GAO's Views on SDIO's Phase I Cost Estimate

GAO discussed the Strategic Defense Initiative Organization's (SDIO) revised cost estimate for phase I of the Strategic Defense Initiative (SDI). GAO found that SDIO revised its estimate of $145.7 billion to $69.1 billion in October 1988 because it: (1) significantly reduced the quantities of sensors and weapons needed for SDI phase I; (2) reduced by 51 percent the number of space-based interceptors planned for development, resulting in savings of about $900 million; (3) reduced the quantity of ground tracking systems by 42 percent and the number of launch sites by 73 percent, resulting in savings of about $400 million; (4) modified certain SDI technical characteristics, resulting in savings of about $18.7 billion; and (5) changed its SDI cost model, resulting in savings of about $14.1 billion. GAO noted that: (1) the phase I program faces some uncertainties because SDI has not been fully designed, built, or tested; (2) assumptions SDIO made in its cost estimate could increase SDI costs; and (3) the SDIO estimate included a $7.6-billion reserve for potential cost increases from technical and schedule changes.