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Orlando Sentinel July 01, 2009

Army deals in limbo

By Richard Burnett

Central Florida's defense contractors are waiting for the other shoe to drop, now that the Pentagon has scrubbed the Army's Future Combat Systems contract — a $160 billion program with big ties to the region.

With hundreds of jobs and hundreds of millions of dollars at stake, local companies are wondering what the Army's game plan is going to be for keeping alive some of the key technologies that survived last week's termination of the advanced land-warfare development program.

Secretary of Defense Robert Gates first proposed killing the Future Combat Systems effort two months ago. The program — the most expensive to date in U.S. military history — had encountered big cost overruns and technical problems.

Many local companies have been involved in developing the program's training technology — an area of work that's expected to remain relatively stable even as the military scales back and divides the FCS into a series of separate contracts.

But industry officials are aware of the uncertainty for all involved whenever a program is scratched, even if pieces of it are to be salvaged and handled as smaller deals.

"That could create threats to our training industry, and it could create opportunities as well," said Ken Kelly, a consultant and chairman of the National Center for Simulation, an industry group based in Orlando.

"The threat to our community is that, if they re-bid these new contracts, the training work could go elsewhere," he said. "At the same time, it could be an opportunity for this area to capture more of the work."

Central Florida is home to the country's largest concentration of high-tech training operations, with more than 100 companies employing about 20,000 workers across the six-county region. The Future Combat System has been a big program locally, especially for SAIC Inc.'s Orlando training-systems unit, the region's main FCS player.

Statewide, defense contractors received $161 million last year alone for FCS work, according to Boeing Co., the program's prime contractor.

The state ranked seventh among 43 states in FCS spending. California ($1.1 billion) and Michigan ($477 million) led the pack, but they may also bear the brunt of the program's restructuring, which is expected to eliminate the development of ground vehicles.

San Diego-based SAIC said the effect of the program's termination on its Orlando operation should be minimal, as long as the Army presses forward with the development of the program's other pieces."The training work on the vehicle component of FCS was canceled, but that work was done in other parts of the country," SAIC spokesman Regen Wilson said. "The work being done in Orlando involves other FCS technologies that Secretary Gates himself said he wants to accelerate and expand to all of the Army."

But others in the business say FCS' cancellation is bound to ripple through local companies.

"Because it was the largest program in the Army, everyone here had a piece of the FCS at some level," said Michael Macedonia, Forterra Corp.'s top Central Florida executive and a former technology chief for the Army's simulation contract agency. "Ending the program was not a surprise, but it is going to be painful for a lot of people. The big issue now is which of the technologies will the Pentagon buy in the future."

The FCS was designed to link every aspect of land warfare — from command centers and overhead aircraft to ground vehicles, individual soldiers, even unmanned robots — in a high-speed, secure electronic network. Work on the system to date has produced some equipment that works and a lot that doesn't, military experts say.

"The costs kept running higher and higher, and the technical issues kept getting more complicated," said John Pike, president of GlobalSecurity.org, a defense-policy research firm in Washington. "We knew from day one that they weren't going to be able to roll out this one big, all-encompassing system any time soon.

"Obviously, there were some things that were not too difficult to do, and some things they tried to do that came close to violating the laws of physics and probably would never be done," he said.


Copyright 2009, Orlando Sentinel