Saving Money in Weapon Programs Easier Said Than Done (UPDATED)

The Army’s high-tech artillery round, the XM982 Excalibur, was under fire last year as senior officials conducted a sweeping review of weapon programs.  
With a nearly $100,000 per-round price tag, the 155mm Excalibur projectile wascited by Army Vice Chief of Staff Gen. Peter Chiarelli as an example of a weapon system that “sounds fantastic … until you see the cost,” he said last summer. Chiarelli said the Army had not made a convincing case for why it needs such high precision artillery rounds when other alternatives — such as other Army, Navy and Air Force smart munitions — were available and cost less.
Excalibur also had incurred a “Nunn-McCurdy breach” that is triggered when a system ends up costing significantly more than originally estimated. The Nunn-McCurdy legislation that Congress passed in 1982 requires that any program whose costs exceeded 15 percent of its original estimate had to be “recertified” by the defense secretary, or else be terminated. The Army had decided to slash Excalibur production from 30,000 to 6,264 projectiles. Buying fewer rounds would drive the unit cost from $47,000 to $99,000 per projectile. The original plan a decade ago called for the Army to acquire 61,483 projectiles. The Army in 2004 projected that Excalibur would cost $29,000 per round, once in production.
Despite the soaring price tag, Excalibur has survived, and the Army last week exercised a contract option worth nearly $180 million to acquire 2,320 rounds, half of which are for the Marine Corps.
“The program was recertified as essential,” said David Brockway, business development manager at The Raytheon Co., which manufactures Excalibur.
“This is the first full rate production contract,” Brockway said April 22.
In this latest order, the Army is paying about $80,000 per round, he said. “It’s the best price the Army’s ever paid.”
It may also have helped save the program that Marine Corps artillery units are big fans of Excalibur.
Troops in Afghanistan have reported increased use of Excalibur, Brockway said. “Some units have fired 20 rounds a week …. Some units have fired almost daily,” he said. “What I get from them is that the war fighter needs this degree of precision.”
Brockway said he has spoken with infrantrymen who’ve been in close contact with enemy fighters and have used Excalibur to kill snipers on roofs using height of burst fuze. “It doesn’t damage the building but eliminates the sniper,” Brockway said.
He said soldiers and marines are using the GPS-guided Excalibur because other available munitions are less accurate and put civilians at risk. The round’s accuracy is measured in “circular error probable,” or CEP. Excalibur’s advertised CEP is six meters, from a range of 40 km. Conventional artillery rounds’ CEP is about 50 meters, when equipped with a precision-guidance kit.
“People have forgotten what a CEP of 50 meters means,” Brockway said. “The rounds will be distributed 300 meters on the battlefield. That’s not precision.”
Another issue that worked in Excalibur’s favor is ground forces’ preference for having their own fire support, instead of having to call for air-delivered strikes, Brockway said. “If you’re out in the mountains away from air bases, air support could be an hour to two hours away,” he said. “I have been told that they can get an Excalibur on target within four minutes, and that’s with all the clearance,” Brockway said. “If they have soldiers pinned down … aircraft can’t be that responsive all the time with air-delivered munitions.”
The $100,000 price tag obviously gives people sticker shock, but close-air support is expensive, too, he noted. “You have to consider the aviation fuel to put it in the air, the aviation base, the pilots, the training,” in addition to the cost of the bombs.
The Army will be testing next month a new version of Excalibur, known as 1B. Unlike the current variant, the new one can be reprogrammed in flight, can be fired from closer distances, Brockway said. “The 1B has a minimum range of 3 km. The way our forces are dispersed, having shorter range is better. … Right now the minimum range is 8 km.
If the 1B round makes it through development, the Army would pay slightly more than $40,000 per round once production begins in 2012 through 2014, Brockway said.
Recent Army purchases notwithstanding, Excalibur still may not be completely out of the woods, predicts retired Army Col. Nathaniel Sledge Jr., former program manager for combat ammunition system.
“Excalibur 1B will probably not be purchased unless the cost savings are large enough to make the weapon absolutely affordable and relatively attractive in comparison to impending alternatives.”
“One could theorize that changes in rules of engagement (use of artillery in self-defense only), the lack of affordability ($100,000 unit cost), and the prospect of alternative systems have brought this program to its knees,” Sledge said. “As the present wars wind down, there will be even less willpower to pursue these cannon fires programs.”
Less costly alternatives might be GPS precision guidance kits that can be strapped on $600 dumb projectile, Chiarelli said in July. “PGK doesn’t quite have the same accuracy. But quite frankly, it’s cheaper.”
An order of 2,320 rounds hardly means the program has a long-term future, considering that the program last year was slashed from 30,000 to 6,000 rounds, Sledge said. “The Army is in effect saying, ‘We're done with this one. What else is out there?”
CLARIFICATION: According to a Raytheon spokesman, Excalibur is not reprogrammed in flight. It can be updated after manufacture with new software to address changes in tactics and battlefield. The minimum 3 km range for Excalibur 1B is only possible via a software update in the future.

Topics: Armaments, Gun and Missile, Defense Department, DOD Budget