this as a case. Of course, the Army could cut the number of heavy brigades further. In 2003, it tore through the Iraqi Army with the equivalent of just two tank divisions. In the processing of finishing the build-out of the equivalent of two 'motorized rifle divisions' (seven brigades of Strykers in the Regulars, and another in the Guard), it's plausible that the Army could do with just eight heavy brigades, albeit with the aforementioned addition of those third battalions. This is rather what's needed for what I described a few weeks ago as "The One-MRC Military". [14] For some degree of economy, it only requires about 8 x 3 x 30, or 720 GCVs, plus that appropriate reserve, for perhaps 800 vehicles. Finally, there is one more possibility: this whole thing may never happen. It’s not that the Army can’t make the case for a new armored troop carrier. Rather, it’s that no one can cost-effectively make an armored troop carrier that combines all the attributes the Army is requesting. The latest remanufactured model of the Bradley infantry vehicle, the M2A3, comes with a unit price of about $3.5 million. But most of that money is sunk, as the force has been substantially overhauled to the M2A2 ODS and M2A3 standards, particularly since the big surge of spending in 2005. With the GCV, the Army is proposing to spend over $1 million per mechanized infantry soldier for greater battlefield protection. That's rather the going rate on a whole MRAP, which tends to carry anywhere from four to fourteen troops. Given the current fiscal constraints, that seems a stretch. This discussion suggests that the range of outcomes for the GCV program is not a smooth continuum, but a set of cases cluster around force structure decisions, as page 7 of 10 2 September 2011
  8. 8. Defense-Industrial Research Memorandum 2011-06 Hasik Analytic LLC outlined in the table below. The Army will order at most 1400 GCVs. It's more likely to order about 1000. If it orders any at all, it should order at least 800, as that's roughly the force required for fighting one big war at a time. And of course, there's a strong possibility that it won't order any at all. Scenarios for Eventual Procurement of the Ground Combat Vehicle IMPLICATIONS FOR INDUSTRY So what does this mean for business, beyond the numbers? To begin, let's consider that SAIC, Boeing, Rheinmetall, and KMW may have a long shot at overturning the Army's contract awards. Or do they? Loren Thompson doubts that the challenge will be successful, because the Army put so much time into getting this one right. [15] Still, there's reason to wonder. Despite all the work that the Air Force Department put into the KC-X evaluations, it took three tries and ten years to get the paperwork right. The Army flubbed the FMTV competition once, and that was for a truck. Depending on what that classified annex said, it may have had a harder time with this one. BAE might actually breathe a sigh of relief should the program be terminated: the Bradley surely has some shortcomings in protection, and York, Pennsylvania does currently have the franchise on Bradley upgrades and overhauls. Up until now, it has been notable that the US Army’s plans for its armored fleet have involved upgrading vehicles from GDLS (the Abrams and the Stryker), but mostly discarding vehicles from BAE (the Bradley and the M113). The Paladin Integrated Management (PIM) program has been the one bright spot for the moment, but note again that the Regulars will only keep one armored artillery battalion per brigade in the long run. If we assume the move towards heavy brigades of three line battalions, even with the aforementioned marginalia, that’s somewhere between 160 and 420 vehicles. So, sustainment of Bradley work might be greatly appreciated. Scenario Heavy brigades and battalions in Regulars and Guard Total heavy battalions GCVs per heavy battalion Total GCVs active Approx. 10% reserve Total GCVs to be bought Baseline 21x2 or 14x3 42 30 1260 ~126 1400 Even reduction 15x2 or 10x3 30 30 900 ~90 1000 One MRC Army 8x3 24 30 720 ~72 800 Bradley is fine TBD TBD 0 0 0 0 page 8 of 10 2 September 2011
  9. 9. Defense-Industrial Research Memorandum 2011-06 Hasik Analytic LLC GD has its own franchise program in the Abrams, and that program for 600 Namers as well. In short, it's set, which is good as the forthcoming force reduction strongly suggest that the production run for Strykers is probably done. Losing the GCV program to BAE won't threaten the viability of its operation in Lima, whatever the fulminations from the House Armed Services Committee. But losing the program entirely to a full cancellation won't knock its rival out of the business. While GD might eventually compete for some Bradley A4 upgrade, BAE rather has the leg up, having already shown an AX version at the AUSA show two years ago. Beating BAE for the GCV, and seeing the GCV through to completion, is about the only sequence of events that would threaten its competitor's viability. This is a more than a meaningful possibility. In Lima today, GD is already working on such heavy vehicles in the Namer program, and by the time GCV production would start in 2017, it would have six years of experience in how to build them. With this hot line, it's reasonable to wonder if GD wouldn't enter the competition for the procurement phase with an a priori cost advantage. But apart from the aforementioned firms, with the observed (possible) exception of BAE, would anyone be particularly discomfited by an eventual order or zero? As happened the FMTV and KC-X disputes, there will certainly be the usual cries of indignation from the chorus of pundits about the fate of something called “the industrial base”. (And note how this term does not exist outside the rarified world of military contracting.) We’ll hear how “capabilities” will vanish forever with any exit from the industry, and how the Army’s probably single source approach will result in an eventual monopoly on heavy armored vehicle production in the United States. This is hogwash. For as the introduction of so many overseas designs in the MRAP program demonstrated, enough money can induce almost anyone to bid. Call that Biden’s Law, for the onetime federal senator who said so in debate. But even more so, the simple fact that GD has an order for 600 Namers from Israel means that heavy tanks will be built in Ohio until probably 2019. It will be a long time before someone needs to worry over this non-issue again. NOTES 1. Carlo Munoz, "Protect Brings Army's Top Program to Grinding Halt," AOL Defense, 26 August 2011; Paul McLeary, "U.S. Ground Combat Vehicle Work Put On Hold," Aerospace Daily & Defense Report, 30 August 2011. 2. "Army Evaluated Nine Vehicles Against GCV In Analysis Of Alternatives, Inside Defense," 11 January 2011 3. Yaakov Katz, "Dispute Leaves Soldiers Without Missile Defense," Jerusalem Post, 29 August 2011 4. Noam Esher, "GDLS to Develop Namer APCs for Israel," Ares, 28 October 2010 5. "Israeli tanks and Hezbollah countermeasures," Stratfor, 25 July 2006; William M. Arkin, "Divine Victory for Whom? Airpower in the 2006 Israeli-Hezbollah War," Strategic Studies Quarterly, Winter 2007, p. 107 page 9 of 10 2 September 2011
  10. 10. Defense-Industrial Research Memorandum 2011-06 Hasik Analytic LLC 6. Yakov Katz, "General Dynamics to Develop Namer APC for IDF," Jerusalem Post, 24 October 2010; "Namer: Israeli Leopard Coming to the USA," Defense Industry Daily, 26 October 2010 7. Paul McLeary, "Ground Combat Vehicle Program Faces Questions," Aviation Week & Space Technology, 22 August 2011 8. Rich Smith, "Who Will Build America's Next Supertank?" The Motley Fool, 22 August 2011 9. Peggy Walsh-Sarnecki, "$385 billion industry: Defense spending may avoid big hit in Michigan," Detroit Free Press, 29 August 2011; Philip Ewing, "SASC Chairman Levin: There Will Be A GCV," DoD Buzz, 30 August 2011 10.Majorie Censer, "Army Vehicle Program Creates Opportunity and Uncertainty," Washington Post, 27 August 2011 11.Chris Rawley, "Libya Lessons: Supremacy of the SOF-Airpower Team... Or, Why Do We Still Need a Huge Army?" Information Dissemination, 28 August 2011 12."Army Could Shed Upto 15 BCTs in Push to Meet Budget Savings Goal," Inside Defense, 30 August 2011; Michael Hoffman, "US Army May Cut 10 Active-Duty Brigades," Defense News, 1 September 2011 13.James Hasik, "Defense and Taxes," DIRM #3, 5 August 2011 14.James Hasik, "Consider the One-MRC Military,", 9 August 2011 15.Michael Hoffman, "SAIC Protests GCV Contract Award," Defense News, 26 August 2011 page 10 of 10 2 September 2011