Defense Acquisition

The Defense Department entered into an international agreement with Germany and Italy to acquire the medium extended air defense system, which would defend maneuver force assets from theater ballistic and cruise missiles and various manned and unmanned aircraft. This report reviews the medium extended air defense system program. GAO (1) discusses the unique capability that the system will add to U.S. air and missile defense, (2) evaluates the development cost of the system and its affordability within the expected ballistic missile defense budget, and (3) assesses the impact that international development will have on the system's cost and capability.

GAO noted that: (1) if the Army is successful in meeting established requirements, MEADS will have capabilities that no other planned theater missile defense system will possess; (2) the system should defeat a wide range of threats arriving from any direction, be transportable within theater by small transport aircraft, be mobile enough to travel cross country or over unimproved roads with the maneuver force, and be sufficiently lethal to negate weapons of mass destruction; (3) acquiring MEADS will affect higher priority missile programs or the infrastructure that supports those programs unless DOD increases the Ballistic Missile Defense Organization's (BMDO) budget allocation; (4) BMDO forecasted in March 1998 that it needed about $1.8 billion for fiscal year (FY) 1999 though FY 2007 to pay its portion of MEADS' estimated $3.6-billion design and development cost; (5) in addition, BMDO will need another $10.1 billion for FY 2005 through FY 2016 to acquire eight battalions of equipment; (6) the European partners are expected to contribute about one-half of the design and development funds; (7) thus, for FY 1999 through FY 2005--the years for which BMDO is now budgeting--the U.S. cost could be reduced to about $1.4 billion; (8) BMDO has no funds budgeted for MEADS after FY 1999 and has been reviewing various program options to find a less expensive acquisition strategy; (9) DOD officials believe that a joint cooperative effort with U.S. allies is the best means of acquiring MEADS because it reduces cost, improves political ties, and builds a more effective coalition force; (10) however, DOD did not fully assess funding and technology transfer issues before initiating the international program and may not be able to achieve these benefits; (11) U.S. and European program participants said that the United States may be viewed as an unreliable partner if it cannot fund its portion of the program, which could threaten the U.S.' ability to participate in future collaborative efforts; (12) even if the United States remains in the program, it may have difficulty developing a truly interoperable weapon without sharing valuable technology; (13) the international structure may also prevent contractors from pursuing the most cost-effective system solution; (14) contractors are finding it difficult to use existing technology developed for other systems because the process for transferring U.S. information to foreign countries is slow and the United States is reluctant to transfer some critical technology; and (15) difficulties might have been avoided if security experts had been included in negotiations of the international agreement.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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