Defense Management
Key Challenges Should be Addressed When Considering Changes to Missile Defense Agency's Roles and Missions Gao ID: GAO-09-466T March 26, 2009To more quickly field ballistic missile defenses, the Missile Defense Agency (MDA) has been exempted from traditional Department of Defense (DOD) requirements development, acquisition, and oversight processes since its creation in 2002. Instead, MDA has unique roles and missions to develop and field weapon systems that address a variety of ballistic missile threats. To date, MDA has spent about $56 billion and plans to spend about $50 billion more through 2013 to develop an integrated Ballistic Missile Defense System. The system consists of a layered network of capabilities that includes defensive components such as sensors, radars, interceptors, and command and control. In reviews of DOD's approach to acquire, operate, and maintain ballistic missile defense systems, GAO has previously reported on several challenges that have stemmed from the broad flexibilities provided to MDA. This testimony summarizes the challenges facing DOD in acquiring and operating its ballistic missile defense systems and describes DOD's efforts to improve transparency and accountability. This statement is based primarily on previously issued GAO reports and testimonies. GAO also reviewed documents and interviewed key officials to update past work and identify DOD and MDA efforts to address previous recommendations.
While MDA's exemption from traditional DOD processes allowed it to quickly develop and field an initial ballistic missile defense capability, this approach has led to several challenges. DOD now has an opportunity to better balance the flexibility inherent in MDA's unique roles with the need for effective management and oversight of ballistic missile defense programs. Furthermore, the start of a new administration and the appointment of a new MDA Director offer DOD the chance to more fully address the challenges identified in GAO's prior work. These include the following: (1) Incorporating Combatant Command Priorities: While DOD established a process in 2005 to address the combatant commands' needs for ballistic missile defense capabilities, GAO reported in 2008 that the process was evolving and had yet to overcome key limitations to its effectiveness, including the need for more effective methodologies to clearly identify and prioritize the combatant commands' needs. Additionally, when developing ballistic missile defenses, MDA lacked a departmentwide perspective on which of the commands' needs were most significant. (2) Establishing Adequate Baselines to Measure Progress: MDA's flexible acquisition approach has limited the ability for DOD and congressional decision makers to measure MDA's progress on cost, schedule, and testing. Specifically, as GAO reported in March 2009, MDA's baselines have been inadequate to measure progress and hold MDA accountable. However, GAO also reported that new MDA initiatives to improve baselines could help improve acquisition accountability. (3) Planning for Long-Term Operations and Support: DOD has taken initial steps to plan for ballistic missile defense support, but efforts to date are incomplete as difficulties in transitioning responsibilities from MDA to the services have complicated long-term planning. Additionally, although operation and support costs are typically 70 percent of a weapon system's life cycle costs, DOD has not required that full cost estimates for ballistic missile defense operations and support be developed and validated, and DOD's 6-year spending plan does not fully reflect these costs. DOD has recently taken some steps to improve transparency and accountability of ballistic missile defense programs, such as the creation of a Missile Defense Executive Board to provide top level oversight and a life cycle management process that established defensewide funding accounts. Although these are positive steps, they do not yet provide comprehensive information for acquisition oversight; and have not yet clearly defined the roles and responsibilities of MDA and the services, including how the defensewide account will be used to fund the ballistic missile defense program over the long term. As DOD seeks to improve transparency and accountability, sustained top leadership will be needed to build upon this recent progress.
GAO-09-466T, Defense Management: Key Challenges Should be Addressed When Considering Changes to Missile Defense Agency's Roles and Missions
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Testimony:
Before the Strategic Forces Subcommittee, Committee on Armed Services,
House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 9:00 a.m. EDT:
Thursday, March 26, 2009:
Defense Management:
Key Challenges Should be Addressed When Considering Changes to Missile
Defense Agency's Roles and Missions:
Statement of John H. Pendleton, Director:
Defense Capabilities and Management:
GAO-09-466T:
GAO Highlights:
Highlights of GAO-09-466T, a testimony before the Subcommittee on
Strategic Forces, Committee on Armed Services, House of
Representatives.
Why GAO Did This Study:
To more quickly field ballistic missile defenses, the Missile Defense
Agency (MDA) has been exempted from traditional Department of Defense
(DOD) requirements development, acquisition, and oversight processes
since its creation in 2002. Instead, MDA has unique roles and missions
to develop and field weapon systems that address a variety of ballistic
missile threats. To date, MDA has spent about $56 billion and plans to
spend about $50 billion more through 2013 to develop an integrated
Ballistic Missile Defense System. The system consists of a layered
network of capabilities that includes defensive components such as
sensors, radars, interceptors, and command and control. In reviews of
DOD‘s approach to acquire, operate, and maintain ballistic missile
defense systems, GAO has previously reported on several challenges that
have stemmed from the broad flexibilities provided to MDA.
This testimony summarizes the challenges facing DOD in acquiring and
operating its ballistic missile defense systems and describes DOD‘s
efforts to improve transparency and accountability. This statement is
based primarily on previously issued GAO reports and testimonies. GAO
also reviewed documents and interviewed key officials to update past
work and identify DOD and MDA efforts to address previous
recommendations.
What GAO Found:
While MDA‘s exemption from traditional DOD processes allowed it to
quickly develop and field an initial ballistic missile defense
capability, this approach has led to several challenges. DOD now has an
opportunity to better balance the flexibility inherent in MDA‘s unique
roles with the need for effective management and oversight of ballistic
missile defense programs. Furthermore, the start of a new
administration and the appointment of a new MDA Director offer DOD the
chance to more fully address the challenges identified in GAO‘s prior
work. These include the following:
* Incorporating Combatant Command Priorities: While DOD established a
process in 2005 to address the combatant commands‘ needs for ballistic
missile defense capabilities, GAO reported in 2008 that the process was
evolving and had yet to overcome key limitations to its effectiveness,
including the need for more effective methodologies to clearly identify
and prioritize the combatant commands‘ needs. Additionally, when
developing ballistic missile defenses, MDA lacked a departmentwide
perspective on which of the commands‘ needs were most significant.
* Establishing Adequate Baselines to Measure Progress: MDA‘s flexible
acquisition approach has limited the ability for DOD and congressional
decision makers to measure MDA‘s progress on cost, schedule, and
testing. Specifically, as GAO reported in March 2009, MDA‘s baselines
have been inadequate to measure progress and hold MDA accountable.
However, GAO also reported that new MDA initiatives to improve
baselines could help improve acquisition accountability.
* Planning for Long-Term Operations and Support: DOD has taken initial
steps to plan for ballistic missile defense support, but efforts to
date are incomplete as difficulties in transitioning responsibilities
from MDA to the services have complicated long-term planning.
Additionally, although operation and support costs are typically 70
percent of a weapon system‘s life cycle costs, DOD has not required
that full cost estimates for ballistic missile defense operations and
support be developed and validated, and DOD‘s 6-year spending plan does
not fully reflect these costs.
DOD has recently taken some steps to improve transparency and
accountability of ballistic missile defense programs, such as the
creation of a Missile Defense Executive Board to provide top level
oversight and a life cycle management process that established
defensewide funding accounts. Although these are positive steps, they
do not yet provide comprehensive information for acquisition oversight;
and have not yet clearly defined the roles and responsibilities of MDA
and the services, including how the defensewide account will be used to
fund the ballistic missile defense program over the long term. As DOD
seeks to improve transparency and accountability, sustained top
leadership will be needed to build upon this recent progress.
View [hyperlink, http://www.gao.gov/products/GAO-09-466T] or key
components. For more information, contact John H. Pendleton at (202)
512-3489 or pendletonj@gao.gov.
[End of section]
Madam Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss the challenges facing the
Department of Defense (DOD) regarding its process for acquiring,
developing, and fielding ballistic missile defenses. Funded at $8
billion to nearly $10 billion per year, the effort to develop and field
ballistic missile defenses is the largest research and development
program in DOD. Since its creation in 2002, the Missile Defense Agency
(MDA) has expended almost $56 billion to develop and field an initial
ballistic missile defense capability, and plans to spend about $50
billion more through 2013, while being exempt from traditional DOD
requirements development, acquisition, and oversight processes. This
exemption provided MDA with flexibility to quickly develop and deliver
an initial capability to defend the United States, deployed U.S.
forces, friends, and allies from the threats posed by ballistic
missiles. However, the new administration and Congress are now
reconsidering the approach with which DOD acquires, operates, and
maintains ballistic missile defense weapon systems. Such
reconsiderations are occurring against the backdrop of other efforts to
more broadly reform DOD's traditional acquisition processes.
My remarks will discuss several key challenges that DOD has yet to
overcome as it has acquired ballistic missile defense capabilities
outside traditional DOD requirements and acquisition processes.
Specifically, my statement will address challenges in incorporating
combatant command priorities, providing information needed for
acquisition accountability, and planning for long-term operations and
support, as well as describing the department's efforts to date to
establish greater oversight. My statement is based primarily on
findings and recommendations from our previously issued reports and
testimonies in these areas. We also interviewed DOD and MDA officials
and reviewed documents to update our past work and identify DOD and MDA
efforts to address our previous recommendations. A selected list of our
previously issued reports and testimonies on these issues is provided
at the end of this statement. We conducted our work in accordance with
generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
Background:
MDA's mission is to develop an integrated and layered Ballistic Missile
Defense System to defend the United States, its deployed forces,
friends, and allies against ballistic missile attacks. This mission
requires complex coordination and the integration of many and varied
defensive components--space-based sensors; ground-and sea-based
surveillance and tracking radars; advanced ground-and sea-based
interceptors; and battle management, command, control, and
communications. Prior to MDA's establishment in 2002, the services,
along with the support and coordination of the Ballistic Missile
Defense Organization, separately managed the development and
acquisition of ballistic missile defense weapon systems as major
defense acquisition programs.[Footnote 1]
In 2002, the President established ballistic missile defense as a
national priority and directed DOD to proceed with plans to develop and
put in place an initial capability beginning in 2004. To expedite the
delivery of an operationally capable Ballistic Missile Defense System,
in 2002 the Secretary of Defense re-chartered the Ballistic Missile
Defense Organization as MDA and directed MDA to manage all ballistic
missile defense systems then under development and transferred those
systems controlled by the military services to the agency.[Footnote 2]
The systems transferred from the services and the new systems whose
development MDA initiates are all considered to be "elements" of the
Ballistic Missile Defense System.[Footnote 3] The Secretary also
directed MDA to manage the Ballistic Missile Defense System as an
evolutionary program, and to develop and field increasingly effective
ballistic missile defense capabilities. To do so, he directed that
systems developed by MDA would not be subject to DOD's traditional
joint requirements determination and acquisition processes until a
mature ballistic missile defense capability had been developed and was
ready to be handed over to a military service for production and
operation.[Footnote 4]
MDA's mission is to develop and field ballistic missile defenses
against threats posed by adversaries from all regions, at all ranges,
and in all phases of flight. At the direction of the Secretary of
Defense and in order to meet a presidential directive, the MDA began
fielding in 2004 a limited capability to defend the United States
against long-range ballistic missile attacks. This Ground-based
Midcourse Defense system, which is intended to protect the U.S.
homeland against incoming long-range ballistic missiles launched from
Northeast Asia and the Middle East, was first made operational in 2006.
MDA has added to this limited capability since it was first fielded by
upgrading additional Air Force early warning radars, developing and
fielding land-and sea-based radars, and fielding an initial capability
for command and control, battle management, and communications.
Additionally, to provide sea-based defenses against regional threats
for deployed U.S. forces, friends, and allies, MDA has upgraded
software and radar systems on 18 Aegis destroyers and cruisers, and
delivered interceptors for use on these vessels, to defend against
short-and medium-range threats. Early in the next decade, MDA plans to
field an additional radar in the Czech Republic and ground-based
interceptors in Poland to defend Europe and North America from
ballistic missile threats originating in the Middle East. Over the long
term, MDA also is developing interceptor payloads that would be capable
of defeating more advanced threats--such as the use of multiple
warheads or decoys--and "boost-phase" capabilities to enable DOD to
shoot down ballistic missiles shortly after liftoff.
To incorporate the views of the combatant commands--which is critical
in determining and prioritizing needed capabilities--the President made
the U.S. Strategic Command responsible in 2003 for advocating for
desirable missile defense characteristics and capabilities on behalf of
all combatant commands to MDA. To fulfill this responsibility, U.S.
Strategic Command and the MDA created the Warfighter Involvement
Process in 2005. A key output of this process is the Prioritized
Capabilities List, which is intended to specify how the combatant
commands collectively prioritize the full range of capabilities needed
to perform ballistic missile defense missions.
To operate and support ballistic missile defense elements over the long
term, DOD plans to transition the responsibility for supporting
ballistic missile defense elements from MDA to the services.
Transitioning involves designating lead military service
responsibilities for providing personnel, force protection, operations
and support, and for developing doctrine, organization, and facilities
requirements for its respective element. The transition process may
culminate in a transfer--which is the reassignment of the MDA program
office responsibilities to the lead service.
Oversight of MDA is executed by the Under Secretary of Defense for
Acquisition, Technology, and Logistics. Because MDA is not subject to
DOD's traditional joint requirements determination and acquisition
processes, DOD developed alternative oversight mechanisms. For example,
in 2007 the Deputy Secretary of Defense established the Missile Defense
Executive Board,[Footnote 5] which is to provide the Under Secretary of
Defense for Acquisition, Technology, and Logistics, or Deputy Secretary
of Defense, as necessary, with a recommended ballistic missile defense
strategic program plan and feasible funding strategy for approval. In
September 2008, the Deputy Secretary of Defense also established a life
cycle management process for the Ballistic Missile Defense System. The
Deputy Secretary of Defense directed the Board to use the process to
oversee the annual preparation of a required capabilities portfolio and
develop a program plan to meet the requirements with Research,
Development, Test, and Evaluation; procurement; operations and
maintenance; and military construction in defensewide accounts.
Key Management Challenges Have Not Been Fully Addressed:
MDA's exemption from traditional DOD processes allowed it the
flexibility to quickly develop and field an initial ballistic missile
defense capability; however, we have previously reported that DOD's
implementation of this approach has resulted in several management
challenges that have not been fully addressed. These challenges include
immature processes for incorporating combatant command priorities,
inadequate baselines to measure progress, and incomplete planning for
long-term operations and support. With the start of a new
administration and the appointment of a new MDA Director, DOD now has
an opportunity to better balance the flexibility inherent in MDA's
unique roles and missions with the need for effective management and
oversight of ballistic missile defense programs, and to more fully
address the challenges that affect its ability to plan and resource
ballistic missile defenses.
Warfighter Involvement Process Has Helped MDA Address Some Combatant
Command Capability Needs, but the Process Faces Limitations:
DOD has taken some steps to address combatant command capability needs
through the Warfighter Involvement Process, but this process faces key
limitations to its effectiveness. For example, based on combatant
command inputs received through the Warfighter Involvement Process, MDA
initiated new programs in fiscal year 2008 to develop and deploy sea-
based defenses against short-range missiles. However, when the
Secretary of Defense created MDA in 2002, the agency initially lacked a
mechanism for obtaining and considering the combatant commands'
priorities as it developed ballistic missile defenses. The lack of such
a mechanism made it difficult for MDA and the combatant commands to be
sure that MDA was addressing the commands' highest priority capability
needs.
Although U.S. Strategic Command and MDA established the Warfighter
Involvement Process in 2005, we reported in July 2008 that this process
is still evolving and had not yet yielded a clear and effective
approach for MDA to follow when making investment decisions.[Footnote
6] Our report identified several shortcomings that inhibited the
process' effectiveness. For example:
* U.S. Strategic Command's and MDA's roles and responsibilities for
implementing the process were not fully documented, which left the
combatant commands without an agreed-upon method for influencing MDA
investments and for holding MDA accountable. U.S. Strategic Command has
since issued guidance that documents how the process operates, but this
guidance is not binding on MDA and will require updating as the process
evolves. As of March 2009 MDA had drafted but not yet issued similar
guidance. As a result, the combatant commands continue to lack both
transparency into the agency's decision-making process and assurance
that MDA will implement the process in a manner that addresses their
needs.
* The process has not yet resulted in effective methodologies for the
combatant commands to clearly identify and consistently prioritize
their capability needs. For example, in preparing the 2007 Prioritized
Capabilities List--intended to give combatant commanders input into
development priorities--combatant commands used differing criteria for
assessing capabilities, and not all commands clearly distinguished
among their top priorities. As a result, the list did not provide MDA
with clear information about how to best address the combatant
commands' needs. DOD agreed with our recommendation that U.S. Strategic
Command improve the methodologies for identifying and prioritizing
capabilities, but has not yet completed the 2009 Prioritized
Capabilities List.
* Senior civilian DOD leadership has not been involved in the
Warfighter Involvement Process to adjudicate potential differences
among the combatant commands' priorities and provide perspective on how
to invest resources against priorities as the leadership would under
traditional DOD processes. Lacking such senior-level involvement, MDA
has not benefited from receiving a broader perspective on which of the
commands' needs is the most significant. To address this shortcoming,
we recommended that senior civilian leadership review the commands'
priorities before they are sent to MDA. DOD partially agreed with our
recommendation, but it did not clearly identify the steps it would take
to implement the recommendation.
A congressionally mandated independent review, released in August 2008,
[Footnote 7] of MDA's roles, missions, and structure also identified
the need to improve the Warfighter Involvement Process. Although the
independent review found that the Warfighter Involvement Process
provided a potential mechanism for the combatant commands to influence
Ballistic Missile Defense System developments, the review made several
recommendations to make the process more effective. In particular, as
our July 2008 report recommended, the independent review recommended
that DOD improve the methodologies used to develop and prioritize the
combatant commands' capability needs so that the Prioritized
Capabilities List provides more adequate guidance to MDA.
Since our July 2008 report was issued, U.S. Strategic Command has
responded to our recommendation that the combatant commands compare
their priorities with MDA's long-term funding plans and provide an
assessment--called the Capability Assessment Report--to MDA. U.S.
Strategic Command expects the first assessment to be completed by the
end of April 2009. The assessment represents the combatant commands'
official assessment of MDA's response to the 2007 Prioritized
Capabilities List, and is also intended to provide a basis for MDA to
make capability trade-offs and programmatic adjustments to ensure
acquisition of the warfighters' desired capabilities. U.S. Strategic
Command provided MDA with a preliminary overview of the assessment in
June 2008 so that MDA and the Missile Defense Executive Board could use
the information during the formulation of the fiscal year 2010 budget.
However, until the MDA's fiscal year 2010 budget is presented to
Congress, we are unable to assess the extent to which the agency's
investments are reflective of the commands' priorities.
MDA's Approach Limits Decision Makers' Ability to Measure Progress on
Cost, Schedule, and Testing, but New Initiatives Could Improve
Acquisition Accountability:
MDA's approach to establishing baselines has limited the ability for
DOD and congressional decision makers to measure MDA's progress on
cost, schedule, and testing; however, new DOD initiatives could help
improve acquisition accountability. Baselines are starting points that
are used to measure progress on cost, schedule, and testing. Tracking
progress against a baseline can signal when a program is diverting from
its planned budget and schedule. Overall, the Ballistic Missile Defense
System does not have baselines that are useful for oversight.
Specifically, cost baselines have not been established, test baselines
remain relatively unstable, and production and fielding are outpacing
testing and modeling.
MDA has not yet established cost baselines that are useful to hold the
agency accountable for how it expends resources, but has indicated that
it is taking steps to do so. Baselined total costs and unit costs are
fundamental markers most programs use to measure performance. However,
MDA's unique roles and missions exempted the agency from a requirement
to establish baselines for total or unit costs.[Footnote 8] As a
result, in March 2009 we reported for the sixth consecutive year that
we were unable to assess MDA's actual costs against baseline costs.
[Footnote 9] However, in response to recommendations in our March 2009
report, MDA agreed to provide total cost baselines for its block
structure, which describes the agency's approach to acquiring and
delivering new increments of ballistic missile defense capabilities to
the services and combatant commands for operational use. While Block 1
capabilities (to defend the United States from a limited, long-range
North Korean attack) will not be baselined, MDA has agreed to submit
cost baselines for Block 2 capabilities (to defend U.S. forces and
allies from short-to medium-range threats in one theater) and portions
of Block 3 capabilities (to expand the defense of the United States to
include limited threats from Iran) as part of its submission to the
President's fiscal year 2010 budget, expected in Spring 2009. MDA also
stated that it will submit total cost baselines for the rest of Block 3
and all of Block 5 capabilities (to expand the defense of U.S. forces
and allies) by the spring of 2010.[Footnote 10]
MDA also has made some progress with developing a schedule baseline for
its blocks and their associated capabilities, but has faced challenges
in meeting this baseline. MDA identifies its schedule baseline as the
fiscal year dates for early, partial, and full capability deliveries of
hardware and functionality for a block; as a result, schedule changes
and their effects on the Ballistic Missile Defense System's development
can be determined by comparing the changes with the original schedule.
However, by trying to conform to the schedule baseline, production and
fielding decisions have outpaced testing and modeling. Specifically,
MDA determines the capability levels of individual elements through a
formal declaration process that is based on a combination of models,
simulations, and ground tests that are all anchored to flight test
data. However, flight test cancellations and delays have resulted in
MDA revising and reducing the basis it uses to declare when missile
defense capabilities can be considered for operational use. As a
result, recent fielding decisions have been made with a more limited
understanding of system effectiveness than planned.
MDA's testing baselines also have not been effective for oversight, but
a new MDA initiative to review its testing program could lead to
improvements. In our March 2009 report, we found that MDA's officially
approved test baseline, the Integrated Master Test Plan, changes
frequently, often because MDA has changed the substance of a test, the
timing of a test, or added new tests to the baseline. For example,
based on its September 2006 plan, MDA had expected the Ground-based
Midcourse Defense element to conduct seven interceptor flight tests
from the start of fiscal year 2007 through the first quarter of 2009.
However, MDA was only able to conduct two of these flight tests. As a
result of these frequent changes, we concluded that MDA's test baseline
is therefore not effective for oversight. Recognizing the challenges to
the testing program, in February 2009, the Director, MDA testified
before this Subcommittee that the agency is undertaking a review of its
program. This review, according to MDA, will identify critical
variables that have not been proven to date, determine what test
scenarios are needed to collect the relevant test data, and develop an
affordable and prioritized schedule of flight and ground tests. If
MDA's review accomplishes its intended goals, then it could both
improve oversight and help close the gaps that exist between testing,
modeling, and simulation.
In our March 2009 report, we made several recommendations to MDA that
would improve its preparation of cost, schedule, and testing baselines,
which are needed to help decision makers in DOD and Congress to
exercise oversight of MDA's acquisition approach. For example, in the
area of cost we recommended that MDA complete total cost baselines
before requesting additional funding for Blocks 2 and 3. Regarding
schedule baselines, we recommended that MDA synchronize the
development, manufacturing, and fielding schedules of Ballistic Missile
Defense System assets with the testing and validation schedules to
ensure that items are not fielded before their performance has been
validated through testing. In the testing area, we recommended that MDA
reassess its flight tests scheduled for the end of fiscal year 2009 to
ensure that they can be reasonably conducted. DOD generally concurred
with all 11 of our recommendations.
Planning for Long-Term Operations and Support Is Underway, But Efforts
Are Incomplete:
DOD has taken some initial steps to plan for long-term operations and
support of ballistic missile defense operations, but planning efforts
to date are incomplete because of difficulties in transitioning
responsibilities from MDA to the services and in establishing operation
and support cost estimates. Our prior work has shown that clear roles
and responsibilities can improve outcomes by identifying who is
accountable for various activities. However, in September 2008,
[Footnote 11] we reported that DOD had not identified clear roles and
responsibilities among MDA and the services for long-term support
planning.
In our September 2008 report we recommended that DOD establish a
process for long-term support planning that adheres to key principles
for life cycle management. This includes establishing timelines for
planning that must be completed before each element is fielded,
involving services in support and transition planning and deciding when
support responsibilities will be transitioned to the services,
specifying roles and responsibilities for MDA and the services for life
cycle management, and identifying who is accountable for ensuring these
actions are accomplished. Since our September 2008 report was issued,
DOD has made some progress in planning for transition of some ballistic
missile defense elements. For example, in January 2009 MDA and the Army
agreed on the overarching terms and conditions for the transition and
transfer of elements from MDA to the Army, including Ground-based
Midcourse Defense, Terminal High Altitude Area Defense, and the AN/TPY-
2 Forward-based Radar. However, the agreement neither identifies when
these elements are expected to transfer to the Army, nor addresses the
specific details on how operations and support costs will be funded
following the transfer. Until DOD establishes a transition and transfer
process that adheres to key principles for life cycle management, DOD
will be unable to ensure that individual elements will be sustained in
the long term, and DOD's long-term support planning will continue to
face challenges.
Moreover, DOD has established limited operation and support cost
estimates for ballistic missile defense elements, and the estimates
that have been developed are not transparent to DOD senior leadership
and congressional decision makers. DOD has not required that full cost
estimates for ballistic missile defense operations and support be
developed, validated, and reviewed. As a result, the Future Years
Defense Plan--DOD's 6-year spending plan--does not fully reflect these
costs. Prior GAO work has shown that operations and support costs are
typically 70 percent of a weapon's life cycle costs.[Footnote 12]
Specifically, our work found that DOD has not addressed ballistic
missile defense operation and support costs in the following three
ways:
* First, in our September 2008 report, we found that MDA and the
services have jointly developed and agreed on cost estimates for only
two of the seven elements we examined.[Footnote 13] Joint cost
estimates for the other five elements are not yet complete and are
likely to change over time, perhaps significantly, because MDA and the
services are still determining key assumptions, such as how support
will be provided--by contractor, the service, or a combination of the
two--and where some elements may be fielded and operated. These
determinations will affect military construction and operation and
support costs, such as maintenance, base operating support, and
facilities.
* Second, in September 2008 we found that DOD did not plan to
independently verify the operation and support cost estimates for all
the ballistic missile defense elements we reviewed. Independently
validated cost estimates are especially important to formulating budget
submissions because, historically, cost estimates created by weapon
system program offices are lower than those that are created
independently. In January 2009, MDA and the Army agreed in principle
that full, independently verified life cycle cost estimates may be
among the criteria for transferring elements to the Army. However, as
of February 2009, DOD had not developed plans to prepare these
estimates. Table 1 shows whether, as of February 2009, the joint
operation and support cost estimates have been completed, whether the
cost estimates have been independently verified, and the status of the
joint estimates.
* Third, we reported in September 2008 that decision makers' visibility
of ballistic missile defense operation and support costs was further
hindered because MDA and the services had agreed only on which
organization is responsible for funding operation and support costs
after fiscal year 2013 for two of the seven elements we reviewed--Aegis
Ballistic Missile Defense and Upgraded Early Warning Radar. It is still
unclear how DOD intends to fund long-term operations and support costs.
Although the MDA and Navy agreed in January 2009 on how to fund
operation and support costs for the Sea-Based X-Band Radar through
2013, the agreement does not specify whether these costs will be funded
through the defensewide fund or through a transfer of MDA's
appropriated funds to the Navy after that time. Additionally, in
February 2009 Army and Air Force officials told us that the services
had not reached agreements with MDA about how to fund operation and
support costs beyond 2013 for four of the seven elements we reviewed.
As a result of these limitations, DOD and the services would face
unknown financial obligations for supporting ballistic missile defense
fielding plans and that most of these costs would not be reflected in
DOD's future years' spending plan for fiscal years 2010 through 2015.
Table 1: Status of Joint Cost Estimates and Plans for Independent
Verification of Operation and Support Cost Estimates for Selected
Ballistic Missile Defense Elements as of February 2009:
Element: Aegis Ballistic Missile Defense;
Status of joint operation and support cost estimate: Completed--MDA and
the Navy agreed on the operation and support costs through a Memorandum
of Agreement;
Status of independent verification of the cost estimate by the Cost
Analysis Improvement Group: Completed.
Element: Ground-based Midcourse Defense;
Status of joint operation and support cost estimate: In Process--Joint
MDA/Army estimate has not been reviewed and approved by the Army Cost
Review Board;
Status of independent verification of the cost estimate by the Cost
Analysis Improvement Group: No independent estimate.
Element: Terminal High Altitude Area Defense;
Status of joint operation and support cost estimate: In Process--Joint
MDA/Army estimate has not been reviewed and approved by the Army Cost
Review Board;
Status of independent verification of the cost estimate by the Cost
Analysis Improvement Group: No independent estimate.
Element: AN/TPY-2 (Forward-based);
Status of joint operation and support cost estimate: In Process--Joint
MDA/Army estimate has not been reviewed and approved by the Army Cost
Review Board;
Status of independent verification of the cost estimate by the Cost
Analysis Improvement Group: No independent estimate.
Element: Sea-Based X-Band Radar;
Status of joint operation and support cost estimate: In Process--Joint
MDA/Navy estimate is expected to be completed by March 31, 2009;
Status of independent verification of the cost estimate by the Cost
Analysis Improvement Group: No independent estimate.
Element: Upgraded Early Warning Radar;
Status of joint operation and support cost estimate: Completed--MDA and
the Air Force jointly agreed on cost estimates through the transition
plan;
Status of independent verification of the cost estimate by the Cost
Analysis Improvement Group: No independent estimate.
Element: European Midcourse Radar;
Status of joint operation and support cost estimate: In process--The
Air Force and MDA began to develop a joint estimate for the European
radar in August 2008;
Status of independent verification of the cost estimate by the Cost
Analysis Improvement Group: In process.
Source: GAO summary of DOD information.
Note: Our sample selection did not include Patriot Advanced Capability-
3, which transferred to the Army in 2003, and the Cobra Dane Radar
Upgrade, which was transferred to the Air Force in January 2009. See
GAO, Missile Defense: Actions Needed to Improve Planning and Cost
Estimates for Long-Term Support of Ballistic Missile Defense,
[hyperlink, http://www.gao.gov/products/GAO-08-1068] (Washington, D.C.:
Sept. 25, 2008), for a more detailed discussion of our scope and
methodology for identifying the elements covered in our review.
[End of table]
To address these cost transparency challenges, we recommended that DOD
establish a requirement to estimate ballistic missile defense operation
and support costs, including detailing when credible estimates are to
be developed, updated, and reviewed, and requiring periodic independent
validation of operation and support costs for each element. In its
response to our recommendations, DOD stated that it has established a
new ballistic missile defense life cycle management process to oversee
the annual preparation of a required capabilities portfolio and a
program plan to meet those requirements through defensewide accounts.
This process is intended in part to provide decision makers with clear,
credible, and transparent cost information.
DOD Is Taking Actions to Establish Greater Oversight, but Obstacles
Remain:
DOD has recently taken some steps to improve oversight of the
development of the Ballistic Missile Defense System, such as the
creation of both the Missile Defense Executive Board and its life cycle
management process, but obstacles remain. For example, DOD's actions do
not yet provide comprehensive information for acquisition oversight;
and have not yet clearly defined the roles and responsibilities of MDA
and the services, including how defensewide accounts will be used to
fund the ballistic missile defense program over the long term.
Additionally, as DOD seeks to improve transparency and accountability,
sustained top leadership will be needed to build upon this recent
progress.
Establishment of a new Missile Defense Executive Board in 2007 has been
a step forward in improving transparency and accountability. The board
is chartered to review and make recommendations on MDA's acquisition
strategy, plans, and funding. One step the board has taken to improve
transparency and accountability was its adoption of its life cycle
management process, a process designed to clarify the ballistic missile
defense roles of MDA, the services, combatant commands, and Office of
the Secretary of Defense. Additionally, the Under Secretary of Defense
for Acquisition, Technology, and Logistics has directed MDA to take
actions based on Missile Defense Executive Board recommendations. For
example, the Under Secretary directed MDA to incorporate into its
budget proposal the interceptor inventory recommended by a Joint Staff
study and endorsed by the Missile Defense Executive Board.
Although the establishment of the Missile Defense Executive Board
represents progress, this new board does not yet provide comprehensive
acquisition oversight of the ballistic missile defense program. As we
reported in March 2009,[Footnote 14] the Under Secretary of Defense for
Acquisition, Technology, and Logistics plans to hold program reviews
for several Ballistic Missile Defense System elements to further
increase acquisition oversight of the Ballistic Missile Defense System.
According to DOD officials, these reviews are designed to provide
comprehensive information that will be used as the basis for Missile
Defense Executive Board recommendations for the Ballistic Missile
Defense System business case and baseline process--a process which,
according to these officials, is similar to the traditional Defense
Acquisition Board process for reviewing other major acquisition
programs. However, it is unclear whether the information provided to
the Missile Defense Executive Board will be comparable to that produced
for other major acquisition program reviews, as most of the information
appears to be derived or presented by MDA as opposed to independent
sources as required for traditional major defense acquisition programs.
[Footnote 15]
Additionally, the Missile Defense Executive Board's life cycle
management process is intended to facilitate more detailed agreements
between MDA and the services to clearly establish their respective
roles and responsibilities; however, these efforts are still in their
early stages. For example, although MDA is developing memorandums of
agreement with the services, the annexes that would lay out the
specific responsibilities for such things as planning, programming,
budgeting, execution, and life cycle management for each ballistic
missile defense element have yet to be completed. Further, the annexes
are expected to provide details about the how the services and MDA will
work more closely together to manage the elements through joint program
offices. The MDA Director told us that these new program offices would
provide the services greater influence in the design of ballistic
missile defenses. We have previously reported that early involvement by
the services is important, because weapons design influences long-term
operations, support, and costs--responsibilities likely borne by the
services, not MDA.
A potential area of concern between MDA and services could be centered
around how DOD will use the defensewide accounts established in the
life cycle management process to fund the ballistic missile defense
program over the long term. The defensewide accounts are intended to
pay for ballistic missile defense costs other than those already agreed
to be paid by the services, including research and development,
procurement, and operations and support costs. In September 2008,
[Footnote 16] we reported that the Missile Defense Executive Board's
life cycle management process lacked concrete details for
implementation and was not well defined. In theory, the defensewide
accounts would allow all costs to be clearly identified and would
alleviate the pressure on the services' budgets to fund operation and
support for ballistic missile defense programs. However, MDA and the
services have not yet determined the amount and duration of funding for
the individual ballistic missile defense elements that will come from
the defensewide accounts.
While DOD has recently been taking positive steps to improve
transparency and accountability for ballistic missile defense programs,
long-term success will require sustained involvement by top DOD
leadership. Leadership and oversight of missile defense has been
sporadic in the past. DOD had a senior-level group, called the Missile
Defense Support Group, dedicated to the oversight of MDA since the
agency's founding that met many times initially; however, it did not
meet after June 2005. This leadership vacuum was not filled until the
Missile Defense Executive Board was established 2 years later. The
Missile Defense Executive Board has a more robust charter than its
predecessor, and an additional strength of the board is that its chair,
the Under Secretary of Defense for Acquisition, Technology, and
Logistics, used it as his primary oversight tool over the last year.
In sum, whether or not DOD continues to manage missile defense outside
its customary acquisition processes, the management challenges we have
found in our work will need to be addressed. Sustained DOD leadership
will be required to ensure that the needs of combatant commands are
considered, that acquisition is adequately managed and overseen, and
that planning occurs for the long-term operations and support of these
multi-billion dollar systems.
Madam Chairman and Members of the Subcommittee, this concludes my
prepared remarks. I would be happy to answer any questions you or other
Members of the Subcommittee may have.
GAO Contact and Staff Acknowledgments:
John H. Pendleton, (202) 512-3489, pendletonj@gao.gov:
In addition to the contact named above, Marie A. Mak, Assistant
Director; David Best; Renee S. Brown; Tara Copp Connolly; Nicolaas C.
Cornelisse; Kasea L. Hamar; Ronald La Due Lake; Jennifer E. Neer; Kevin
L. O'Neill, Analyst in Charge; and Karen D. Thornton made key
contributions to this report.
[End of section]
Related GAO Products:
Defense Acquisitions: Production and Fielding of Missile Defense
Components Continue with Less Testing and Validation Than Planned.
[hyperlink, http://www.gao.gov/products/GAO-09-338]. Washington, D.C.:
March 13, 2009.
Defense Acquisitions: Charting a Course for Improved Missile Defense
Testing. [hyperlink, http://www.gao.gov/products/GAO-09-403T].
Washington, D.C.: February 25, 2009.
Defense Acquisitions: Sound Business Case Needed to Implement Missile
Defense Agency's Targets Program. [hyperlink,
http://www.gao.gov/products/GAO-08-1113]. Washington, D.C.: September
26, 2008.
Missile Defense: Actions Needed to Improve Planning and Cost Estimates
for Long-Term Support of Ballistic Missile Defense. [hyperlink,
http://www.gao.gov/products/GAO-08-1068]. Washington, D.C.: September
25, 2008.
Ballistic Missile Defense: Actions Needed to Improve the Process for
Identifying and Addressing Combatant Command Priorities. [hyperlink,
http://www.gao.gov/products/GAO-08-740]. Washington, D.C.: July 31,
2008.
Defense Acquisitions: Progress Made in Fielding Missile Defense, but
Program Is Short of Meeting Goals. [hyperlink,
http://www.gao.gov/products/GAO-08-448]. Washington, D.C.: March 14,
2008.
Missile Defense: Actions Needed to Improve Information for Supporting
Future Key Decisions for Boost and Ascent Phase Element. [hyperlink,
http://www.gao.gov/products/GAO-07-430]. Washington, D.C.: April 17,
2007.
Defense Acquisitions: Missile Defense Acquisition Strategy Generates
Results, but Delivers Less at a Higher Cost. [hyperlink,
http://www.gao.gov/products/GAO-07-387]. Washington, D.C.: March 15,
2007.
Defense Management: Actions Needed to Improve Operational Planning and
Visibility of Costs for Ballistic Missile Defense. [hyperlink,
http://www.gao.gov/products/GAO-06-473]. Washington, D.C.: May 31,
2006.
Defense Acquisitions: Missile Defense Agency Fields Initial Capability
but Falls Short of Original Goal. [hyperlink,
http://www.gao.gov/products/GAO-06-327]. Washington, D.C.: March 15,
2006.
Defense Acquisitions: Actions Needed to Ensure Adequate Funding for
Operation and Sustainment of the Ballistic Missile Defense System.
[hyperlink, http://www.gao.gov/products/GAO-05-817]. Washington, D.C.:
September 6, 2005.
Defense Acquisitions: Status of Ballistic Missile Defense Program in
2004. [hyperlink, http://www.gao.gov/products/GAO-05-243]. Washington,
D.C.: March 31, 2005.
Missile Defense: Actions Are Needed to Enhance Testing and
Accountability. [hyperlink, http://www.gao.gov/products/GAO-04-409].
Washington, D.C.: April 23, 2004.
Missile Defense: Actions Being Taken to Address Testing
Recommendations, but Updated Assessment Needed. [hyperlink,
http://www.gao.gov/products/GAO-04-254]. Washington, D.C.: February 26,
2004.
Missile Defense: Additional Knowledge Needed in Developing System for
Intercepting Long-Range Missiles. [hyperlink,
http://www.gao.gov/products/GAO-03-600]. Washington, D.C.: August 21,
2003.
Missile Defense: Alternate Approaches to Space Tracking and
Surveillance System Need to Be Considered. [hyperlink,
http://www.gao.gov/products/GAO-03-597]. Washington, D.C.: May 23,
2003.
Missile Defense: Knowledge-Based Practices Are Being Adopted, but Risks
Remain. [hyperlink, http://www.gao.gov/products/GAO-03-441].
Washington, D.C.: April 30, 2003.
Missile Defense: Knowledge-Based Decision Making Needed to Reduce Risks
in Developing Airborne Laser. [hyperlink,
http://www.gao.gov/products/GAO-02-631]. Washington, D.C.: July 12,
2002.
Missile Defense: Review of Results and Limitations of an Early National
Missile Defense Flight Test. [hyperlink,
http://www.gao.gov/products/GAO-02-124]. Washington, D.C.: February 28,
2002.
Missile Defense: Cost Increases Call for Analysis of How Many New
Patriot Missiles to Buy. [hyperlink,
http://www.gao.gov/products/GAO-NSIAD-00-153]. Washington, D.C.: June
29, 2000.
Missile Defense: Schedule for Navy Theater Wide Program Should Be
Revised to Reduce Risk. [hyperlink,
http://www.gao.gov/products/GAO/NSIAD-00-121]. Washington, D.C.: May
31, 2000.
[End of section]
Footnotes:
[1] The Ballistic Missile Defense Organization was established in 1993
to manage and direct DOD ballistic missile defense acquisition programs
with the services playing major roles in system development.
[2] When this organization was re-chartered as MDA, its
responsibilities were reoriented around a concept for a globally
integrated, layered ballistic missile defense.
[3] Ballistic missile defense elements include: Ground-based Midcourse
Defense; Aegis Ballistic Missile Defense; Upgraded Early Warning Radar;
AN/TPY-2 Forward-based Radar; Cobra Dane Radar Upgrade; Sea-Based X-
Band Radar; Terminal High-Altitude Area Defense; Command, Control,
Battle Management, and Communications; European Interceptor Site;
European Midcourse Radar; and Adjunct Sensor.
[4] DOD's traditional requirements process is described in Chairman,
Joint Chiefs of Staff Instruction 3170.01F, Joint Capabilities
Integration and Development System, May 1, 2007. DOD's traditional
acquisition process is described in DOD Directive 5000.01, The Defense
Acquisition System, May 12, 2003, and DOD Instruction 5000.02,
Operation of the Defense Acquisition System, Dec. 8, 2008.
[5] The Missile Defense Executive Board is chaired by the Under
Secretary of Defense for Acquisition, Technology, and Logistics. The
Board's members are: Director, Defense Research and Engineering, Under
Secretary of Defense for Policy; Director, Program Analysis and
Evaluation; Assistant Secretary of the Army for Acquisition, Logistics,
and Technology; Deputy Under Secretary of Air Force Space Programs;
Under Secretary of Defense for Intelligence; Commander, U.S. Strategic
Command; Assistant Secretary of State for International Security and
Nonproliferation; Director, Operational Test and Evaluation; Vice Chief
for Naval Operations; Director, Missile Defense Agency; and Vice
Chairman, Joint Chiefs of Staff.
[6] GAO, Ballistic Missile Defense: Actions Needed to Improve the
Process for Identifying and Addressing Combatant Command Priorities,
[hyperlink, http://www.gao.gov/products/GAO-08-740] (Washington, D.C.:
July 31, 2008).
[7] Institute for Defense Analyses, Study on the Mission, Roles, and
Structure of the Missile Defense Agency (MDA), IDA P-4374 (Alexandria,
VA: Aug. 2008).
[8] Section 2435 of Title 10 of the U.S. Code requires a baseline
description for major defense acquisition programs and generally the
baseline description must be approved before funds may be obligated to
the program. The Ballistic Missile Defense System program meets the
definition of a major defense acquisition program, which is defined at
10 U.S.C. § 2430; however, the requirement to establish a baseline is
not triggered until entry into system development and demonstration.
Under the Secretary of Defense's 2002 program guidance for ballistic
missile defense, ballistic missile defense system elements do not
return to standard acquisition processes until they transfer to the
military services. As of March 2009, only the Patriot Advanced
Capability-3 and Cobra Dane Radar Upgrade have transferred from MDA to
the services.
[9] GAO, Defense Acquisitions: Production and Fielding of Missile
Defense Components Continue with Less Testing and Validation Than
Planned, [hyperlink, http://www.gao.gov/products/GAO-09-338]
(Washington, D.C.: Mar. 13, 2009).
[10] Block 4 capabilities are to defend allies and deployed forces in
Europe from limited Iranian long-range threats and to enhance
protection of the United States.
[11] GAO, Missile Defense: Actions Needed to Improve Planning and Cost
Estimates for Long-Term Support of Ballistic Missile Defense,
[hyperlink, http://www.gao.gov/products/GAO-08-1068] (Washington, D.C.:
Sept. 25, 2008).
[12] [hyperlink, http://www.gao.gov/products/GAO-08-1068].
[13] The seven elements reviewed were Aegis Ballistic Missile Defense,
Ground-based Midcourse Defense, Terminal High Altitude Area Defense,
AN/TPY-2 Forward-based Radar, Sea-Based X-Band Radar, Upgraded Early
Warning Radar, and European Midcourse Radar. Our criteria for selecting
elements specified a sample of at least two elements from each of the
services and that the elements already be fielded or planned for
fielding between fiscal years 2008 and 2015. For more details about our
scope, methodology, and selection criteria, see [hyperlink,
http://www.gao.gov/products/GAO-08-1068].
[14] [hyperlink, http://www.gao.gov/products/GAO-09-338].
[15] Before a program can enter the system development and
demonstration phase of the acquisition cycle, statute requires that
certain information be developed. 10 U.S.C. § 2366b. In 2002, the
Secretary of Defense deferred the application of some of DOD's
acquisition processes to the Ballistic Missile Defense System.
Therefore, MDA has not yet entered System Development and
Demonstration, which would trigger the statutes requiring the
development of information that the Defense Acquisition Board uses to
inform its decisions. Most major defense acquisition programs are also
required by statute to obtain an independent verification of program
cost prior to beginning system development and demonstration, and/or
production and deployment. 10 U.S.C. § 2434. Statute also requires an
independent verification of a system's suitability for and
effectiveness on the battlefield before a program can proceed beyond
low-rate initial production. 10 U.S.C. § 2399.
[16] [hyperlink, http://www.gao.gov/products/GAO-08-1068].
[End of section]
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