Missile Defense
Actions Needed to Improve Transparency and Accountability Gao ID: GAO-11-372 March 24, 2011Since 2002, Congress has directed GAO to assess the Missile Defense Agency's (MDA) annual fiscal year cost, schedule, testing, and performance progress in developing the Ballistic Missile Defense System (BMDS). This year's report specifically assesses MDA's progress in (1) delivering missile defense assets as scheduled (2) improving accountability and transparency over the past year (3) implementing the European Phased Adaptive Approach (4) implementing changes to the Ground-based Midcourse Defense program (5) implementing the targets revised acquisition strategy identified in 2009, and (6) testing the BMDS and developing its modeling and simulations to assess performance. To accomplish this, GAO reviewed MDA's progress reports to the Congress, pertinent Department of Defense (DOD) policies and reports including a DOD assessment and plan related to the Ground-based Midcourse Defense system.
In 2010, MDA made progress in delivering assets as well as increasing transparency and accountability. While many significant, positive steps were taken, GAO also found issues limiting the extent to which cost, schedule, and system performance can be tracked. Stabilizing the new acquisition approach, improving execution and increasing transparency are key steps for DOD. Asset Delivery: In 2010, MDA was able to meet or exceed its delivery goals for several MDA activities, such as missile defense upgrades to Aegis ships. However, the agency was unable to meet all of its goals for Terminal High Altitude Area Defense, a system used to defend against targets in their last phases of flight. Transparency and Accountability: MDA finalized a new process in which detailed baselines were set for several missile defense systems. As a result of the new process, its 2010 progress report to the Congress is more comprehensive than it was in 2009. Although the information in MDA's progress reports to the Congress increased, GAO found its unit and life-cycle cost baselines had unexplained inconsistencies and documentation for six baselines had insufficient evidence to be a high-quality cost estimate. As a result, GAO could not evaluate cost progress. European Phased Adaptive Approach for Missile Defense: The September 2009 shift in focus for European missile defense represents a significant change in U.S. policy and a substantial investment for DOD. However, DOD has not fully implemented a management process that synchronizes European missile defense acquisition activities and ensures transparency and accountability. Without key management and oversight processes, there is a limited basis for oversight, and there is a risk that key components will start production before demonstrating system performance. In the past, similar deficiencies in missile defense acquisition oversight have led to rework, cost increases, delays, and doubts about delivered capabilities. Ground-based Midcourse Defense (GMD): While the GMD system---which is primarily designed to engage longer-range targets in the midcourse range of flight--has demonstrated a limited capability, DOD has not yet determined the system's full capabilities and limitations. In January and December 2010, GMD experienced two flight test failures. In addition, GMD is just beginning to take actions necessary to sustain the capability through 2032. Targets Acquisition, Testing, and Performance: MDA made a targets acquisition decision in 2010 in response to a target failure. This decision was not consistent with its 2009 acquisition plan which envisioned competitive contract awards that would reduce reliance on its prime contractor. The cost of this action remains unknown. Also, as in previous years, failures and delays in testing have continued to delay validation of models and simulations used to assess BMDS performance. GAO makes 10 recommendations for MDA to strengthen its resource, schedule and test baselines, facilitate baseline reviews, and further improve transparency and accountability. GAO is also making a recommendation to improve MDA's ability to carry out its test plan. In response, DOD fully concurred with 7 recommendations. It partially concurred with 3, contending that its current actions are sufficient and that the test recommendation is also not affordable. GAO continues to believe that additional action is needed.
RecommendationsOur 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.
Director: Cristina T. Chaplain Team: Government Accountability Office: Acquisition and Sourcing Management Phone: (202) 512-4859GAO-11-372, Missile Defense: Actions Needed to Improve Transparency and Accountability
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United States Government Accountability Office:
GAO:
Report to Congressional Committees:
March 2011:
Missile Defense:
Actions Needed to Improve Transparency and Accountability:
GAO-11-372:
GAO Highlights:
Highlights of GAO-11-372, a report to congressional committees.
Why GAO Did This Study:
Since 2002, Congress has directed GAO to assess the Missile Defense
Agency‘s (MDA) annual fiscal year cost, schedule, testing, and
performance progress in developing the Ballistic Missile Defense
System (BMDS). This year's report specifically assesses MDA‘s progress
in (1) delivering missile defense assets as scheduled (2) improving
accountability and transparency over the past year (3) implementing
the European Phased Adaptive Approach (4) implementing changes to the
Ground-based Midcourse Defense program (5) implementing the targets
revised acquisition strategy identified in 2009, and (6) testing the
BMDS and developing its modeling and simulations to assess
performance. To accomplish this, GAO reviewed MDA‘s progress reports
to the Congress, pertinent Department of Defense (DOD) policies and
reports including a DOD assessment and plan related to the Ground-
based Midcourse Defense system.
What GAO Found:
In 2010, MDA made progress in delivering assets as well as increasing
transparency and accountability. While many significant, positive
steps were taken, GAO also found issues limiting the extent to which
cost, schedule, and system performance can be tracked. Stabilizing the
new acquisition approach, improving execution and increasing
transparency are key steps for DOD.
Asset Delivery:
In 2010, MDA was able to meet or exceed its delivery goals for several
MDA activities, such as missile defense upgrades to Aegis ships.
However, the agency was unable to meet all of its goals for Terminal
High Altitude Area Defense, a system used to defend against targets in
their last phases of flight.
Transparency and Accountability:
MDA finalized a new process in which detailed baselines were set for
several missile defense systems. As a result of the new process, its
2010 progress report to the Congress is more comprehensive than it was
in 2009. Although the information in MDA‘s progress reports to the
Congress increased, GAO found its unit and life-cycle cost baselines
had unexplained inconsistencies and documentation for six baselines
had insufficient evidence to be a high-quality cost estimate. As a
result, GAO could not evaluate cost progress.
European Phased Adaptive Approach for Missile Defense: The September
2009 shift in focus for European missile defense represents a
significant change in U.S. policy and a substantial investment for
DOD. However, DOD has not fully implemented a management process that
synchronizes European missile defense acquisition activities and
ensures transparency and accountability. Without key management and
oversight processes, there is a limited basis for oversight, and there
is a risk that key components will start production before
demonstrating system performance. In the past, similar deficiencies in
missile defense acquisition oversight have led to rework, cost
increases, delays, and doubts about delivered capabilities.
Ground-based Midcourse Defense (GMD):
While the GMD system”-which is primarily designed to engage longer-
range targets in the midcourse range of flight”has demonstrated a
limited capability, DOD has not yet determined the system‘s full
capabilities and limitations. In January and December 2010, GMD
experienced two flight test failures. In addition, GMD is just
beginning to take actions necessary to sustain the capability through
2032.
Targets Acquisition, Testing, and Performance:
MDA made a targets acquisition decision in 2010 in response to a
target failure. This decision was not consistent with its 2009
acquisition plan which envisioned competitive contract awards that
would reduce reliance on its prime contractor. The cost of this action
remains unknown. Also, as in previous years, failures and delays in
testing have continued to delay validation of models and simulations
used to assess BMDS performance.
What GAO Recommends:
GAO makes 10 recommendations for MDA to strengthen its resource,
schedule and test baselines, facilitate baseline reviews, and further
improve transparency and accountability. GAO is also making a
recommendation to improve MDA‘s ability to carry out its test plan. In
response, DOD fully concurred with 7 recommendations. It partially
concurred with 3, contending that its current actions are sufficient
and that the test recommendation is also not affordable. GAO continues
to believe that additional action is needed.
View [hyperlink, http://www.gao.gov/products/GAO-11-372] or key
components. For more information, contact Cristina Chaplain at (202)
512-4841.
[End of section]
Contents:
Letter:
Background:
MDA Met Most of Its Fiscal Year 2010 Asset Delivery Goals:
MDA Undertook Steps to Improve Transparency and Accountability:
Acquisitions Supporting European PAA Face Synchronization,
Transparency, and Accountability Challenges:
New GMD Strategy Curtails Planned Operational Quantities, and It May
Take Years to Understand Capabilities, Limitations, and Sustainability:
Decisions on Acquisition of Targets in Fiscal Year 2010:
Overall Performance of the BMDS Still Cannot Be Assessed Due to Models
and Simulations Challenges and Shortfalls in Testing:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Comments from the Department of Defense:
Appendix II: Assessment of MDA Resource Baselines:
Appendix III: Aegis Ballistic Missile Defense (Aegis BMD) with
Standard Missile-3 Interceptor:
Appendix IV: Aegis Ashore with Standard Missile-3 Block IB (European
PAA Phase II):
Appendix V: Airborne Infrared (ABIR):
Appendix VI: Airborne Laser Test Bed (ALTB):
Appendix VII: BMDS Sensors:
Appendix VIII: Command and Control, Battle Management and
Communications (C2BMC):
Appendix IX: Ground-based Midcourse Defense (GMD):
Appendix X: Precision Tracking Space System (PTSS):
Appendix XI: Space Tracking and Surveillance System (STSS):
Appendix XII: Targets and Countermeasures:
Appendix XIII: Terminal High Altitude Area Defense (THAAD):
Appendix XIV: Scope and Methodology:
Appendix XV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Description of MDA's BMDS Elements and Supporting Efforts:
Table 2: September 2009 Presidential Policy for European Phased
Adaptive Approach:
Table 3: BMDS Fiscal Year 2010 Asset Deliveries:
Table 4: Some System Development Risks Exacerbated by European PAA
Schedule Compression:
Table 5: Status of Activities Needed to Inform GMD Sustainment Efforts:
Table 6: Operation and Sustainment Costs as a Percentage of Total
Costs Reported in the 2010 BAR:
Table 7: Unreported APUC Variances from MDA's 2009 BAR:
Table 8: Current Delivery Plans for AN/TPY-2:
Table 9: The Number of Ground-Based Interceptors Needed through 2032
Lacks Analysis:
Table 10: Key MDA Target Acquisition Decisions in Fiscal Year 2011:
Table 11: THAAD's Knowledge Point Objectives by Test Before and After
the FTT-11 Failure in December 2009:
Figures:
Figure 1: GAO Analysis of MDA Cost Estimates against the Four
Characteristics of High-Quality and Reliable Cost Estimates:
Figure 2: GAO Analysis of MDA Cost Estimates against the Four
Characteristics of High-Quality and Reliable Cost Estimates:
Figure 3: February 2010 and February 2011 Plans for Aegis Ashore
Flight Test Events:
Abbreviations:
ABIR: Airborne Infrared:
Aegis BMD: Aegis Ballistic Missile Defense:
AIRS: Airborne Infrared Surveillance:
AN/TPY-2: Army Navy/Transportable Radar Surveillance - Model 2:
ALTB: Airborne Laser Test Bed:
APUC: Average Procurement Unit Cost:
AT&L: Acquisition, Technology and Logistics:
BAR: BMDS Accountability Report:
BMDR: Ballistic Missile Defense Review:
BMDS: Ballistic Missile Defense System:
C2BMC: Command, Control, Battle Management, and Communications:
CAPE: Cost Assessment and Program Evaluation:
CE-I: Capability Enhancement-I:
CE-II: Capability Enhancement-II:
DOD: Department of Defense:
DOT&E: Director, Operational Test and Evaluation:
EKV: Exoatmospheric Kill Vehicle:
EVM: Earned Value Management:
FTF: Flexible Target Family:
GBI: Ground-based Interceptor:
GMD: Ground-based Midcourse Defense:
ICBM: Intercontinental Ballistic Missile:
IMTP: Integrated Master Test Plan:
MBIT: Maintenance Built-In Test:
MDA: Missile Defense Agency:
MDEB: Missile Defense Executive Board:
OTA: Operational Test Agency:
PAA: Phase Adaptive Approach:
PAUC: Program Acquisition Unit Cost:
PTSS: Precision Tracking Space System:
RAM: Reliability, Availability and Maintainability:
SBIRS: Space-Based Infrared System:
SBX: Sea-Based X-Band:
SM-3: Standard Missile-3:
STSS: Space Tracking and Surveillance System:
TDACS: Throttleable Divert and Attitude Control System:
THAAD: Terminal High Altitude Area Defense:
TIVS: Thermally Initiated Venting System:
UAS: Unmanned Aircraft System:
UEWR: Upgraded Early Warning Radar:
VLS: Vertical Launch System:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
March 24, 2011:
Congressional Committees:
The Missile Defense Agency's (MDA) mission is to develop an integrated
and layered Ballistic Missile Defense System (BMDS) to defend the
United States, its deployed forces, allies, and friends. In order to
meet this mission, MDA is developing a highly complex system of
systems--land, sea-, and space-based sensors, interceptors and battle
management. Since its initiation in 2002, MDA has been given a
significant amount of flexibility in executing the development and
fielding of the BMDS. To enable MDA to field and enhance a missile
defense system quickly, the Secretary of Defense in 2002 delayed the
entry of the BMDS program into the Department of Defense's (DOD)
traditional acquisition process until a mature capability was ready to
be handed over to a military service for production and operation. To
meet a presidential directive to deliver an initial capability by
2004, the program has concurrently developed and fielded assets. While
this approach helped MDA rapidly deploy an initial capability, it has
also meant that MDA has fielded some assets whose capability is
uncertain. Moreover, we have reported that MDA's approach has limited
transparency and accountability for DOD's largest single acquisition
program--spending from approximately $7 billion to $9.5 billion per
year.[Footnote 1] More specifically, there has been limited
understanding about baseline costs, schedules, requirements, and
system effectiveness.
Last year, we reported that MDA was in the process of transitioning to
new leadership, a new acquisition strategy, a new test strategy, and a
shift in emphasis toward early intercept capabilities. Given the
breadth and scope of these changes, we concluded that the agency had
an opportunity to chart a course that enables transparency and
accountability while retaining its desired flexibility, and it
appeared that MDA was committed to doing so. Importantly, the Director
of MDA had begun new initiatives in accordance with guiding principles
of DOD's acquisition policies, which already embrace knowledge-based
practices and sound management controls.[Footnote 2] The Director of
MDA intended to apply these new policies to each element or
appropriate portions of the elements, as is currently done across DOD,
in order to provide a better foundation for Congress and others to
assess progress and hold senior leadership accountable for outcomes.
[Footnote 3]
Since 2002, Congress has directed GAO to assess MDA's annual fiscal
year cost, schedule, testing, and performance progress in developing
the BMDS.[Footnote 4] We have delivered assessments of MDA's progress
covering fiscal years 2003 through 2009 and are currently mandated to
continue our assessments through fiscal year 2013.[Footnote 5]
According to this mandate, we are required to assess MDA's fiscal year
progress against the annual goals it is required to report to Congress
each February in the BMDS Accountability Report (BAR).[Footnote 6]
This year's report specifically assesses MDA's progress in (1)
delivering missile defense assets as scheduled (2) improving
accountability and transparency over the past year (3) implementing
the European Phased Adaptive Approach (PAA) (4) implementing changes
to the Ground-based Midcourse Defense (GMD) program (5) implementing
the targets revised acquisition strategy identified in 2009, and (6)
testing the BMDS and developing its modeling and simulations to assess
performance.
To assess all six areas of MDA's progress, we examined the
accomplishments of nine BMDS elements and supporting efforts that MDA
is currently developing and fielding: the Aegis Ballistic Missile
Defense (Aegis BMD); Aegis Ashore; BMDS Sensors; Command, Control,
Battle Management, and Communications (C2BMC); GMD; Precision Tracking
and Surveillance System (PTSS); Space Tracking and Surveillance System
(STSS); Targets and Countermeasures; and Terminal High Altitude Area
Defense (THAAD). We reviewed individual element responses to GAO data
collection instruments, which detailed key accomplishments for fiscal
year 2010. The results of these reviews are presented in detail in
appendixes to this report and are also integrated as appropriate in
our findings related to progress in delivering assets and implementing
new initiatives. We also sought to examine MDA's Baseline Execution
Reviews of each element's progress, but were unable to assess the
supporting backup materials as they were not made available to us
until February 2011--the very end of the audit.
To assess whether MDA elements delivered assets as scheduled, we
examined the 2009 BAR and compared it to the 2010 version, looking for
similarities and differences between the two. We also reviewed
responses to GAO data collection instruments, which detailed key
accomplishments for fiscal year 2010, including some asset deliveries,
as well as any delayed asset deliveries:
To follow up on the progress MDA made to improve transparency and
accountability, we reviewed pertinent DOD policies to compare MDA's
current level of accountability with that of other DOD programs. We
also assessed the cost, schedule, and test baselines included in the
2010 BAR.[Footnote 7] In addition, we held discussions with officials
in MDA's Operations Directorate to discuss the new phased adaptive
approach. Lastly, we met with officials in MDA's Acquisition
Directorate to discuss how the agency is establishing and managing
against its internal baselines.
For our assessment regarding the implementation of the management
process to synchronize acquisitions for the European PAA, we
synthesized management and oversight principles from the Office of
Management and Budget, DOD, MDA, and GAO best acquisition practices
for large acquisition efforts similar to European PAA.[Footnote 8] We
then compared European PAA acquisition efforts to these principles. We
also reviewed DOD and MDA documentation related to European PAA. We
also requested the European PAA cost estimate that was completed in
fall of 2009.[Footnote 9] However, we did not receive the cost
estimate until February 2011--the very end of our audit--and therefore
we could not assess it for this report. We met with MDA and Office of
the Secretary of Defense officials. We visited the U.S. European
Command and U.S. Strategic Command. We met with officials from MDA
directorates and element program offices as well as the Offices of the
Under Secretary of Defense for Policy and the Under Secretary of
Defense for Acquisition, Technology and Logistics and visited
contractor facilities.
In addition, we are including the acquisition-related parts of our
final analysis performed in response to a congressional mandate that
we review a DOD assessment and plan related to the GMD system, that
included issues related to acquisition, sustainment and
refurbishment.[Footnote 10] For DOD's Assessment and Plan for the GMD
program, we reviewed the reports provided by DOD; analyzed
sustainment, refurbishment and test plans and program schedules; and
assessed budget documents and program reviews. We interviewed
officials from MDA, U.S. Strategic Command, U.S. Northern Command, and
the Army.
To assess BMDS testing and target development progress, we reviewed
technical baselines in the BAR, MDA's Integrated Master Test Plans,
the target business case analysis, target contracts, and other
documents related to target planning and acquisitions. We also
interviewed officials within program offices and within MDA functional
directorates, such as the Directorates for Engineering and Testing. In
addition, we discussed the elements' test programs and test results
with the BMDS Operational Test Agency and DOD's Office of the
Director, Operational Test and Evaluation. We held discussions with
the BMDS Operational Test Agency to follow up on BMDS models and
simulations. Our scope and methodology for each of the six objectives
is discussed further in appendix XIV.
As we agreed to with your staff, we do not include an analysis of
MDA's earned value management (EVM) reporting this year. In prior
years, in the absence of full cost baselines for elements, we assessed
the EVM progress of individual contracts. We issued our findings on
MDA's EVM progress during fiscal year 2009 in July 2010 and found data
reliability issues with 2 of the 14 contracts.[Footnote 11] Because of
these issues with the GMD and Targets and Countermeasures programs'
EVM data, we were unable to report cost progress for these two
contracts which amounted to half of the total budgeted contract costs
for MDA prime contracts we reviewed. We plan to assess EVM data on MDA
prime contracts in the future once MDA has had time to address our
recommendations to improve data reliability. In our July report, MDA
stated that it intended to take a key step in addressing our
recommendations by conducting a major review of the GMD program's EVM
data by the end of September 2010. Because MDA provided documentation
of its actions at the end of our audit--in February 2011--leaving no
time for review, we will assess whether the steps MDA has taken
sufficiently address GMD's data reliability issues in next year's
report.
We conducted this performance audit from March 2010 to March 2011 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 BMDS is being designed to counter ballistic missiles of all
ranges--short, medium, intermediate, and long. Since ballistic
missiles have different ranges, speeds, sizes, and performance
characteristics, MDA is employing an integrated and layered
architecture to provide multiple opportunities to destroy ballistic
missiles before they can reach their targets. The system's
architecture includes space-based and airborne sensors as well as
ground-and sea-based radars; ground-and sea-based interceptor
missiles; and a command and control, battle management, and
communications system to provide the warfighter with the necessary
communication links to the sensors and interceptor missiles.
A typical engagement scenario to defend against an intercontinental
ballistic missile would occur as follows:
* Infrared sensors aboard early-warning satellites detect the hot
plume of a missile launch and alert the command authority of a
possible attack.
* Upon receiving the alert, land-or sea-based radars are directed to
track the various objects released from the missile and, if so
designed, to identify the warhead from among spent rocket motors,
decoys, and debris.
* When the trajectory of the missile's warhead has been adequately
established, an interceptor--consisting of a kill vehicle mounted atop
a booster--is launched to engage the threat. The interceptor boosts
itself toward a predicted intercept point and releases the kill
vehicle.
* The kill vehicle uses its onboard sensors and divert thrusters to
detect, identify, and steer itself into the warhead. With a combined
closing speed of up to 10 kilometers per second (22,000 miles per
hour), the warhead is destroyed above the atmosphere through a "hit to
kill" collision with the kill vehicle.
* Some interceptors use sensors to steer themselves into the inbound
ballistic missile. Inside the atmosphere, these systems kill the
ballistic missile using a range of mechanisms such as direct collision
between the missile and the inbound ballistic missile or killing it
with the combined effects of a blast fragmentation warhead (heat,
pressure, and grains/shrapnel) in cases where a direct hit does not
occur.
* Table 1 provides a brief description of nine BMDS elements and
supporting efforts currently under development by MDA.
Table 1: Description of MDA's BMDS Elements and Supporting Efforts:
BMDS element/supporting effort[A]: Aegis Ballistic Missile Defense
(Aegis BMD);
Description: Aegis BMD is a sea-based missile defense system being
developed in incremental, capability-based blocks to defend against
ballistic missiles of all ranges. Key components include the shipboard
SPY-1 radar, Standard Missile-3 (SM-3) missiles, and command and
control systems. It will also be used as a forward-deployed sensor for
surveillance and tracking of ballistic missiles. The SM-3 missile has
multiple versions in development or production: Blocks IA, IB, and IIA.
BMDS element/supporting effort[A]: Aegis Ashore;
Description: Aegis Ashore is a future land-based variant of the ship-
based Aegis BMD. It is expected to track and intercept ballistic
missiles in their midcourse phase of flight using SM-3 interceptor
variants as they come available. Key components include the Aegis SPY-
1 radar, command and control system, and vertical launching system;
and removable enclosures for the systems to facilitate worldwide
deployment. DOD plans to deploy the first Aegis Ashore with SM-3 Block
IB in 2015 as part of the European Phased Adaptive Approach.
BMDS element/supporting effort[A]: BMDS Sensors;
Description: MDA is developing various sensors for fielding. These
include forward-based sensors; mobile, sea-based, space-based and
airborne sensors; as well as upgrades to existing early warning
radars. The BMDS uses these sensors to identify and continuously track
ballistic missiles in all phases of flight.
BMDS element/supporting effort[A]: Command, Control, Battle
Management, and Communications (C2BMC);
Description: C2BMC is the integrating element of the BMDS. Its role is
to provide deliberate planning, situational awareness, sensor
management, and battle management for the integrated BMDS.
BMDS element/supporting effort[A]: Ground-based Midcourse Defense
(GMD);
Description: GMD is a ground-based missile defense system designed to
destroy intermediate and intercontinental ballistic missiles during
the midcourse phase of their flight. Its mission is to protect the
U.S. homeland against ballistic missile attacks from North Korea and
the Middle East.
BMDS element/supporting effort[A]: Precision Tracking and Space System
(PTSS);
Description: PTSS is being developed as an operational component of
the BMDS designed to support early intercept of regional medium-and
intermediate-range ballistic missile threats to the United States and
its allies in Europe. PTSS will track large missile raid sizes early
after launch, which could enable earlier intercepts.
BMDS element/supporting effort[A]: Space Tracking and Surveillance
System (STSS);
Description: STSS is a space-based infrared sensor program with two
demonstration satellites that launched on September 25, 2009. The
purpose of the program is to provide risk reduction for the future
PTSS.
BMDS element/supporting effort[A]: Targets and Countermeasures;
Description: MDA maintains a series of targets used in BMDS flight
tests to present realistic threat scenarios. The targets are designed
to encompass the full spectrum of threat missile ranges and
capabilities.
BMDS element/supporting effort[A]: Terminal High Altitude Area Defense
(THAAD);
Description: THAAD is a ground-based missile defense system designed
to destroy short-and medium-range ballistic missiles during the late-
midcourse and terminal phases of flight. Its mission is to defend
deployed U.S. forces and friendly foreign population centers.
Source: MDA data.
[A] The Airborne Laser Test Bed (ALTB), formerly the Airborne Laser
program, is being developed as an advanced platform for DOD's directed
energy research program. As a test bed, the ALTB is currently not
under development as a BMDS element.
[End of table]
Acquisition Strategy for Missile Defense:
MDA has employed varied strategies to acquire and deploy missile
defense systems. From its inception in 2002 through 2007, MDA
developed missile defense capability in biennial increments, known as
blocks. These 2-year blocks were each built on preceding blocks and
enhanced the development and capability of the BMDS. However, there
was little visibility into baseline costs and schedules associated
with systems that comprised the blocks or how the blocks addressed
particular threats. In response to recommendations from GAO, in
December 2007, MDA announced a new block structure that was intended
to improve the program's transparency, accountability, and oversight.
The new blocks were not based on biennial time periods, but instead
focused on fielding capabilities that address particular threats.
Because the new block structure was not aligned to regular time
periods, multiple blocks were under way concurrently. The capabilities-
based five-block approach included several positive changes, including
the commitment by DOD to establish total acquisition costs and unit
costs for selected block assets, including in a block only those
elements or components of elements that would be fielded during the
block and abandoning the practice of deferring work from one block to
another.
MDA was still transitioning to this new capabilities-based block
approach when the MDA Director terminated it in June 2009--a year and
a half after it was created. According to MDA, the agency terminated
the capability-based block structure to address congressional
concerns. The agency then began to manage the BMDS as a single
integrated program but planned to report on cost, schedule, and
performance issues by each element within the program. At the time of
our 2010 report, MDA was in the process of determining how it would
implement changes to its acquisition management strategy.
Shift in Approach to European Missile Defense:
Another significant change that took place in 2009 was the new
administration's shift in its approach to European missile defense.
DOD altered its approach to European defense, which originally focused
on ground-based interceptors (GBI) from the GMD element and a large
fixed radar as well as transportable X-Band radars, in order to
provide defenses against long-range threats to the United States and
short-, medium-, and intermediate-range Iranian threats to Europe. The
new European PAA consists primarily of Aegis BMD sea-based and land-
based systems and interceptors, as well as various sensors to be
deployed over time as the various capabilities are matured. According
to DOD, this new approach offers a number of improvements over the
previous architecture, such as providing missile defenses sooner with
greater flexibility to meet evolving threats, providing more
opportunities to involve close allies, and delivering greater
capability to defend against a large number of threat missiles. In
essence, the new policy marks a fundamental change from an emphasis on
a global integrated system to a policy that bundles capability and
tailors it for different regions--the PAA--with the European PAA being
the first of these regional approaches. According to DOD, it intends
to use the department's existing processes for managing missile
defense acquisitions and the existing BMDS element-based acquisition
approach for missile defense system elements--not one specific to each
PAA--to approve system acquisitions for each PAA.
The European PAA policy announced by the President articulates a
schedule for delivering four phases of capability to defend Europe and
augment current protection of the U.S. homeland in the following
timeframes: Phase 1 in 2011, Phase 2 in 2015, Phase 3 in 2018, and
Phase 4 in 2020. DOD's phased schedule for the European PAA comprises
multiple elements and interceptors to provide increasingly integrated
ballistic missile defense capability. The policy is structured around
the phased deployment of increasingly capable variants of the SM-3
interceptor, together with sensors, command and control, and other
capabilities. It is projected that each successive phase will deliver
additional capability with respect to both threat missile range and
raid size.
Table 2 outlines the plans and estimated delivery timeframes
associated with each European PAA phase.
Table 2: September 2009 Presidential Policy for European Phased
Adaptive Approach:
European PAA phase: Phase I;
Plans: Deploy current and proven missile defense systems available in
the next 2 years, including the sea-based Aegis Weapon System, the SM-
3 interceptor (Block IA) and sensors such as the Army/Navy
Transportable Radar Surveillance system to address regional ballistic
missile threats to Europe and deployed U.S. personnel and their
families;
Estimated delivery time frame: 2011.
European PAA phase: Phase II;
Plans: After appropriate testing, deploy a more capable version of the
SM-3 interceptor (Block IB) in both sea- and land-based configurations
and more advanced sensors, to expand the defended area against short-
and medium-range missile threats;
Estimated delivery time frame: 2015.
European PAA phase: Phase III;
Plans: After development and testing are complete, deploy the more
advanced SM-3 Block IIA variant currently under development to counter
short-, medium-, and intermediate-range threats;
Estimated delivery time frame: 2018.
European PAA phase: Phase IV;
Plans: After development and testing are complete, deploy the SM-3
Block IIB to help better cope with medium-and intermediate-range
missiles and the potential future intercontinental range ballistic
missile threat to the United States;
Estimated delivery time frame: 2020.
Source: President's September 17, 2009 policy announcement.
[End of table]
However, many aspects of the European PAA have not yet been
determined. DOD has thus far committed to using two land-based Aegis
Ashore facilities and at least one Army Navy/Transportable Radar
Surveillance--Model 2 (AN/TPY-2) radar. Additionally, each European
PAA phase could have as many as three Aegis BMD ship patrol areas, but
DOD has not yet committed to a specific number of ships or SM-3
interceptors for each phase. DOD also has not yet committed to the
specific type or number of the other elements and interceptors that
will be part of the European PAA phases.
MDA Met Most of Its Fiscal Year 2010 Asset Delivery Goals:
MDA increased inventories for Aegis, GMD, Sensors, and THAAD in fiscal
year 2010. The Aegis, GMD, and Sensors elements all either met or
exceeded their delivery goals, but THAAD was unable to meet all of its
2010 delivery goals. Table 3 shows the asset deliveries that we were
able to track and record based on the agency's 2009 BAR and other
information we obtained directly from each program element.
Table 3: BMDS Fiscal Year 2010 Asset Deliveries:
BMDS element: Aegis;
Fiscal year 2010 delivery goals: 2 Aegis BMD cruisers (ships);
17 SM-3 missiles;
Assets delivered in fiscal year 2010: 2 Aegis BMD cruisers (ships);
26 SM-3 missiles.
BMDS element: GMD;
Fiscal year 2010 delivery goals: 3 ground-based interceptors;
Assets delivered in fiscal year 2010: 6 ground-based interceptors[A].
BMDS element: BMDS Sensors;
Fiscal year 2010 delivery goals: 1 AN/TPY-2 radar;
Assets delivered in fiscal year 2010: 1 AN/TPY-2 radar.
BMDS element: THAAD;
Fiscal year 2010 delivery goals: 1 THAAD battery[B];
Assets delivered in fiscal year 2010: 1 partial THAAD battery[C].
Source: GAO (presentation); MDA (data).
[A] Although the GMD program delivered six GBIs in fiscal year 2010,
two of the interceptors were delayed from fiscal year 2009 and another
one was a test asset.
[B] A THAAD battery includes interceptor missiles, launchers, an X-
band radar, and a fire control and communications system.
[C] THAAD delivered all of the first battery except for the
interceptor missiles and launchers.
[End of table]
In fiscal year 2010, Aegis BMD planned to deliver two additional ships
to the fleet with the Aegis Weapons System software as well as 17 SM-3
missiles. The program reported that it met its goal of delivering two
additional ships with the Aegis Weapon System software as planned,
which completed the 20-ship fleet. In addition, the program delivered
26 SM-3 Block IA missiles in fiscal year 2010--9 more than originally
planned. Furthermore, MDA redelivered 2 missiles that resolved quality
problems discovered in 2009.[Footnote 12]
Meanwhile, GMD met its delivery goals, delivering three interceptors
as planned. The program also delivered two additional interceptors in
fiscal year 2010 that were originally scheduled to be delivered in
fiscal year 2009. The program also delivered an interceptor that was
used during a fiscal year 2010 flight test.[Footnote 13] Lastly, the
BMDS Sensors program successfully delivered one AN/TPY-2 radar to
THAAD as planned.
The THAAD program partially met its goal to deliver its first battery
in fiscal year 2010. While some assets of its first battery were
delivered, which included an X-band radar, a fire control and
communications system, and some ground support equipment, none of the
battery's 24 interceptors or 3 launchers were delivered as planned.
The interceptors are experiencing delays because of production issues
stemming from design and qualification issues related to a safety
system in the interceptor. The launchers are experiencing delays to
completing the government acceptance process because of issues during
production associated with manufacturing challenges, parts
obsolescence, design changes, and manufacturing defects. Late
qualification and design changes have also delayed the acceptance
process further. THAAD plans to complete the interceptors by the end
of the fourth quarter of fiscal year 2011. The government acceptance
process for the launchers should be complete by the third quarter of
fiscal year 2011.
MDA Undertook Steps to Improve Transparency and Accountability:
Throughout 2010, MDA continued to make significant changes to its key
acquisition processes in order to increase transparency and
accountability and reflect acquisition best practices. Specifically,
MDA assessed each program to determine its acquisition phase
(technology development, product development, or production), and for
the first time, developed and reported detailed baselines for each
element, including resource baselines outlining key costs for several
BMDS components. While the steps taken are significant and positive,
our analysis identified shortcomings in cost, schedule, and testing
baselines that limit the extent to which cost and schedule growth as
well as system performance can be tracked.
New Review Process Results in More Detailed Baselines, but Gaps Remain:
In our last report, we recommended that in addition to procurement
unit costs, the unit costs for BMDS assets reported in the 2010 BAR be
broadened to include development costs so that all costs were included
in its unit costs.[Footnote 14] We also recommended that MDA develop
and report to Congress a measure for schedule baseline goals that
incorporates delivering integrated capabilities to the warfighter and
the dates at which performance baselines will be achieved. In
addition, we recommended that top-level test goals for each element,
or appropriate portions thereof, be reported to Congress in the 2010
BAR. A final recommendation called for MDA to report variances against
all established baselines. DOD concurred with all of these
recommendations.
In 2010, MDA made progress in implementing these recommendations by
finalizing a new baseline phase review process in which the agency set
detailed baselines for several BMDS elements, or portions of elements,
for the first time. Specifically, MDA established resource, schedule,
test, operational capacity,[Footnote 15] technical,[Footnote 16] and
contract[Footnote 17] baselines for several BMDS components. It
reported these to Congress in its June 2010 BAR. MDA identified three
phases of development where baselines are approved--technology
development, product development, and initial production phases--and
specified the key knowledge that is needed at each phase. MDA
officials stated that they expect that aligning the development
efforts with the phases will help to ensure that the appropriate level
of knowledge is obtained before the acquisitions move from one phase
to the next. In another key step, approval of the product development
and initial production baselines will be jointly reviewed by the
Director of MDA and the respective service acquisition executive, as a
number of missile defense systems are expected to eventually
transition to the military services for operation. In addition, in
regard to these new phases, the agency established a process for
approving baselines. As a result of MDA's new baseline phase review
process, its 2010 BAR is more comprehensive than its 2009 BAR.
This year, we specifically assessed the new resource, schedule, and
test baselines set by MDA. While the material reported was more
comprehensive and provided more transparency into resources, schedule,
and testing than in previous years, we identified shortcomings that
limit the ability to track cost and schedule growth and performance.
Resource Baseline:
The resource baseline is the expected investment needed that leads to
the delivery of a BMDS product. MDA presented unit cost baselines for
specific assets of each element as well as baselines for cost
components of the element including development costs, production and
deployment costs, and military construction costs. As a result, there
can be multiple baselines for each element. This was the first time
that MDA reported program acquisition unit costs (which include
development costs in its calculation) and baselines for portions of,
and in some cases all, life-cycle costs derived from life cycle cost
estimates.
* Unit cost is the cost divided by the quantity. It is usually
reported in two ways: (1) average procurement unit cost--procurement
cost divided by procurement quantity--and (2) program acquisition unit
cost--acquisition cost (which includes both development and
procurement) divided by total quantity.[Footnote 18]
* MDA's baselines for life cycle costs are based on life cycle cost
estimates. A life cycle cost estimate should encompass all past (or
sunk), present, and future costs for every aspect of the program,
regardless of funding source, and can be used to support budgetary
decisions, key acquisition decision points, milestone reviews, and
investment decisions. The elements of a program's life cycle cost
include the costs of research, development, test, and evaluation;
production and deployment; military construction; operation and
sustainment; and disposal. MDA's life cycle cost baselines in many
cases included sunk costs and costs from the future years defense plan
through completion. In addition, MDA included a time-phased estimate
of the costs including sunk costs, costs through the future years
defense plan, and "to complete" costs.
MDA provided 12 cost baselines for elements' efforts under our review,
including Aegis Ashore; Aegis BMD SM-3 Block IB missiles and
associated software upgrades for ship sets; future Aegis BMD ship
software upgrades; two capability deliveries for AN/TPY-2; C2BMC
Spiral 6.4; GMD; two capability deliveries for the Sea Based X-band
(SBX) radar; the current THAAD capability configuration; and the
Targets and Countermeasures program short-range, medium-range,
intermediate-range, and intercontinental ballistic missile target
efforts.[Footnote 19]
While the amount of information presented has increased, we found that
the unit cost baselines and the baselines for portions of, and
sometimes all, life cycle costs in the BAR did not provide clear,
consistent, and complete information, which affected its usefulness
for oversight.
* Parts of the 2010 resource baselines were unclear and inconsistent
because MDA used particular terms that did not always appear to
accurately describe the costs and baselines it was reporting. For
example, MDA presented "life cycle costs" in several resource
baselines but the use of this term is misleading because in some cases
the reported totals appeared to only partially reflect all the main
life cycle cost categories. Specifically, it is unclear if disposal
costs and, in some cases, operation and sustainment costs were
accounted for in all of the life cycle costs. No explanation is
provided in the BAR to explain why some of the cost categories appear
to be missing or to describe how the use of the term life cycle cost
is appropriate for what was reported.
* The resource baselines for three of the four Targets and
Countermeasures resource baselines were incomplete because a large
percentage of sunk costs were excluded. The BAR, however, does not
disclose that the sunk costs were excluded nor does it explain why MDA
decided to exclude them.
* MDA officials told us that they mistakenly baselined operation and
sustainment costs in the 2010 BAR and intend to remove those baselines
in the 2011 BAR. Choosing not to baseline these costs, in some cases,
excludes a large portion of costs from the total cost baseline MDA is
reporting. Further, officials also told us that they do not plan to
report variances in future BARs for any of the remaining development,
production and deployment, or military construction costs that are
baselined. Reporting variances is important because deviations from
the baseline plan provide valuable insight into program risk and its
causes to decision makers. It is unclear why the agency will not
report variances against these baselines.
* MDA was also unclear and incomplete in its reporting of operation
and sustainment costs. In four of five cases, the operation and
sustainment costs reported in the BAR are only those costs for which
MDA is responsible and do not include the costs borne by the services.
[Footnote 20] MDA's BAR does not explain that the operation and
sustainment costs represented are only a portion of those costs that
will be required for the program.[Footnote 21]
* Although MDA presented average procurement unit costs for 10 BMDS
assets in its 2009 BAR, it only reported on 6 of the 10 in its 2010
BAR. MDA also did not identify variances for any of these unit costs
or explain why these variances were not provided, although it could
have reported variances in 3 of the 6 cases.
* MDA was also unclear and inconsistent in how it reported target unit
costs--by choosing not to report average procurement or program
acquisition unit costs. Instead the program reported average unit
costs and, separately, recurring costs without defining these costs or
explaining their purpose the BAR. By reporting only the average unit
costs for targets, MDA is not reporting the full unit costs to develop
and procure targets that would normally be captured in program
acquisition unit costs as it reported for other baselines.
Details on these inconsistencies, exclusions, and issues with clarity
are outlined in appendix II.
Finally, we sought to determine whether the cost baselines reported in
the BAR were supported by high-quality--that is, reliable--cost
estimates. According to the GAO Cost Estimating and Assessment Guide,
the cost estimate is part of a total systems analysis and is a
critical element in any acquisition process to help decision makers
evaluate resource requirements at milestones and other important
decision points.[Footnote 22] Cost estimates establish and defend
budgets and drive affordability analysis. The guide identifies the 12
steps necessary for developing a high-quality cost estimate, which we
used to assess MDA's life cycle cost estimates to determine whether
they were (1) comprehensive, (2) well documented, (3) accurate, and
(4) credible. According to MDA cost officials, they developed their
cost estimates based on the methodology in our guide. Our methodology
and the full details of our assessment are reported in appendix II.
While MDA was able to provide life cycle cost estimates for all 12 of
the BAR life cycle cost baselines reported, we found that 6 of the
estimates did not match the costs that were reported in the BAR--
specifically those for Aegis Ashore, Aegis BMD SM-3 Block IB missile
and associated software upgrades for ship sets, C2BMC Spiral 6.4, GMD,
SBX capability deliveries, and current THAAD capability configuration
estimates.[Footnote 23] We did not assess those estimates further
because they did not support the BAR baselines. For the remaining 6,
we found that the documentation that MDA provided contained
insufficient evidence to meet the characteristics of a high-quality
cost estimate. Specifically, the estimates were not comprehensive,
lacked documentation, were not completely accurate, or were not
sufficiently credible. See figure 1 for the results of our review of
the 6 estimates.
Figure 1: GAO Analysis of MDA Cost Estimates against the Four
Characteristics of High-Quality and Reliable Cost Estimates:
[Refer to PDF for image: illustrated table]
Future Aegis BMD ship software upgrades[A]:
Comprehensive: Partially Met;
Well documented: Partially Met;
Accurate: Partially Met;
Credible: Minimally Met.
AN/TPY-2[B]:
Comprehensive: Partially Met;
Well documented: Partially Met;
Accurate: Partially Met;
Credible: Minimally Met.
Short range ballistic missile target[C]:
Comprehensive: Partially Met;
Well documented: Minimally Met;
Accurate: Minimally Met;
Credible: Minimally Met.
Medium range ballistic missile target[C]:
Comprehensive: Partially Met;
Well documented: Minimally Met;
Accurate: Minimally Met;
Credible: Minimally Met.
Intermediate range ballistic missile target[C]:
Comprehensive: Partially Met;
Well documented: Minimally Met;
Accurate: Minimally Met;
Credible: Minimally Met.
Intercontinental range ballistic missile target[C]:
Comprehensive: Minimally Met;
Well documented: Minimally Met;
Accurate: Minimally Met;
Credible: Not Met.
Source: MDA data; GAO analysis.
Note: The ratings we used in this analysis are as follows: "met" means
that the program provided documentation that satisfied the criterion;
"substantially met" means that the program provided the majority of
the documentation to satisfy the criterion; "partially met" means that
the program provided documentation satisfying part of the criterion;
"minimally met" means that the program provided documentation
satisfying a minor part of the criterion; and "not met" means that the
program did not provide documentation that satisfied the criterion.
[A] Future Aegis BMD ship software upgrades refer to software version
5.0. See appendix III for details on this software version.
[B] The cost estimate was for a portion of the AN/TPY-2 element's
costs related to two capability deliveries.
[C] The Targets and Countermeasures program manages the short-range,
medium-range, intermediate-range, and intercontinental ballistic
missile efforts.
[End of figure]
The 6 estimates were not fully comprehensive because in some cases
they did not provide enough detail to enable us to determine if all
government and contractor costs had been included, or, in other cases,
did not include the historical data necessary to back up given
assumptions. The estimates were not well documented in some cases
because the estimates lacked documentation necessary to recreate the
estimate, or, in some instances, did not provide enough information on
how cost factors were derived. None of the estimates met the standards
for accuracy because, in some cases the estimates did not provide a
confidence level making it impossible to determine if the estimate was
unbiased and based on most likely costs, did not provide access to the
detailed calculations used in the estimate, or discrepancies existed
on costs among several of the documents provided. Finally, costs
associated with the estimates lacked credibility because none of the 6
estimates performed a cost sensitivity analysis, provided evidence
that cost driver cross checks were performed, or completed independent
cost estimates.
As discussed above, one of the criteria for a credible cost estimate
is having an independent cost assessment. Other DOD major defense
acquisition programs are required to perform an independent cost
estimate before advancing through major milestones.[Footnote 24]
Because of the flexibilities granted in 2002, MDA is not required to
obtain independent cost estimates for its programs, and has not
otherwise required their programs to do so.[Footnote 25] The Office of
the Director for Cost Assessment and Program Evaluation (CAPE) has
performed independent cost estimates for the Aegis BMD program as well
as portions of other MDA programs in the past including the STSS and
GMD programs. More recently, the CAPE performed an independent cost
estimate of THAAD procurement costs. MDA has committed to work with
the CAPE to develop cost estimates for other MDA elements in the
future. MDA's plans to work with the CAPE to develop cost estimates
for more MDA elements will contribute to the credibility of its
estimates.
Although MDA established life cycle cost baselines as part of its
resource baseline for the first time in fiscal year 2010, cost
progress cannot be independently evaluated until MDA reports baselines
that are supported by reliable, high-quality cost estimates and
addresses the issues noted in appendix II.
Schedule Baseline:
The schedule baseline, as presented in the 2010 BAR, is a timeline for
key product development milestones and tasks, such as key decision
points and product deliveries. For the first time, MDA reported
detailed schedule baselines, including information about the program
phase decision points and capability deliveries, element knowledge
points, models and simulations, and product and capability development
efforts. In addition, some schedule baselines also include scheduled
flight and ground test information, as well as fielding and field
support events. For example, the GMD schedule baseline shows fielding
and field support deliveries, such as hardware deliveries, which
includes new and refurbished GBI deliveries; facilities, such as silo
construction; and software upgrades. However, the amount and type of
information presented varies from element to element.
While the amount of information presented is a significant improvement
over that in the 2009 BAR, we found that the asset delivery schedule
reported in the 2010 BAR was not comparable to the asset delivery
schedule in the 2009 BAR. The 2009 BAR included a comprehensive list
of planned asset deliveries, as well as schedule delays and
accelerations. However, the 2010 BAR did not include a comprehensive
list of planned asset deliveries nor did it report variances against
the delivery plans it set in 2009. As a result, we could not track and
analyze the timing and number of asset deliveries using the BAR.
Instead, we had to request detailed information from each program
element. The lack of variance reporting on asset deliveries from 2009
to 2010, coupled with the absence of planned asset deliveries limits
the usefulness of the BAR for oversight.
Test Baseline:
MDA's 2010 BAR includes a schedule of major flight tests, ground
tests, key modeling and simulation events and the primary goals
associated with those tests and events. The test events found in the
BAR are further detailed and explained in MDA's test baseline known as
the Integrated Master Test Plan (IMTP). The IMTP is the management
tool that MDA uses to establish and document test requirements for the
BMDS test program. We reported last year that MDA extensively revised
the IMTP to address concerns that the plan was not effective for
management and oversight because it was revised frequently, only
extended through the following fiscal year and was not well integrated
with other key aspects of testing such as target acquisitions.
[Footnote 26] While the new IMTP still represents a significant
improvement in test planning and transparency for MDA, frequent
revisions to the test baseline due to test failures and/or target
availability, hinders external oversight of MDA's test baseline and
the funding allocated for testing.
More specifically, the revised IMTP extended the test baseline through
2015 and better laid out MDA's test plan by establishing and
documenting the test requirements for the BMDS with specific focus on
collecting the data needed for verification, validation, and
accreditation of the BMDS models and simulations. Also, under the new
plan, each test was designed to test certain criteria, so that,
according to MDA test officials, a failed test did not necessarily
require alteration to the IMTP.
Despite the agency's effort to revamp its test plans, MDA's test plan
remains success-oriented. For example, MDA officials told us that they
do not plan for test failures when developing the test schedule and
that there is no flexibility to absorb test failures. Despite
experiencing several failures in recent years and conducting several
retests, the agency does not build in contingencies for retests in its
test plans. Moreover, according to program officials, there are no
risk reduction flights planned for newly developed targets and MDA
does not budget for extra flight test interceptors. Accordingly,
having a sufficient schedule and funding margin to account for actual
recent experience remains key to a more successful and stable test
program.
Because the IMTP is success-oriented, any problems encountered with
the plan necessitates a change in the plan and frequent changes to
those plans make it difficult to maintain effective oversight of MDA's
test program using the test baselines reported in the BAR. For example
two intercept tests that were planned for the THAAD program in fiscal
year 2010 did not take place because of a target failure in a previous
flight test.[Footnote 27] Additionally, MDA had to alter GMD's planned
flight test schedule for fiscal years 2010 and 2011 in order to
conduct a retest of a prior test--FTG-06--that failed January 2010.
According to the Director, Operational Test and Evaluation, this
retest will likely delay the previous flight test program by at least
6 months. Also, MDA canceled an additional future flight test in order
to conduct the retest, thereby reducing the amount of intercept data
that will be collected.
These frequent changes make it more difficult to track testing
progress and system performance. Moreover, it is unclear what happens
to funding planned for tests within a certain fiscal year when the
test is canceled or moved to a subsequent fiscal year. Each year, as
part of its budget request, MDA justifies its flight test funding
request based on a planned set of specific tests. However, because MDA
is unable to execute its test plan as presented in the BAR and the
budget and does not identify test cost variances in the BAR or the
budget, the connection between the justification for funds and the
actual execution is broken. For example, MDA requested funding for a
GMD flight test--FTG-09. According to the fiscal year 2010 budget
request, this test was scheduled to be conducted in fiscal year 2011
as a salvo test.[Footnote 28] However, because of the noted failure in
FTG-06, this test was canceled. Consequently, reviewing budget
documents and the BAR does not enable us to determine how much was
spent on the FTG-09 test prior to its deletion. Until MDA establishes
or reports a test baseline that is both relatively stable and
synchronized with other key BMDS management documents, such as the
budget, as well as identifies test cost variances, decision-makers
will continue to make decisions based on unstable data that are not
effective for oversight or useful for timely decisions.
Lastly, as in prior years, target availability also continued to
affect MDA's test plans in fiscal year 2010. Since 2006, we have
reported that target availability has delayed and prompted
modifications to planned test objectives. This trend continued in
2010. For example, because of target availability, five tests
scheduled for fiscal year 2010 were canceled because of a moratorium
on air launches of targets. Additionally, target shortfalls have
contributed to delays in flight tests, reduced the number of flight
tests, and altered test objectives. According to MDA officials,
targets were the main driver of the revisions of the test schedule in
the latest IMTP. For additional information regarding target issues
and their effect on BMDS testing, see appendix XII.
Congress established new requirements for Missile Defense baselines,
in December 2010, in the National Defense Authorization Act for Fiscal
Year 2011.[Footnote 29] Several of the shortcomings in the 2010 BAR we
discuss above are addressed in the law as MDA is now required to
submit annual reports on acquisition baselines--to include schedules,
cost estimates, and test baselines--starting February 15, 2011. MDA's
2010 BAR was approved prior to this law. However, we plan to assess
the agency's 2011 BAR against the law's criteria in our 2012 report.
Acquisitions Supporting European PAA Face Synchronization,
Transparency, and Accountability Challenges:
The shift in focus for European missile defense represents the most
comprehensive shift in U.S. Ballistic Missile Defense policy since
2002 when the Secretary of Defense created MDA and the President
directed the fielding of an initial set of missile defense
capabilities by 2004. To assist Congress in its review of this policy
shift and its implications, we were asked to assess DOD's efforts to
implement the phased adaptive approach for Ballistic Missile Defense
in Europe. In December 2010, we issued a correspondence on acquisition
management and near-term development risks related to the European
PAA.[Footnote 30] In January 2011, we reported on (1) the extent to
which DOD has developed guidance and addressed management of cost and
schedule in the planning and implementation of the European PAA and
(2) the extent to which DOD planning for the European PAA is informed
by operational performance data.
In our January report on the European PAA, we recommended actions to
enable effective oversight of the European PAA, including
establishment of a life cycle cost estimate to help assess
affordability and an integrated schedule to help identify European PAA
implementation risks.[Footnote 31] With respect to acquisition
management for the European PAA, our December 2010 report found that
DOD has not fully implemented a management process that synchronizes
European PAA acquisition activities and ensures transparency and
accountability. At the time of our review, DOD had made progress in
acquisition planning for technology development and systems
engineering and testing and partial progress in defining requirements
and identifying stakeholders but had not yet developed a European PAA
acquisition decision schedule or an overall European PAA investment
cost. We found that the limited visibility into the costs and schedule
for the European PAA and the lack of some key acquisition management
processes reflect the oversight challenges with the acquisition of
missile defense capabilities that we have previously reported. The
consequences of these issues have included limited means of
independently assessing progress and a limited basis for oversight and
the department entering into production before fully demonstrating
system performance, leading to rework, cost increases, delays, and
uncertainties about delivered capabilities. We concluded that for the
European PAA, the flexibility desired by DOD is not incompatible with
appropriate visibility into key aspects of acquisition management. As
DOD proceeds with the European PAA acquisition activities, it is
important for Congress and the President to have assurance that the
European PAA policy is working as intended and that acquisition
activities are cost-effective.
In response to our December 2010 report, DOD stated that it disagreed
with GAO's approach to assess the European PAA as what it termed a
"near-distinct" element of the BMDS, rather than DOD's decision to
employ the department's existing processes. As we have consistently
reported, the department's existing processes for developing and
acquiring missile defense have transparency and accountability issues
that limit oversight and preclude assessing overall progress and limit
opportunities for constructive action to put programs in a better
position to succeed. The principles we used to assess the European PAA
are embedded in the department's acquisition guidance as well as the
Office of Management and Budget's guidance for capital programming
across federal agencies, particularly as it relates to bringing
together and synchronizing multiple development efforts. Although we
understand that the European PAA is a policy approach, not an
acquisition program, it nonetheless represents an arrangement of
significant investments, it requires a high degree of coordination and
technical integration, and the progress implementing the European PAA
continues to be of congressional interest. Thus, we reported that we
continue to believe these acquisition management principles serve as a
useful, appropriate and beneficial standard by which to assess the
department's approach to managing European PAA acquisitions.
European PAA Acquisition Schedules Are Highly Optimistic:
We have consistently reported that a sound, executable acquisition has
firm requirements, mature technologies, and a strategy that provides
sufficient time and money for design activities before making the
decision to start system development and demonstration or to
transition to production. The administration's European PAA policy
committed DOD to a schedule before the scope of system development
effort was fully understood. DOD is working to develop plans for
implementation within the constraints of policy time frames; however,
system schedules are highly optimistic in technology development,
testing, production, and integration, leaving little room for
potential delays. As efforts to meet near-term commitments unfold, the
schedule for delivering capabilities may be difficult to achieve and
resources needed may grow. (See table 4.)
Table 4: Some System Development Risks Exacerbated by European PAA
Schedule Compression:
BMDS element/area: Command, Control, Battle Management, and
Communication (C2BMC);
Issues/risks: The C2BMC element, which is designed to integrate the
BMDS capabilities and provide planning, situational awareness, sensor
management, and battle management, may present an incorrect picture of
the battle space because it may not accurately group threat missile
tracks to reduce multiple cues from sensors about the tracks.
BMDS element/area: Aegis Ashore;
Issues/risks: The Aegis BMD weapon system currently in service on
ships will require modifications for use on land as Aegis Ashore. The
contract for Aegis Ashore's new deckhouse was awarded prior to key
design reviews for Aegis Ashore and we have reported that such
sequencing can lead to costly modifications later in the process.
Aegis Ashore developmental flight test intercept events have been
reduced from five to two, the first intercept test is delayed more
than a year, and testing is not timed to inform production commitments.
BMDS element/area: Aegis Ballistic Missile Defense (Aegis BMD) SM-3 IB;
Issues/risks: Target availability delayed a key flight test expected
to demonstrate performance of Aegis BMD 3.6.1 with Standard Missile-3
Block IA for European PAA Phase I. Progress of Aegis 4.0.1 with SM-3
Block IB is limited by delay in development of Throttleable Divert
Attitude Control System (TDACS), an interceptor component. Aegis BMD
5.0 features highly integrated hardware and software and is a key
dependency of the new Aegis Ashore program.
BMDS element/area: Terminal High Altitude Area Defense (THAAD);
Issues/risks: Some production risks for THAAD batteries including an
incomplete system and some component qualification, potential design
changes, and demonstrated production rates for interceptor components
not supporting production needs, have caused a more than a 6-month
delay in production.
BMDS element/area: Interoperability and Assessment of Integrated
System Performance;
Issues/risks: As a system of systems, the BMDS is expected to perform
as a whole, not just the sum of its individual parts;
thus technical interoperability and integration among individual
systems is key to whole system performance. Ability of testing and
assessment plans to fully demonstrate BMDS capabilities in regional
context is constrained by existing limitations in models and
simulations. These limitations include incorrect representations of
how BMDS elements are linked in the real world and can result in
overstating integrated system performance. Interoperability with
friends and allies is uncertain. Who will contribute, how, and the
degree of technical feasibility and investment to interoperate with
other nations has yet to be determined.
Source: GAO analysis of DOD data.
[End of table]
New GMD Strategy Curtails Planned Operational Quantities, and It May
Take Years to Understand Capabilities, Limitations, and Sustainability:
Another significant change made for 2010 included a reduction in the
number of planned emplaced GBIs from 44 to 30. In making this
reduction, the Secretary of Defense stated that 30 GBIs provide an
adequate near-term defensive capability for the United States, while
allowing for testing and resolution of problems with interceptor
technology.[Footnote 32] According to the Ballistic Missile Defense
Review, over the past few years, MDA accelerated development of the
homeland defense by simultaneously developing and fielding assets.
This step was taken largely in order to facilitate the deployment of
GBIs in time to coincide with the expected deployment of
intercontinental ballistic missiles by North Korea. That projected
intercontinental ballistic missile deployment has not yet occurred and
consequently, DOD concluded that it is unnecessary to continue to
accept the same level of programmatic risk in the GMD program going
forward. Rather, the department plans to focus homeland defense on
maintaining the current level of capability and developing future,
proven capabilities to enhance homeland defense should a new threat
emerge while still maintaining current GMD capabilities.
We were mandated by the Congress in 2009 to examine a DOD assessment
and plan related to the GMD system, that included issues related to
acquisition, sustainment and refurbishment. We found that while the
GMD system has demonstrated a limited capability, DOD has not yet
determined the system's full capabilities and limitations. According
to the Director of Operational Test and Evaluation's fiscal year 2010
assessment, ground tests support characterization of GMD performance
and test results suggest that GMD provides a capability to defend the
United States against limited, uncomplicated, long-range ballistic
missile threats. However, lack of sufficient data for comprehensive
model and simulation validation and accreditation continues to
preclude a full performance evaluation of GMD. Even though GMD
continued to further develop its capability in fiscal year 2010, the
GMD program has been unable to successfully achieve all of its testing
objectives since 2005. Testing shortfalls continued in fiscal year
2010 when GMD failed to achieve an intercept during Flight Test Ground-
based Interceptor (FTG)-06. As we previously reported, FTG-06 was
planned as the first test of GMD's enhanced version of the kill
vehicle called the Capability Enhancement II (CE-II). Additionally, we
noted that MDA stated that the CE-II interceptors would not be
declared operational until the satisfactory completion of FTG-06. As a
result of the failure in FTG-06, MDA inserted[Footnote 33] FTG-06a,
which also failed to achieve an intercept in December 2010.[Footnote
34]
Despite testing delays, shortfalls, and failures, MDA has continued to
deliver assets. For example, neither the Capability Enhancement I (CE-
I) or CE-II Exoatmospheric Kill Vehicle (EKV) has verified its
capability against countermeasures--a capability it expected to
demonstrate for the CE-I in 2008. Failures in both the target and the
interceptors over several years have prevented collecting this
information. Moreover, the CE-II EKV has not successfully intercepted
a target. Despite these shortfalls all CE-I EKVs have been delivered
and the manufacturing and emplacements of the CE-II EKV continued in
2010. According to the Director, MDA, based on the issues that arose
in FTG-06a, he directed the agency to stop taking deliveries of any
more completed CE-II EKVs. MDA officials stated that the agency is
allowing the contractor to continue to work on those components of the
EKV that would not be factors in the FTG-06a flight test anomaly in
order to keep the production line moving and to allow a rapid recovery
of deliveries once the failure investigation team determines likely
cause or causes and develops either design changes or mitigations.
However, based on our assessment of the GMD developmental flight test
plan that was scheduled to continue until 2021, even with this delay,
most CE-II EKVs will be manufactured and delivered prior to completing
the developmental flight tests and validating their capability.
Delays in collecting data to fully understand capabilities and
limitations also hinder GMD's efforts to adequately plan sustainment
efforts.[Footnote 35] In fiscal year 2010, the Director of MDA stated
that the GMD program is expected to be in service until 2032. However,
in certain cases, the agency is just beginning to collect necessary
sustainment data that would support the service life. In addition, the
collection of this data is incomplete and, in many cases, will not be
completed for many years. Table 5 lists several activities that are
necessary to inform sustainment efforts and their status. Appendix IX
provides additional details regarding GMD sustainment efforts.
Table 5: Status of Activities Needed to Inform GMD Sustainment Efforts:
Activity necessary to inform sustainment effort: Stockpile Reliability
Plan;
Status of activity:
* Finalized September 30, 2010.
Activity necessary to inform sustainment effort: Aging and
Surveillance Test Program;
Status of activity:
* Began data collection in 2008 on certain components;
* Lack of spare parts hinders collection of key data;
* No specific CE-II EKV components are undergoing aging and
surveillance testing;
* Planned completion: To be determined based on the quality of data
gathered.
Activity necessary to inform sustainment effort: Developmental Flight
Test Program;
Status of activity:
* Expected completion: 2021.
Activity necessary to inform sustainment effort: Reliability,
Availability, Maintainability, and Testability;
Status of activity:
* Reliability, availability, and maintainability was not designed into
certain GMD components;
* Started gathering limited data in 2007;
* Planned completion: To be determined.
Source: MDA data.
[End of table]
Decisions on Acquisition of Targets in Fiscal Year 2010:
MDA initiated a new targets acquisition plan in 2009 which called for
separate contract awards for different classes of targets, including
medium-range, intermediate-range, and intercontinental targets. This
plan was undertaken in response to GAO findings regarding cost,
schedule and performance problems with the previous targets
acquisition approach.[Footnote 36] MDA conducted a business case
analysis in order to identify a new acquisition plan that could
address these problems. This new approach was to seek separate,
competitive contract awards for different classes of targets, allowing
MDA to benefit from greater opportunities for competition and reducing
the role of the prime contractor. In fiscal year 2010, as part of this
strategy, MDA issued two solicitations: one for medium-range targets,
and another for intermediate-range targets. However, the agency
canceled the solicitation for medium-range targets after receiving
proposals. According to MDA officials, the proposals received were
more expensive than anticipated. MDA officials cited higher-than-
expected costs for the proposals received on the medium-range
solicitation as the primary reason it was canceled, but the
information they provided did not show detailed analysis of the effect
of the cancellation on the cost and schedule assumptions of the
business case. The cost effects of this change remain unknown.
According to targets program officials, they may issue a new
competitive solicitation for medium-range targets, but they have not
yet done so. MDA also issued a draft solicitation for intercontinental-
range targets in September 2010, but canceled the solicitation in
February 2011 before it was finalized.[Footnote 37]
Separately, MDA also issued a new undefinitized contract action in the
second quarter of fiscal year 2010, which asked the incumbent prime
contractor to build five new medium-range air-launched targets.
[Footnote 38] MDA officials stated that this action was in response to
the target failure in the FTT-11 flight test, and was not related to
the cancellation of the medium-range solicitation. Undefinitized
contract actions authorize contractors to begin work before reaching a
final agreement on contract terms. The current "not-to-exceed" level
for the contract action is $496 million. MDA has allowed this
undefinitized contract action to continue for an extended period--over
290 days as of January 2011.[Footnote 39] According to MDA officials,
the delay in definitization is due to changes in its requirements for
the targets, and they anticipate definitization in July 2011, by which
time the contract action will have remained undefinitized for about
450 days. The extended use of undefinitized contract actions has
previously been identified by GAO and others as risky for the
government. Because contracting officers normally reimburse
contractors for all allowable costs they incur before definitization,
contractors bear less risk and have little incentive to control costs
during this period. The government also risks incurring unnecessary
costs as requirements may change before the contract is definitized.
According to MDA officials, acquiring these new medium-range air-
launched targets through an undefinitized action was necessary in
order to meet the testing schedule. Documentation provided by the
agency showed only limited analysis prior to the decision to award the
undefinitized contract action. Officials recognized that this approach
would add to the cost of targets compared to the Air Force contract
vehicle they had previously used, but because the action remains
undefinitized, the agency does not yet know the final price of these
targets. For more detailed information regarding targets during fiscal
year 2010, see appendix XII.
Overall Performance of the BMDS Still Cannot Be Assessed Due to Models
and Simulations Challenges and Shortfalls in Testing:
For the eighth year, we are unable to report on the overall
performance of the BMDS because MDA models and simulations have not
matured sufficiently and may not be fully mature until 2017. Because
the potential combinations of BMDS configurations, intercept
scenarios, and missile threats are too numerous for ground and flight
testing, assessing overall BMDS performance depends upon the use of
models and simulations to understand the capabilities and limitations
of the system. Such an end-to-end system-level simulation brings
together the capabilities of various element models in order to
analyze how the BMDS integrated and fielded radars, communication
systems, and interceptors perform during scenarios. To work
effectively, these models and simulations need to be anchored to data
from ground and flight tests and validated by independent evaluators--
the BMDS Operational Test Agency (OTA)--in order to have confidence in
their results. Moreover, the system-level simulation itself is
expected to change over time as additional models become available to
represent the evolving BMDS configuration. Until models and
simulations are accredited and validated, BMDS performance cannot be
fully assessed.
In fiscal year 2010, MDA began execution of its revamped IMTP to
collect the data needed to accredit the models and simulations used
for assessing BMDS performance. The agency was able to conduct several
BMDS element tests that generated data needed to accredit models and
simulations as well as assess performance for individual BMDS
elements. For example, in June 2010 during a GMD booster verification
test, C2BMC was able to collect data for accreditation of its models
and simulations while demonstrating command and control of a key BMDS
radar. In addition, in August 2010, MDA and the BMDS OTA conducted a
ground test referred to as Ground Test Integrated-04b (GTI-04b), to
demonstrate functionality, interoperability, and performance of the
BMDS and to characterize BMDS element capabilities. According to the
Director of Operational Test and Evaluation, this test provided the
most accurate representation to date of the BMDS including GMD for
characterization of performance as well as insight into GMD
functionality, interoperability, and performance within the BMDS. Test
results suggested that GMD provides a capability to defend the United
States against limited long-range ballistic missiles with
uncomplicated, emerging threat reentry vehicles.
While some individual BMDS elements' models and simulations provided
insight into their interoperability and performance within the BMDS,
BMDS OTA officials told us that current BMDS system-level modeling and
infrastructure are inadequate to assess the overall performance of the
BMDS. BMDS OTA officials told us that the current IMTP focuses on data
needed to accredit element-level models, but it does not address
system-level integrated performance. In an August 2009 memorandum to
MDA, the BMDS OTA and the Joint Functional Component Command for
Integrated Missile Defense, referred to as the Warfighter, identified
testing requirements that are needed to assess BMDS performance. More
importantly, in this memorandum both the BMDS OTA and the Warfighter
alerted MDA that there were a number of system-level model,
infrastructure, and stimuli limitations that adversely affected the
OTA's ability to assess BMDS performance. The Warfighter and the BMDS
OTA require testing to reflect realistic representations of strategic
and regional/theater defense designs with the full complement of
fielded BMDS assets. The BMDS OTA and the Warfighter noted that as the
BMDS matures and fielded assets increase, modeling and simulation
capabilities and laboratory representations of BMDS assets must keep
pace to maintain operational realism. However, they stated that
current laboratory and model and simulation limitations prevent full
asset representation and fail to test the loading that would occur on
the communication links as well as the complexity of a full regional/
theater conflict on command and control nodes. This limitation
severely affects event execution and the ability of the Warfighter to
make informed decisions relative to the operational readiness and
capability of BMDS elements.
In addition, as with previous years, failures and delays in testing
have continued to delay the validation of the models and simulations
used to assess the overall performance of the BMDS. GMD, Sensors and
THAAD were able to conduct several key flight tests demonstrating
element performance; however, each also failed to achieve all planned
fiscal year objectives. Additionally, the C2BMC element successfully
participated in multiple element tests and completed some ground tests
needed to declare a new software configuration operational. Aegis BMD
and STSS were unable to conduct either of their planned developmental
flight tests for fiscal year 2010. For specific details regarding each
element's annual testing accomplishments, delays, and failures, see
the individual element appendixes.
Conclusions:
Last year we noted that as MDA transitioned to new leadership, a new
acquisition strategy, a new test strategy, and a shift in emphasis
toward early intercept capabilities, the agency had an opportunity to
chart a course that enables transparency and accountability as well as
flexibility. We also noted that the Director of MDA had begun new
initiatives in accordance with guiding principles of DOD's acquisition
policies, which already embrace knowledge-based practices and sound
management controls. This year we began to see the fruit of those
efforts as MDA applied these new policies and began to provide a
better foundation for Congress and others to assess progress and hold
senior leadership accountable for outcomes. However, while it is
undoubtable that some progress has been made in terms of implementing
new acquisition reviews and reporting detailed baselines, there remain
critical gaps in both the material reported and particularly the
quality of the underlying cost estimates needed to establish baselines.
In addition, the department has undertaken another series of
significant changes to the acquisition focus of MDA. The decision in
2010 to shift the focus of acquisitions from strategic to regional
missile defense brings with it a host of significant challenges for
MDA and the department. Ensuring that these changes are properly
analyzed, efforts are properly synchronized and the resulting
decisions are communicated and justified will require significant
attention from top departmental leaders.
Lastly, fundamental to accountability and oversight is being able to
establish a sound plan and to track actual performance against that
plan. For a variety of reasons, including a lack of baselines and
changing goals and methods for tracking progress, we have not been
able to report with any confidence or consistency on how the missile
defense program has performed against its plans or expectations these
past 8 years. Thus, it is imperative that the latest policy
initiatives be sustained in a way that provides consistent, complete
and reliable reporting of progress and variances against those
baselines from year to year. The baseline structure MDA established in
2010 is a good start and represents a reasonable basis for reporting
progress and variances in the future, and thus should be safeguarded
for several years.
Recommendations for Executive Action:
We recommend that the Secretary of Defense direct MDA to undertake the
following 10 actions to strengthen its baselines, facilitate external
and independent reviews of those baselines, ensure effective oversight
of the BMDS, and further improve transparency and accountability of
its efforts. Several of these recommendations relate to how DOD may
meet the new statutory requirements to establish and report baselines
under the Ike Skelton National Defense Authorization Act for Fiscal
Year 2011.
To improve clarity, consistency, and completeness of the baselines
reported to Congress, the Secretary of Defense should ensure that MDA
takes the following actions:
1. For resource baselines:
a) Provide more detailed explanations and definitions of information
included in resource baselines; particularly operations and support
costs and unit cost calculations.
b) Label cost estimates to appropriately reflect the content reported
and explain any exclusions.
c) Include all sunk costs in all of its cost estimates and baselines.
d) Obtain independent cost estimates for each baseline.
In meeting new statutory requirements to include a cost estimate in
each acquisition baseline for a program element, take steps to ensure
these cost estimates are high quality, reliable cost estimates that
are documented to facilitate external review.
2. For schedule baselines:
a) In meeting new statutory requirements to report on an acquisition
baseline including a comprehensive schedule, include a comprehensive
list of actual versus planned quantities of assets that are or were to
be delivered each fiscal year.
b) In meeting new requirements to report variances on acquisition
baselines, report on variances of these quantities by fiscal year and
the reasons for these differences.
3. For test baselines:
a) In meeting new statutory requirements to report variances between
reported acquisition baselines, also report variances between the test
plan as presented in the previous acquisition baseline and the test
plan as executed that explain the reason for any changes.
b) Report the cost effects of those test changes in either the BAR or
the budget justification documentation.
In order to stabilize the test plan and ensure the test baseline can
absorb test failures and test delays and remains executable, the
Secretary of Defense should ensure that the Missile Defense Agency:
4. Includes sufficient schedule and resource margin, including spare
test assets and targets, based on recent test experience and
forecasted testing demands.
Agency Comments and Our Evaluation:
DOD provided written comments on a draft of this report. These
comments are reprinted in appendix I. DOD also provided technical
comments, which were incorporated as appropriate.
DOD fully concurred with 7 of our 10 recommendations, including our
recommendations to take steps to ensure its cost estimates are high-
quality, reliable cost estimates that are documented to facilitate
external review. In response to this recommendation, DOD stated that
MDA will follow the GAO Cost Estimating and Assessment Guide for each
program reported in the BAR. In doing so, MDA Cost Estimating and
Analysis Directorate plans to form a cost assessment group to formally
assess each cost estimate to ensure they are well documented,
comprehensive, accurate, and credible. DOD also fully concurred with
our recommendation to report the cost effects of its test changes in
either the BAR or budget justification documentation, stating that MDA
will provide the cost effects as part of the individual program
resource baselines starting in the 2012 BAR.
DOD partially concurred with our recommendation that the Secretary of
Defense direct MDA to include all sunk costs in all of its cost
estimates and baselines. DOD stated that MDA will continue to report
sunk costs in most of its acquisition programs except targets, where
it will continue to report unit costs in the same manner as the 2010
and 2011 BARs. According to DOD, because each target is inherently a
test article and no two are identical, there are always variable non-
recurring costs associated with each article. Also, due to the
extensive reuse of previous strategic missile components in the
targets program, including all sunk costs does not reflect MDA program
costs accurately. Accordingly, MDA will use the costs incurred/planned
during the future years defense plan to calculate unit costs. These
unit costs will not include any sunk costs. We continue to believe
that all costs, including all sunk costs incurred for individual
target efforts, should be reported to the maximum extent possible,
regardless of the agency or service that originally incurred those
costs. To the extent that a sunk cost, such as the original cost of
previous strategic missile components, can not be calculated, that
fact should be explained when the costs are reported. Moreover, DOD's
method of reporting and baselining target unit costs will not reflect
even MDA program costs accurately because it excludes MDA-incurred
sunk costs. Excluding these costs, which can run into the hundreds of
millions of dollars, precludes understanding of the full investment
required to develop and procure targets, as well as limiting insight
into developmental progress. In addition, the incomplete costs
reported will be changed every two years because, as DOD noted, MDA
uses only the costs for the future years defense plan to calculate the
target unit cost baselines. The future years defense plan covers a six
year period of time, but changes every two years to a new six year
period of time. Calculating unit costs this way provides neither the
full cost nor the full quantities of targets as it removes any costs
or quantities prior to fiscal year 2010. We therefore continue to
believe that including these costs will aid departmental and
congressional decision makers as they make difficult choices of where
to invest limited resources.
DOD also partially concurred with our recommendation that the
Secretary of Defense direct MDA to report, in its annual reports on
acquisition baselines, variances in quantities of assets by fiscal
year that are or were to be delivered each fiscal year and the reasons
for these differences. DOD stated that a change in an asset quantity
in a fiscal year may drive a reportable BMDS schedule variance and
noted that any changes in asset quantities would also be reflected in
unit costs and in the technical baseline. In a separate response, DOD
stated that in meeting new statutory requirements, MDA will report a
comprehensive list of actual versus planned assets that are or will be
delivered each fiscal year. MDA, in its 2009 BAR, included a
comprehensive list of actual versus planned quantities of assets that
were to be delivered each fiscal year as its schedule baseline,
identified the criteria for reporting schedule variances, and also
planned to provide the rationale for any variances. MDA is now
statutorily required to establish an acquisition baseline for each
element that includes a comprehensive schedule, including delivery and
fielding schedules. In addition, because DOD has stated that they will
include actual versus planned quantities when meeting annual baseline
reporting requirements, we continue to believe that additionally
reporting the rationale for these variances, as MDA had previously
committed to, would benefit departmental and congressional decision
makers as they meet their obligations to manage and oversee this
effort.
DOD also partially concurred with our recommendation that the
Secretary of Defense direct MDA to include sufficient schedule and
resource margin, including spare test assets and targets, based on
recent test experience and forecasted testing demands. DOD responded
that maintaining cost/schedule margins and additional targets is not
cost effective. Instead, DOD stated that MDA will conduct an event-
oriented test and acquisition decision-based program and update the
test plan frequently to reflect the status of test execution. In
addition, DOD noted that MDA will use a "rolling spare" approach to
targets. We remain concerned about MDA's inability to successfully
execute those plans. MDA changed its approach to testing 2 years ago,
after struggling for years to successfully execute the test plan,
instituting a more rigorous planning effort. However, despite
increased attention to defining and resourcing its test plan, it has
been unable to stabilize and execute the plan successfully. Without a
change in its approach, MDA is almost certain to continue to set and
reset test plans that are immediately unexecutable soon after they are
reset. This approach incurs significant hidden or unplanned costs as
testing is delayed and test plans are restructured. As we testified
February 25, 2009, the success of MDA's test planning hinges on
properly resourcing the tests with sufficient time, funding and
reliable targets.[Footnote 40] Our current recommendation, based on
the experience of the last 2 years, is designed to help stabilize the
test plan and reduce the frequency and effort required to reset the
test plan while gathering the knowledge MDA has decided it needs as
efficiently as possible. Until MDA adds sufficient cost and schedule
margin, including additional interceptors and targets, it will
continue to achieve less testing, at a greater cost than planned. We
therefore continue to believe that the department and Congress would
benefit if test plans incorporate reasonable cost and schedule margins.
Lastly, DOD identified 35 "factual errors" in its technical comments.
However, upon review we found that 7 of the 35 were not errors of
fact, but rather different conclusions; 6 we determined were errors in
DOD's official comments, 12 required additional substantiation that
was not provided or were material previously requested but could not
be assessed during this review because the extensive delay left no
time for analysis; and lastly 10 we determined were actual errors of
facts and we therefore made the appropriate changes in those cases.
We are sending copies of this report to the Secretary of Defense and
to the Director of MDA. The report also is available at no charge on
the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-4841 or chaplainc@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Major contributors to this report are
listed in appendix XV.
Signed by:
Cristina Chaplain:
Director:
Acquisition and Sourcing Management:
List of Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Thad Cochran:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Howard P. McKeon:
Chairman:
The Honorable Adam Smith:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable C.W. Bill Young:
Chairman:
The Honorable Norman D. Dicks:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
Appendix I: Comments from the Department of Defense:
Office Of The Under Secretary Of Defense:
Acquisition, Technology And Logistics:
3000 Defense Pentagon:
Washington, DC 20301-3000:
March 15, 2011:
Ms. Cristina Chaplain:
Director, Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Chaplain:
This is the Department of Defense (DoD) response to the GAO Draft
Report, GA0-11-372, "Missile Defense: Actions Needed to Improve
Transparency and Accountability," dated February 25, 2011 (GAO Code
120904).
The DoD concurs with seven of the draft report's recommendations and
partially-concurs with three. The rationale for our position is
included in the enclosure. I submitted separately a list of technical
and factual errors for your consideration.
We appreciate the opportunity to comment on the draft report. My point
of contact for this effort is Mr. David Crim, David.Crim@osd.mil, 703-
697-5385.
Sincerely,
Signed by:
David G. Ahern:
Deputy Assistant Secretary of Defense:
Portfolio Systems Acquisition:
Enclosure: As stated:
[End of letter]
GAO Draft Report Dated February 25, 2011:
Gao-11-372 (Gao Code 120904):
"Missile Defense: Actions Needed To Improve Transparency And
Accountability"
Department Of Defense Comments To The GAO Recommendations:
Recommendation 1: The GAO recommends that the Secretary of Defense
direct Missile Defense Agency (MDA) to:
a) Provide more detailed explanations and definitions of information
included in resource baselines; particularly operations and support
costs and unit cost calculations.
b) Label cost estimates to appropriately reflect the content reported
and explain any exclusions.
c) Include all sunk costs in all of its cost estimates and baselines.
d) Obtain independent cost estimates for each baseline.
e) In meeting new statutory requirements to include a cost estimate in
each acquisition baseline for a program element, take steps to ensure
these cost estimates are high quality, reliable cost estimates that
are documented to facilitate external review.
DOD Response:
la) DoD concurs with the recommendation.
lb) DoD concurs with the recommendation.
lc) Partially Concur. MDA will continue to report sunk costs in most
of its acquisition programs except targets. Specifically, MDA will
continue to report unit costs for their targets in the same manner as
the 2010 and 2011 Ballistic Missile Defense System (BMDS) Accountability
Reports (BARS). Because each target is inherently a test article and
no two are identical, there are always variable non-recurring costs
associated with each article. Due to the extensive reuse of previous
strategic missile components in our targets program, including all
sunk costs does not reflect MDA program costs accurately. Accordingly,
MDA will use the costs incurred/planned during the FYDP to calculate
unit costs. These unit costs will not include any sunk costs.
1d) DoD concurs with the recommendation. The Department is using Cost
Assessment and Program Evaluation Independent Cost Estimates (10Es)
for MDA programs.
le) DoD concurs with the recommendation. MDA will ensure it has a high
quality, reliable cost estimate, completed and documented in
accordance with the GAO Cost Estimating and Analysis Guide for each
program reported in the BAR. To help ensure this, MDA Cost Estimating
and Analysis Directorate plans to form a cost assessment group to
formally assess each cost estimate to ensure they are well documented,
comprehensive, accurate, and credible.
Recommendation 2: The GAO recommends that the Secretary of Defense
direct Missile Defense Agency to:
a) In meeting new statutory requirements to report on an acquisition
baseline including a comprehensive schedule, include a comprehensive
list of actual versus planned quantities of assets that are or were to
be delivered each fiscal year.
b) In meeting new requirements to report variances on acquisition
baselines, report variance of these quantities by fiscal year and the
reasons for these differences.
DOD Response:
2a) Concur. MDA will meet statutory requirements on acquisition
baseline reporting, including comprehensive schedules, and will
include a comprehensive list of actual versus planned quantities of
assets that are or will be delivered each fiscal year.
2b) Partially Concur. A change in an asset quantity in a fiscal year
may or may not drive a BMDS schedule variance. Changes in asset
quantities are likely to affect Unit Cost (resource baseline). Changes
in asset delivery schedule may affect BMDS performance (technical
baseline). Changes to each baseline are reported. Each baseline has
thresholds defining when changes become variances.
Recommendation 3: The GAO recommends that the Secretary of Defense
direct Missile Defense Agency to:
a) In meeting new statutory requirements to report variances between
reported acquisition baselines, also report variances between the test
plan as presented in the previous acquisition baseline and the test
plan as executed that explain the reason for any change.
b) Report the cost effects of those test changes in either the BMDS
Accountability Report (BAR) or budget justification documentation.
DOD Response:
3a) DoD concurs with the recommendation.
3b) DoD concurs with the recommendation. MDA will provide the cost
effects of test changes as part of the individual program resource
baselines starting in the 2012 BAR.
Recommendation 4: The GAO recommends that the Secretary of Defense
direct Missile Defense Agency to include sufficient schedule and
resource margin, including spare test assets and targets, based on
recent test experience and forecasted testing demand.
DOD Response: Partially Concur. Maintaining cost/schedule margins and
additional targets is not cost effective. Instead, MDA will conduct an
event-oriented test and acquisition decision based program and update
the Integrated Master Test Plan frequently to reflect status of test
execution. MDA will use a "rolling spare" approach to targets.
[End of section]
Appendix II: Assessment of MDA Resource Baselines:
We reviewed 12 resource baselines for Ballistic Missile Defense System
(BMDS) elements' efforts as presented in the June 2010 BMDS
Accountability Report (BAR) including:
* Aegis Ashore;
* Aegis Ballistic Missile Defense (BMD) Standard Missile 3 (SM-3)
Block IB missiles and associated software upgrades for ship sets;
* future Aegis BMD ship software upgrades;
* two capability deliveries for Army Navy/Transportable Radar
Surveillance (AN/TPY-2);
* Command and Control, Battle Management, and Communications (C2BMC)
Spiral 6.4;
* Ground-based Midcourse Defense (GMD);
* two capability deliveries for the Sea Based X-Band (SBX) Radar;
* current Terminal High Altitude Area Defense (THAAD) capability
configuration; and:
* Targets and Countermeasures program short-range ballistic missile;
* Targets and Countermeasures program medium-range ballistic missile;
* Targets and Countermeasures program intermediate-range ballistic
missile; and:
* Targets and Countermeasures program intercontinental ballistic
missile target efforts.[Footnote 41]
The Missile Defense Agency (MDA) presented baselines for both unit
costs and portions of, and in some cases all, life cycle costs in the
2010 BAR. MDA presented unit cost baselines for specific assets of
each element as well as baselines for cost components of the element
including development, production and deployment, and military
construction costs. As a result, there can be multiple baselines for
each element. MDA expressed the majority of its unit costs as program
acquisition unit cost (PAUC) or average procurement unit cost (APUC).
The APUC is the total procurement funds divided by the fielded
quantity, and was included as part of MDA's unit cost baselines for
the first time in the 2009 BAR.[Footnote 42] The PAUC is the total
cost for the development and procurement of the acquisition program
divided by the total quantity, and was included for most of the
elements for the first time in the 2010 BAR in response to GAO
recommendations.[Footnote 43] MDA's 2010 BAR also presented, for the
first time, a baseline for portions of, and in some cases all, life
cycle costs based on life cycle cost estimates for several BMDS
components.
Other major defense acquisition programs[Footnote 44] are required by
statute to describe program goals in an acquisition program baseline
that, as implemented by the Department of Defense (DOD), has been
approved by a higher-level DOD official prior to the program's
initiation.[Footnote 45] The baseline, derived from the best estimates
of cost, schedule, and performance requirements, provides decision
makers with the program's total cost for an increment of work, unit
costs for assets to be delivered, the date that an initial operational
capability will be fielded, and the weapon's intended performance
parameters. The baseline, according to DOD acquisition guidance,
includes cost parameters that should reflect realistic cost estimates
of the total program and/or increment, and should contain cost
parameters for major elements of program life-cycle cost.[Footnote 46]
The elements of a program's life-cycle cost include research,
development, test, and evaluation; production and deployment; military
construction; operation and sustainment; and disposal costs. Once
approved, major defense acquisition programs are required to measure
their program against the baseline. The threshold application of these
laws and policies related to baselines are typically triggered by a
program's entry into engineering and manufacturing development
(formerly system development and demonstration)--a phase in the DOD
acquisition cycle during which the weapon system is designed and then
demonstrated in tests. The BMDS has not formally entered into the DOD
acquisition cycle, therefore this requirement does not yet apply.
[Footnote 47]
The Resource Baselines Reported in the BAR Do Not Provide Clear,
Consistent and Complete Information:
Parts of the 2010 resource baselines were unclear because MDA used
particular terms that did not always appear to accurately describe the
costs and baselines it was reporting. For example, MDA presented "life
cycle costs" in several resource baselines but it was unclear in the
BAR whether these costs cover the full range of cost categories or
cost components normally included in a life cycle cost estimate. In
addition, although MDA presented baselines for some of the costs, and,
in other cases, all of the costs included in its life cycle costs,
program officials told us that they mistakenly baselined operation and
sustainment costs in the 2010 BAR and intend to remove those baselines
in the 2011 BAR. Officials also told us that they do not plan to
report variances in future BARs for any of the remaining development
and production costs that are baselined. The operation and sustainment
costs that MDA did report in the BAR were incomplete and unclear
because, except in one case, they did not include the costs borne by
the services and there was no explanation in the BAR for these
exclusions. The resource baselines also included many inconsistencies
that were unexplained in the BAR. For example, MDA did not report unit
cost variances that could have been reported and MDA presented
alternate versions of unit costs without explaining how these unit
costs were constructed. There also appeared to be instances of
underestimating life cycle costs when we compared the time-phased
estimate to the life cycle cost baseline. It was unclear why these
inconsistencies existed for the life cycle cost baselines because MDA
did not explain in the BAR how any portions of the life cycle costs
were baselined.
Although MDA termed one section of its resource baseline "life cycle
costs," the use of the term is misleading because in some cases the
reported totals appeared to only partially reflect all the main life
cycle cost categories. These categories normally include research and
development, production and deployment, operation and sustainment, and
disposal costs. Life cycle should be thought of as a "cradle to grave"
approach to managing a program throughout its useful life. This
usually entails identifying all cost elements that pertain to the
program from initial concept all the way through operations, support,
and disposal. For some of the elements, not all of these cost
categories were identifiable in the figures reported and as a result
it appears that the totals reported were mislabeled as life cycle
costs. Specifically, it appeared that the Aegis Ashore and future
Aegis BMD ship software upgrades elements may not have included
operation and sustainment costs. It also appeared that none of the 12
baselines reported disposal costs. No explanation was given in the BAR
for the exclusion of either of these cost categories or why the term
life cycle cost is appropriate for what was reported.
In another instance, the information reported in three of the four
Targets and Countermeasures resource baselines was not complete
because sunk costs were excluded from the life cycle cost baselines.
[Footnote 48] The short-range ballistic missile effort excluded more
than $400 million in sunk costs from its baseline, to leave less than
43 percent of its total estimated costs baselined. The intermediate-
range ballistic missile effort also removed more than $900 million in
sunk costs from its baselined development costs, choosing to baseline
less than half of the total estimated costs. MDA did note in the BAR
that costs beyond fiscal year 2015 were excluded from the Targets and
Countermeasures baselines because the quantities of targets were
uncertain in the years beyond 2015. The BAR, however, does not inform
the reader that the sunk costs were excluded nor does it explain why
MDA decided to exclude them. Agency officials told us that sunk costs
were excluded from the development baseline because sunk costs did not
fit the definition of average unit cost for the targets. However, this
response still does not explain why these costs were excluded from the
life cycle cost baselines. Excluding these costs in the baseline means
that the full costs through 2015 for these efforts are underestimated
and, therefore, are not transparent to decision makers external to the
agency.
MDA officials told us that they mistakenly reported operation and
sustainment costs as baselined for several elements and stated that
they do not intend to report variances for the remaining baselined
portions of life cycle costs, despite indications in the 2010 resource
baselines that variances would be reported in the future. For the
current THAAD capability configuration and the Aegis BMD SM-3 Block IB
missiles and associated software upgrades for shipsets, agency
officials said that reporting the operation and sustainment costs
associated with these elements as a baseline was an error. Although
the agency intends to continue to report operation and sustainment
costs, they do not consider those costs baselined and will not report
them as part of the baseline in the future. Choosing not to baseline
these costs, in some cases, removes a large portion of costs from the
total cost baseline MDA is reporting. See table 6 for details on the
operation and sustainment costs as a percentage of total costs MDA
will not baseline in the future.
Table 6: Operation and Sustainment Costs as a Percentage of Total
Costs Reported in the 2010 BAR:
Aegis BMD SM-3 Block IB missiles and associated software upgrades for
shipsets[A];
Operation and sustainment costs: $591 million;
Operation and sustainment as a percentage of total reported costs: 9.0
percent.
Two capability deliveries for AN/TPY-2;
Operation and sustainment costs: $5.586 billion;
Operation and sustainment as a percentage of total reported costs:
64.7 percent.
C2BMC Spiral 6.4;
Operation and sustainment costs: $387 billion;
Operation and sustainment as a percentage of total reported costs:
31.1 percent.
GMD[ B];
Operation and sustainment costs: $12.871 billion;
Operation and sustainment as a percentage of total reported costs:
38.6 percent.
Two capability deliveries for SBX;
Operation and sustainment costs: $2.550 billion;
Operation and sustainment as a percentage of total reported costs:
63.4 percent.
Current THAAD capability configuration;
Operation and sustainment costs: $4.162 billion;
Operation and sustainment as a percentage of total reported costs:
23.9 percent.
Source: MDA (date); GAO (analysis):
Note: The operation and sustainment costs reported above only include
those costs for which MDA is responsible and excludes those costs
borne by the services except for the two capability deliveries for SBX
which include both the costs borne by MDA and the service. MDA did not
clarify if the operation and sustainment costs shown for C2BMC's
Spiral 6.4 were the total operation and sustainment costs necessary
for the effort.
[A] The Aegis BMD SM-3 Block IB missiles and associated software
upgrades for shipsets effort provided a corrected version of the
resource baseline after the June 2010 BAR was released. The updated
version, dated September 2010, shows operation and sustainment costs
of $591 million as 7.4 percent of the total reported costs.
[B] In technical comments to our draft report, we learned that
according to MDA, the GMD operation and sustainment costs are only for
one capability delivery and are not representative of the entire
program. The BAR did not explain that these costs only reflected a
portion of the program.
[End of table]
Further, the operation and sustainment costs that MDA reported in the
BAR were incomplete and unclear because, except in one case, they did
not include the costs borne by the services and there was no
explanation in the BAR for these exclusions. By excluding the
services' portion of these costs, the operation and sustainment costs
reported in the BAR for four out of five of the elements' efforts are
underestimated since they only include those costs that MDA will be
responsible for paying.[Footnote 49] Only the operation and
sustainment costs reported for the two capability deliveries for the
SBX Radar included both the costs borne by MDA and the service. The
BAR does not explain these differences or exclusions in reporting its
operation and sustainment costs.
In addition, MDA officials stated that although MDA will continue to
report development, production and deployment, and military
construction costs as baselined, none of these baselines will report
variances. They stated that the resource baselines are represented
solely by unit cost baselines--not by any baselines for life cycle
costs. Officials told us that there is no technical reason that
prevents MDA from reporting variances for development, production and
deployment, or military construction costs. It is also unclear why the
agency will not report baselines and variances for operation and
sustainment costs. Reporting variances is important because deviations
from the baseline plan give management at all levels information about
where corrective actions are needed to bring the program back on
track. While variances are often perceived as something bad, they
provide valuable insight into program risk and its causes and can
empower management to make decisions about how to best handle risks.
Although MDA presented APUC unit costs in its 2009 BAR, it only
reported on six of the ten APUCs presented in last year's BAR. In
addition, it did not present variances for any of these unit costs or
explain why these variances were not provided. Of these six, MDA could
have reported variances on three according to the agency's own
definition of a variance--a cost increase of 10 percent or more when
compared to the original resource baseline for a BMDS product. In the
case of the THAAD fire control, the unit cost increased by more than
20 percent. According to MDA, the agency did not report on APUC unit
costs for four of the assets presenting APUCs in the 2009 BAR because
it considered these programs to be complete and the 2009 BAR to be a
final report. However, one of the four assets not reporting an APUC in
the 2010 BAR is the Aegis BMD SM-3 Block IA missile for which, during
fiscal year 2010, the agency delivered an additional 26 missiles. It
is unclear why the agency did not provide an updated APUC for this
asset in the 2010 BAR since it was not complete before fiscal year
2010. In addition, the 2010 BAR did not explain MDA's decision to stop
reporting these four assets. MDA officials also stated that no
variances were reported because the agency considers the 2010 BAR
resource baselines to be the first established unit cost baselines.
However, the agency first reported APUC costs in 2009, and the 2009
BAR explicitly refers to these as "unit cost baselines." Further, the
2009 BAR states that the agency would report any variances to these
APUC baselines in the 2010 BAR. See table 7 for a comparison of the
2009 BAR APUC unit costs to the 2010 BAR APUC unit costs and
associated unreported variances.
Table 7: Unreported APUC Variances from MDA's 2009 BAR:
Aegis BMD Block I missiles:
2009 BAR APUC: $18 million;
2010 BAR APUC: Not reported;
Percentage change: [Empty];
Unreported variance: [Empty].
Aegis BMD Block IA missiles:
2009 BAR APUC: $11 million;
2010 BAR APUC: Not reported;
Percentage change: [Empty];
Unreported variance: [Empty].
Aegis BMD shipset software upgrades[A]:
2009 BAR APUC: $45 million;
2010 BAR APUC: $36 million;
Percentage change: -20.0%;
Unreported variance: Not applicable.
AN/TPY-2[B]:
2009 BAR APUC: $208 million;
2010 BAR APUC: $177 million;
Percentage change: -14.9%;
Unreported variance: Not applicable.
Fylingdales upgraded early warning radar[B]:
2009 BAR APUC: $197 million;
2010 BAR APUC: Not reported;
Percentage change: [Empty];
Unreported variance: [Empty].
GMD ground based interceptors:
2009 BAR APUC: $62 million;
2010 BAR APUC: $71 million;
Percentage change: 14.5%;
Unreported variance: [Empty].
THAAD interceptors:
2009 BAR APUC: $11 million;
2010 BAR APUC: $11 million;
Percentage change: 0.0%;
Unreported variance: Not applicable.
THAAD fire control system:
2009 BAR APUC: $13 million;
2010 BAR APUC: $16 million;
Percentage change: 23.1%;
Unreported variance: [Empty].
THAAD launchers:
2009 BAR APUC: $9 million;
2010 BAR APUC: $10 million;
Percentage change: 11.1%;
Unreported variance: [Empty].
Thule upgraded early warning radar[B]:
2009 BAR APUC: $216 million;
2010 BAR APUC: Not reported;
Percentage change: [Empty];
Unreported variance: [Empty].
Source: August 2009 BAR and June 2010 BAR. GAO analysis.
Note: MDA's definition of a variance is a cost increase of 10 percent
or more when compared to the original resource baseline for a BMDS
product. MDA does not consider cost decreases of 10 percent or more as
variances for reporting purposes.
[A] Aegis BMD shipset software upgrades refers to software version
4.0.1. See appendix III for further details on this software version.
[B] The AN/TPY-2, Thule upgraded early warning radar, and Fylingdales
upgraded early warning radar are all managed by the Sensors program
office. For more details on these radars, see appendix VII.
[End of table]
MDA was also unclear and inconsistent in how it reported target unit
costs and did not define or explain these inconsistencies in the BAR.
While MDA reported APUC and PAUC for most of its unit cost baselines,
it chose to instead report average unit costs for its 4 Targets and
Countermeasures program efforts presented in the BAR--short-range,
medium-range, intermediate-range, and intercontinental ballistic
missile targets. It also separately reported the non-recurring costs
to develop these targets. There was no explanation in the BAR as to
how the targets' average unit costs were constructed or why the
targets required a different reporting method from the rest of the
BMDS element assets. MDA officials told us that since Targets and
Countermeasures is procuring targets and is not a developmental
acquisition program, that reporting APUC and PAUC was not the best
method for reporting unit costs for targets. However, MDA is investing
significant amounts to develop the targets it needs. MDA reported in
the 2010 BAR that it is planning to invest $2.4 billion to develop and
procure targets between fiscal years 2010 and 2015.
By reporting only the average unit costs for targets, which officials
told us was the same as the average recurring costs, MDA is not
reporting the full unit costs to develop and procure targets. In
analyzing the information in the 2010 BAR, we determined that in only
4 of the 12 separate target unit costs reported did the BAR provide
enough information to calculate PAUC costs. For example, while MDA
reported that the new extended medium range ballistic missile average
unit cost was $29 million, if it had included all reported development
costs, it could have reported a PAUC of $60 million for these targets.
In addition, the planned new intermediate range ballistic missile
reported an average unit cost of $40 million, but had it included all
reported development costs, it could have reported a PAUC of $109
million. For 8 of the 12 targets presenting average unit costs,
including the LV-2 intermediate range target, insufficient information
was presented in the BAR to calculate a PAUC.
The 2010 BAR's life cycle cost baselines also lacked clarity and
consistency in how some costs were accounted for, giving the
appearance that some of the baselines were underestimated. MDA
presented both a time-phased estimate in then-year dollars and a life
cycle cost baseline in base year dollars, without providing any
details in the BAR on how these costs were converted.[Footnote 50] For
example, sunk costs presented in the time-phased estimates were
sometimes converted to base year dollars in the life cycle cost
baseline and other times not converted. Four of the life cycle costs
baselines contained sunk costs that were not converted. Not converting
these costs to base year dollars means these costs were underestimated
in the life cycle cost baseline. However, it is not possible to assess
by how much these costs are underestimated since, in some cases, life
cycle cost estimates did not include details on the span of years
included in sunk costs. Without knowing which years are covered or
being able to account for the costs per year, we were unable to verify
the estimates for sunk costs.
Life Cycle Cost Baselines Are Not Based on High-Quality Cost Estimates:
We assessed MDA's life cycle cost estimates using the GAO Cost
Estimating and Assessment Guide that is based on best practices in
cost estimating and which identifies key criteria for establishing
high quality cost estimates.[Footnote 51] Our analysis of the 12 life
cycle cost estimates that formed the basis of the 12 life cycle cost
baselines in the 2010 BAR found that only 6 of these estimates matched
the costs that were reported in the BAR. The 6 estimates that did not
match the BAR baselines--Aegis Ashore, Aegis BMD SM-3 Block IB missile
and associated software upgrades for shipsets, C2BMC Spiral 6.4, GMD,
SBX capability deliveries, and current THAAD capability configuration-
-were therefore excluded from further analysis.[Footnote 52] Of the
remaining 6 life cycle cost estimates, none fully met the 4
characteristics of high-quality cost estimates as established by the
GAO Cost Estimating and Assessment Guide.
According to the GAO Cost Estimating and Assessment Guide, the cost
estimate is part of a total systems analysis and is a critical element
in any acquisition process to help decision makers evaluate resource
requirements at milestones and other important decision points. Cost
estimates establish and defend budgets and drive affordability
analysis. The guide identifies 12 steps necessary for developing a
high-quality cost estimate.[Footnote 53] According to the guide,
documentation is a pervasive requirement throughout the 12 steps
needed to establish a reliable cost estimate. The detailed
documentation called for in the guide addresses the purpose of the
estimate, the program background and system description, its schedule,
the scope of the estimate (in terms of time and what is and is not
included), the ground rules and assumptions, all data sources,
estimating methodology and rationale, the results of the risk
analysis, and a conclusion about whether the cost estimate is
reasonable. A cost estimate is much more than just a single number. It
is a compilation of many lower-level cost element estimates that span
several years, based on the program schedule. Therefore, a good cost
estimate--while taking the form of a single number--is supported by
detailed documentation that describes how it was derived and how the
expected funding will be spent in order to achieve a given objective.
This documentation should include enough detail that a cost analyst
unfamiliar with the program could recreate it quickly with the same
result.
Our research has identified a number of best practices that are the
basis of effective program cost estimating and should result in
reliable and valid cost estimates that management and key decision
makers can use for making informed decisions. These four
characteristics of a high-quality and reliable cost estimate are
comprehensive, well documented, accurate, and credible. A cost
estimate is considered:
* Comprehensive: when it accounts for all possible costs associated
with a project, details all cost-influencing ground rules and
assumptions, is technically reasonable, is structured in sufficient
detail to ensure that costs are neither omitted nor double-counted,
and the estimating teams' composition is commensurate with the
assignment;
* Well-documented: when supporting documentation for the estimate is
accompanied by a narrative explaining the process, sources, and
methods used to create the estimate and contains the underlying data
used to develop the estimate;
* Accurate: when the estimate is not overly conservative or too
optimistic and is based on an assessment of the costs most likely to
be incurred; and:
* Credible: when the estimate has been cross-checked with independent
cost estimates, the level of confidence associated with the point
estimate has been identified, and a sensitivity analysis has been
conducted--that is, the project has examined the effect of changing
one assumption related to each project activity while holding all
other variables constant in order to identify which variable most
affects the cost estimate.[Footnote 54]
Although MDA cost officials stated that MDA followed the GAO Cost
Estimating and Assessment Guide for building cost estimates and
baselines, the documentation that MDA provided for the 6 life cycle
cost estimates contained insufficient evidence to meet the
characteristics of a high-quality cost estimate. In our analysis, we
used ratings to describe how much of the criteria the documentation
met toward being comprehensive, well-documented, accurate, and
credible. The ratings we used were as follows: "Met" means that the
program provided documentation that satisfied the criterion;
"Substantially met" means that the program provided the majority of
the documentation to satisfy the criterion; "Partially met" means that
the program provided documentation satisfying part of the criterion;
"Minimally met" means that the program provided documentation
satisfying a minor part of the criterion; and "Not met" means that the
program did not provide documentation that satisfied the criterion.
See figure 2 for the results of our review of the 6 estimates.
Figure 2: GAO Analysis of MDA Cost Estimates against the Four
Characteristics of High-Quality and Reliable Cost Estimates:
[Refer to PDF for image: illustrated table]
Future Aegis BMD ship software upgrades[A]:
Comprehensive: Partially Met;
Well documented: Partially Met;
Accurate: Partially Met;
Credible: Minimally Met.
AN/TPY-2[B]:
Comprehensive: Partially Met;
Well documented: Partially Met;
Accurate: Partially Met;
Credible: Minimally Met.
Short range ballistic missile target[C]:
Comprehensive: Partially Met;
Well documented: Minimally Met;
Accurate: Minimally Met;
Credible: Minimally Met.
Medium range ballistic missile target[C]:
Comprehensive: Partially Met;
Well documented: Minimally Met;
Accurate: Minimally Met;
Credible: Minimally Met.
Intermediate range ballistic missile target[C]:
Comprehensive: Partially Met;
Well documented: Minimally Met;
Accurate: Minimally Met;
Credible: Minimally Met.
Intercontinental range ballistic missile target[C]:
Comprehensive: Minimally Met;
Well documented: Minimally Met;
Accurate: Minimally Met;
Credible: Not Met.
Source: MDA data; GAO analysis.
[A] Future Aegis BMD ship software upgrades refer to software version
5.0. See appendix III for details on this software version.
[B] The cost estimate was for a portion of the AN/TPY-2 element's
costs related to two capability deliveries.
[C] The Targets and Countermeasures program manages the short-range,
medium-range, intermediate-range, and intercontinental ballistic
missile efforts.
[End of figure]
The 6 estimates were not fully comprehensive because they did not
provide enough detail to enable us to determine if all government and
contractor costs had been included, and it was unclear if the cost
estimate was derived from a detailed work breakdown structure allowing
us to check if all of the life cycle costs were fully accounted for.
In addition, 4 of the estimates did not include the historical data
necessary to back up given assumptions. The estimates were not well
documented in 5 cases because the estimates lacked documentation
necessary to be able to recreate the estimates, and further did not
include an electronic cost model to provide the information necessary
to understand how each estimate was created. The remaining estimate
was not considered well documented because, in some instances, it did
not provide enough information on how cost factors were derived, and
cited methodology but did not include the backup analysis to support
it. None of the estimates met the standards for accuracy. For example,
four of the estimates did not provide a confidence level in the
estimate making it impossible to determine if the estimate was
unbiased and based on most likely costs, did not provide access to the
detailed calculations used in the estimate, or did not provide the
historical data to allow us to check the reliability of the sources or
how data is verified for accuracy. The other two cost estimates lacked
accuracy because discrepancies existed on costs among several of the
documents provided or the costs did not match the summary estimates
reported in the BAR. Finally, costs associated with the estimates
lacked credibility because none of the six estimates performed a cost
sensitivity analysis, provided evidence that cost driver cross checks
were performed, or completed independent cost estimates. In addition,
MDA performed a cost and risk uncertainty analysis on only one of the
six estimates, without which the estimate lacks the level of
confidence associated with achieving the cost estimate.
As discussed above, one of the criteria for a credible cost estimate
is having an independent cost assessment. Other DOD major defense
acquisition programs are required to perform an independent cost
estimate before advancing through major milestones.[Footnote 55]
Because of the flexibilities granted in 2002, MDA is not required to
obtain independent cost estimates for its programs, and has not
otherwise required their programs to do so.[Footnote 56] The Office of
the Director for Cost Assessment and Program Evaluation (CAPE) has
performed independent cost estimates for the Aegis BMD program as well
as portions of other MDA programs in the past including the STSS and
GMD programs. More recently, the CAPE performed an independent cost
estimate of THAAD procurement costs. MDA has committed to work with
the CAPE to develop cost estimates for other MDA elements in the
future. MDA's plans to work with the CAPE to develop cost estimates
for more MDA elements will contribute to the credibility of its
estimates.
[End of section]
Appendix III: Aegis Ballistic Missile Defense (Aegis BMD) with
Standard Missile-3 Interceptor:
Fiscal Year 2010 Events:
* Activities in fiscal year 2010--including the new European PAA--
brought new challenges to the Aegis BMD portfolio;
* MDA restructured Aegis BMD into a program executive office with four
programs, including Aegis BMD 4.0.1/SM-3 IB, Aegis Ashore, and Aegis
BMD 5.1/SM-3 IIA;
* MDA requested $2.16 billion for fiscal year 2011, an 18 percent
increase from last year's request;
* MDA added BMD 3.6.1 capability to two ships. DOD established Aegis
Ashore, which will be based on Aegis 5.0 and the SM-3 IB interceptor;
* MDA held several program reviews for Aegis BMD 4.0.1, Aegis Ashore,
and Aegis 5.0.
What You Need To Know:
* Comprising about 26 percent of MDA's total fiscal year 2011 budget
request, Aegis BMD is poised to be MDA's largest single investment in
a BMDS element;
* Target availability delayed a key flight test expected to
demonstrate performance of Aegis BMD 3.6.1 with SM-3 Block IA for
European PAA Phase I;
* Progress of Aegis 4.0.1 with SM-3 Block IB is limited by delay in
development of the Throttleable Divert Attitude Control System
(TDACS), an interceptor component;
* Aegis BMD 5.0 features highly integrated hardware and software and
is a key dependency of the new Aegis Ashore program.
Background and Overview:
Aegis BMD is a sea-based missile defense system being developed in
incremental, capability-based blocks to defend against enemy ballistic
missiles of all ranges. Components include the shipboard SPY-1 radar,
command and control systems, and Standard Missile 3 (SM-3). MDA
continues to develop Aegis BMD in spirals for the weapon system and
variants of the SM-3 interceptor. Following the shift in DOD's
strategy for the defense of Europe from one that relied on the Ground-
based Midcourse Defense interceptors in Poland and the Czech Republic,
Aegis BMD became the centerpiece of DOD's new European PAA. Successive
variants of Aegis with the SM-3 interceptor are designed to improve
performance against increased threat missile range, type, and raid
size. The currently deployed system is Aegis BMD 3.6.1 with SM-3 IA,
which is designed to hit short-to medium-range threat missiles. The
next generation version is Aegis BMD 4.0.1 with SM-3 IB which features
an improved (two-color) target seeker, an advanced signal processor,
and an improved divert/attitude control system for adjusting its
course. Aegis BMD 5.0, scheduled for certification in 2014, does not
add new functionality, but is designed to integrate Aegis BMD 4.0.1
with the Navy's open architecture system, which would enable any Aegis
ship to perform the BMD mission. A new land-based version--Aegis
Ashore--will have its first configuration as Aegis BMD 5.0 with SM-3
IB, scheduled to become operational in fiscal year 2015 (see appendix
IV).
Aegis BMD did not conduct any developmental intercept flight tests in
fiscal year 2010, although it did participate in several other BMDS
flight and ground tests to assess BMD functionality and
interoperability with the BMDS.[Footnote 57] During fiscal year 2010,
MDA expected to conduct FTM-15 to demonstrate Aegis 3.6's ability to
launch the SM-3 IA interceptor using data from a remote sensor against
an intermediate-range ballistic missile target. However, the flight
test has been delayed due to target availability. This had a ripple
effect on other scheduled events, resulting in a delay in
demonstrating key capabilities of Aegis 3.6.1 with SM-3 IA and Aegis
4.0.1 with SM-3 IB. The FTM-15 is key to demonstrating capability of
the IA interceptor to engage threat missiles in the range expected for
European PAA Phase I, planned for deployment by December 2011. In
other testing, a Japanese Aegis BMD destroyer conducted a successful
intercept of a separating target using an SM-3 IA interceptor.
Progress of Aegis 4.0.1 with SM-3 Block IB Limited by Delay in
Development of TDACS, an Interceptor Component:
Aegis 4.0.1 with SM-3 IB has executed more slowly than expected in
fiscal year 2010. At the last execution review of the fiscal year,
progress toward verifying the SM-3 IB engagement capability required
action, and 6 of the 14 development phase exit criteria tracking
program execution were assessed as not on track, including those
related to requirements, affordability, design, manufacturing, and
weapon system safety. The slower pace primarily reflects delays in SM-
3 IB interceptor development.
Aegis 4.0.1, with the SM-3 IB interceptor, is expected to have
increased discrimination, engagement coordination, threat missile
range capability and raid capacity. Technology development of the
interceptor's Throttleable Divert Attitude Control System (TDACS) is
following a high-risk path due to continuing resolution of issues
discovered during sub-assembly hazard testing. The TDACS issues relate
to the operational suitability and expected lifetime of the
interceptor. The first intercept flight test, FTM-16, was moved into
the third quarter fiscal year 2011 to allow time to investigate and
resolve the issues. FTM-16 is critical to demonstrating the
interceptor performance, as well as being required to certify the
Aegis combat system. According to the Director, MDA, the flight test
was rescheduled to allow time to complete qualification tests. Design
verification and qualification tests validate component performance,
reliability and producibility. MDA has since determined the root cause
of the TDACS problem and identified two design improvements. However,
due to continuing delays redesigned TDACS components will not be
included in the interceptor manufactured for FTM-16; instead, it will
be manufactured using a new process control to partially mitigate the
issue. Further, MDA has since decided to conduct the flight test in
the fourth quarter of fiscal year 2011 without completing the
qualification tests as originally planned. The TDACS qualifications
and verifications leading up to the FTM-16 intercept test will be
limited to the environmental conditions expected during the FTM-16
event. Following FTM-16, the design changes to the TDACS will require
the full set of design and qualification testing.
We reported in February 2010 that planned interceptor production would
precede knowledge of interceptor performance, and recommended that MDA
delay a decision to produce interceptors to follow successful
completion of developmental testing, a flight test, and manufacturing
readiness review. We reported again in December that the SM-3 IB test
schedule was not synchronized with planned production and financial
commitments. This schedule had become even more compressed as a result
of TDACS redesign, and planned requalification. As a result, MDA
recently deferred planned interceptor production decisions to follow
redesign efforts, the manufacturing readiness review, and an
additional flight test; steps that could better inform those
production decisions.
While MDA characterized the first 30 interceptors as being test
rounds, half remain unassigned to a specific test. Furthermore, of
those interceptors assigned to a test, some may be produced earlier
than necessary since they deliver 1 to 2 years prior to the scheduled
test. Program officials note the unassigned "test" rounds will provide
information on reliability, maintainability, and supportability, and
verify cost estimates and production processes.
Aegis BMD 5.0 Features Highly Integrated Hardware and Software and Is
a Key Dependency of the New Aegis Ashore Program:
Aegis BMD 5.0 will not provide new mission capability; instead it will
leverage the Navy's Aegis modernization effort, which transitions the
cruisers' and destroyers' computers and displays from military
standard to commercial-off-the-shelf components. The modernization
effort will increase the number of cruisers and destroyers that have
the potential to be BMD capable from 27 to 84, and the installation of
Aegis 5.0 in conjunction with the modernization will add the BMD
capability. Once Aegis 5.0 is available, Aegis ships with version
3.6.1 may be upgraded directly to 5.0, instead of undergoing an
interim installation of 4.0.1 (estimated at $52 million per ship).
Although it does not add new mission capability, the migration into an
open architecture environment requires significant modification and
testing of 8 of 10 major components of the Aegis weapons system.
Execution reviews already show signs of schedule compression and
interdependencies of multiple efforts increase schedule risk. As the
European PAA's new Aegis Ashore program is highly dependent on the
scheduled delivery of Aegis 5.0, delays could have significant
consequences for providing European BMD capability as planned (see
appendix IV).
[End of section]
Appendix IV: Aegis Ashore with Standard Missile-3 Block IB (European
PAA Phase II):
Fiscal Year 2010 Events:
* MDA established the Aegis Ashore program office in early fiscal year
2010;
* MDA held developmental baseline and baseline execution reviews for
Aegis Ashore;
* MDA prepared two program cost estimates; although the planned,
independent cost estimate was not completed;
* DOD selected the first two land-based sites for fielding the
European Phased Adaptive Approach (Romania in 2015 and Poland in 2018);
* MDA awarded the contract to design new Aegis Ashore system
components, including deckhouse and enclosures for component systems;
* DOD began expansion of the Pacific Missile Range Facility to support
testing and development for the European PAA.
What You Need To Know:
* Aegis Ashore was announced in September 2009 as part of the European
PAA;
* Technical analysis supporting the selection of Aegis Ashore for the
European PAA is unclear;
* Highly concurrent acquisition activity results in significant cost,
schedule, and performance risk;
* Development uncertainties remain and various Aegis components
require modification for a land-based configuration;
* Deckhouse and vertical launching system (VLS) enclosures design are
not complete;
* Flight tests reduced from previous plan, not timed to inform
production commitments.
Background and Overview:
Aegis Ashore is MDA's future land-based variant of the ship-based
Aegis BMD. It is expected to track and intercept ballistic missiles in
their midcourse phase of flight using Standard Missile-3 (SM-3)
interceptor variants as they come available. Key components include
the Aegis SPY-1 radar, command and control system, vertical launching
system (VLS), SM-3 missiles and removable enclosures for the systems
to facilitate worldwide deployment. DOD expects to deploy the first
Aegis Ashore with the SM-3 block IB in fiscal year 2015 as part of the
European Phased Adaptive Approach (PAA).
Technical Analysis Supporting Selection of Aegis Ashore for European
PAA Is Unclear:
According to the Director of MDA, the idea of Aegis Ashore preceded
the new European PAA policy. Earlier in 2008 and 2009 MDA had been
studying alternatives to the Arrow 3 program--a joint US-Israeli
program designed for Israeli self-defense against short-range
ballistic missiles. MDA's analysis had considered several land-based
SM-3 options, and had concluded that an Aegis with SM-3 was the
preferred option. It is unclear how assumptions and analysis related
to Arrow-3 supported--and what if any additional technical analysis
was conducted to support--the selection of Aegis Ashore for the
European PAA.
While MDA does not yet follow DOD's standard acquisition processes, a
robust consideration of alternatives is a key first step in that
process and is intended to assess the operational effectiveness,
costs, and risks of alternative weapon system solutions for addressing
a validated warfighting need. We reported in September 2009 that DOD
often did not effectively consider a broad range of alternatives for
addressing a warfighting need or assess technical and other risks
associated with each alternative.[Footnote 58] Without a sufficient
comparison of alternatives and focus on technical and other risks,
reviews of alternatives may identify solutions that are not feasible
and decision makers may approve programs based on limited knowledge.
While many factors can affect cost and schedule outcomes, we found
that programs that had a limited assessment of alternatives tended to
have poorer outcomes than those that had more robust assessments. The
Office of Cost Assessment and Program Evaluation is studying
alternatives to Aegis Ashore.[Footnote 59]
Highly Concurrent Acquisition Activity and Development Uncertainties
Result in Significant Cost, Schedule and Performance Risk:
A knowledge-based acquisition approach is a cumulative process in
which certain knowledge is acquired by key decision points before
proceeding. In other words, demonstrating technology maturity is a
prerequisite for moving forward into system development, during which
the focus should be on design and integration. The President's
announcement of the European PAA on September 17, 2009 officially
began Aegis Ashore, and MDA placed Aegis Ashore directly into the
third acquisition development phase--product development. MDA
officials note that this decision was due to the understanding that
Aegis Ashore would be a modification of proven Aegis BMD capabilities.
Yet Aegis Ashore has not yet completed some of the activities MDA
outlines for its first two development phases (materiel solutions
analysis and technology development), and is executing others
concurrently with activities in the third development phase (product
development). For example, although MDA's acquisition oversight
process identifies the following top-level tenets for phase review
entry/entrance criteria prior to entering the Product Development
phase, Aegis Ashore had not: obtained an independent cost estimate,
prepared a life cycle cost estimate, demonstrated critical
technologies in the operational environment (land), or ensured
interoperability and integration with the larger BMDS. MDA's knowledge
points--typically identified during the first MDA acquisition phase--
identify information required to make key decisions (e.g. program
funding decisions, technology selections, capability declarations,
program continuation, or the selection of an alternative course of
action) and manage program risk. MDA's knowledge points for Aegis
Ashore were completely redefined less than 3 months after being
established.
DOD's commitment to field Aegis Ashore by 2015 has resulted in
significant schedule compression for the program, even as MDA
discovered issues that broadened the scope of development and design,
placing the program at increased risk of cost growth and schedule
delay. According to the Director, MDA, Aegis Ashore development is not
a high risk because it is based on the existing Aegis BMD system.
However, while Aegis BMD has demonstrated performance at sea, these
demonstrations used the currently fielded 3.6.1 version of Aegis BMD
with the SM-3 IA interceptor, not the newer variant of the Aegis
operating system and new interceptor that Aegis Ashore will use. Aegis
Ashore is dependent on next-generation versions of Aegis systems--
Aegis 4.0.1 and Aegis 5.0--as well as the new SM-3 IB interceptor, all
of which are currently under development (see appendix III). Moreover,
a series of changes are required to further modify these new variants
of Aegis BMD for use on land with Aegis Ashore. These modifications
include changes to the VLS; suppression or disabling of certain
features used at sea; design, integration, and fabrication of a new
deckhouse enclosure for the radar, and potential changes to the SM-3
IB interceptor. Changes to those existing Aegis BMD components that
will be reused for Aegis Ashore may reduce their maturity in the
context of the new Aegis Ashore program, and new features will require
testing and assessment to demonstrate their performance. MDA plans to
conduct both ground and flight tests prior to deployment, however
these tests will not occur prior to making production decisions.
Various Aegis Components Require Modification for a Land-Based
Configuration:
Aegis Ashore expects to leverage the existing shipboard Aegis Combat
System--comprised of 32 sensors, communications, weapons, and
countermeasures. However only 11 of these will be reused for Aegis
Ashore; the remaining 21 will need to be suppressed or otherwise
disabled, including the software that accounts for a ship's pitch and
yaw. While officials note that current land-based testing processes
for portions of the Aegis Combat System involve similar suppression,
the Aegis Ashore land-based configuration is unique and must still be
demonstrated through operational testing.
The program office assessed both the SPY-1 radar and the VLS as flight
proven through successful mission conditions, reflecting the
assessment of the radar and VLS currently at sea. However, these
systems will operate on land, and it is unclear whether the radar's
spectrum supportability is fully understood or accounted for. Also,
the VLS will be modified to address the differing protection, safety,
and environmental requirements of its new land-based environment.
Finally, MDA may modify the SM-3 Block IB for Aegis Ashore; the extent
of these changes remains unknown.
Deckhouse and VLS Enclosures Design Not Complete:
Both the radar and the VLS will be configured in removable enclosures
that have not yet been designed or tested. Also, Aegis Ashore's new
deckhouse--instead of being integrated on a ship deck with the VLS and
the ship's hull, mechanical, and electrical systems--will be
configured apart from the VLS and these will require standalone power
generation. The deckhouse design also requires that it be removable in
order to facilitate shipment. However not all requirements are fully
known, and although neither the deckhouse requirements or design are
stable, the contract for Aegis Ashore deckhouse fabrication and
integration was awarded prior to preliminary or critical design
reviews for the overall Aegis Ashore system. The potential for rework
because design starts before requirements are complete was noted as a
continuing risk in the last program review of the fiscal year, and we
have previously reported that starting fabrication prior to achieving
design stability can lead to costly modifications later in the process
due to rework.
Aegis Ashore Flight Tests Reduced from Previous Plan, Not Timed to
Inform Production Commitments:
The number of planned developmental flight test events has been
reduced since the Aegis Ashore program began and they are not timed to
inform production decisions. In MDA's February 2010 test plan Aegis
Ashore was scheduled to participate in 7 developmental flight test
events, 5 of which were intercept events. The current plan is for 4
test events, 2 of which are intercepts. The first intercept is now
scheduled more than a year later than previously planned (see figure
3).
Figure 3: February 2010 and February 2011 Plans for Aegis Ashore
Flight Test Events:
[Refer to PDF for image: illustrated time line]
Fiscal year: 2013;
Test plan: Ver. 10.1 Feb. 2010;
AA CTV-01 (quarter 1);
AA FTM-01 (quarter 2);
Test plan: Ver. 11.1 Feb. 2011;
AA CTV-01 E1 (quarter 4);
AA CTV-01 E2 (quarter 4).
Fiscal year: 2014;
Test plan: Ver. 10.1 Feb. 2010;
AA FTM-02 (quarter 2);
AA FTM-03 (quarter 4);
Test plan: Ver. 11.1 Feb. 2011;
AA FTM-01 E1 (quarter 3);
AA FTM-01 E2 (quarter 3).
Fiscal year: 2015;
Test plan: Ver. 10.1 Feb. 2010;
AA FTM-04 (2 intercepts) (quarter 2);
AA FTX-01 (quarter 4).
Test plan: Ver. 10.1 Feb. 2010;
Total: 7;
AA non-intercept events: 2;
AA intercept events: 5.
Test plan: Ver. 11.1 Feb. 2011;
Total: 4;
AA non-intercept events: 2;
AA intercept events: 2.
AA = Aegis Ashore.
AA CTV = Aegis Ashore Controlled Test Vehicle.
AA FTM = Aegis Ashore Flight Test Missile (interceptor).
AA FTX = Aegis Ashore Flight Test Other (simulated intercept).
Source: GAO analysis of MDA data.
[End of figure]
MDA officials indicate that the current plan is sufficient to collect
data on critical variables and to evaluate weapon system performance
in the Aegis Ashore configuration. We have previously reported that
repetition of intercept-related objectives is important to build
confidence in intercept capability. MDA plans to make production
commitments for the first operational Aegis Ashore and its
interceptors by early fiscal year 2012. The first intercept flight
test with a target is planned for the second half of fiscal year 2014,
at which point the design will have been finalized, the Aegis Ashore
deckhouse and components built, and Aegis Ashore construction and
interceptor production will be well under way.
[End of section]
Appendix V: Airborne Infrared (ABIR):
Fiscal Year 2010 Events:
* The ABIR program demonstrated the ability of infrared sensors aboard
Unmanned Aerial System (UAS) to observe ballistic missiles in flight
at long distances and improved sensor performance;
* The ABIR program completed alternatives analysis and selected Multi-
Spectral Target System-class infrared sensor and MQ-9 Reaper ABIR
experiments and demonstration efforts;
* The ABIR program partnered with Air Force, Navy, and combatant
commanders to develop risk reduction tests and preliminary operational
concept;
* The program participated in five ABIR tests demonstrating missile-
tracking accuracy.
What You Need To Know:
* The ABIR acquisition approach focuses on exploring the use of
currently available technology;
* MDA delayed fielding ABIR from fiscal year 2015 to fiscal year 2019;
* MDA faces significant challenges in developing an operational system;
* Delays in fielding ABIR prolong sensor coverage gaps in early
intercept capabilities;
* MDA's plan to field ABIR in fiscal year 2019 is inconsistent with
justification for developing the program.
Background and Overview:
ABIR is being designed to track enemy ballistic missile raids soon
after launch with airborne sensors forward in the theater in order to
enable early intercept attempts. MDA began exploring a similar concept
of an operational unmanned aerial system (UAS) infrared missile
detection system with the Airborne Infrared System (AIRS) in fiscal
year 2002. In fiscal year 2009, MDA began assessing new platform and
sensor alternatives and decided to conduct ABIR experiments and
demonstration efforts to determine the usefulness of UASs to perform
missile defense missions. In addition, MDA plans to have an
operational ABIR program fielded by fiscal year 2019 as part of Phase
III of the Phased Adaptive Approach (PAA) for the defense of Europe
and the United States.
The ABIR Acquisition Approach Focuses on Exploring the Use of
Currently Available Technology:
MDA is following a different acquisition approach for ABIR than it has
with some of its other acquisition development programs, according to
program officials. Rather than developing a system from the ground up,
MDA is using existing technology to demonstrate the usefulness of UAS
infrared sensors to perform early missile tracking. ABIR experiments
and demonstrations will inform the requirements for an operational
system. To facilitate this process, MDA will utilize experiments and
demonstrations to meet dedicated knowledge points, such as verifying
the infrared sensor's performance, assessing missile raid size
handling, and launching an interceptor on ABIR sensor tracks. For the
experiments and demonstration efforts, MDA and the Air Force jointly
conducted an analysis of alternatives to select the infrared sensor
and decided on the Multi-Spectral Target System-class sensor, an
infrared sensor with built-in integration to UASs that was used in
earlier risk-reduction activities for ABIR. Program officials stated
that MDA collaborated with the Air Force and determined that the MQ-9
Reaper, a medium-to-high altitude, long endurance UAS, best fit both
MDA's and the Air Force's needs. While ABIR will use the Multi-
Spectral Target System-class sensor and the MQ-9 Reaper, according to
program officials, the operational system will be selected through
industry competition. To that end, program officials stated they are
developing the prototypes so that they are not necessarily tied to a
specific UAS or sensor platform to enhance future competition.
MDA Delayed Planned Fielding of ABIR from Fiscal Year 2015 to Fiscal
Year 2019:
MDA decided to delay fielding ABIR to fiscal year 2019 in order to
further explore the usefulness of forward based airborne sensors to
the BMDS, follow a more knowledge-based acquisition approach, and
alleviate funding constraints. MDA initially planned to deliver six
ABIR platforms by fiscal year 2015 and participate in Phase II of the
PAA. However, MDA decided to delay fielding to fiscal year 2019 and
participate in Phase III of the PAA to allow MDA more time to
experiment and demonstrate the usefulness of forward-based UASs for
early intercept missile tracking. Technical development challenges
exist, such as achieving a three dimensional track of boosting
missiles within a tactically significant timeframe and operationally
realistic setting as well as tracking mass raid sizes. Officials from
the Office of the Under Secretary of Acquisition, Technology and
Logistics have stated concerns about the Precision Tracking Space
System's (PTSS) planned capability to accomplish similar objectives.
MDA plans to conduct experiments and progressively demonstrate key
knowledge points in order to determine the usefulness of ABIR to the
BMDS.
In addition, although DOD has defined an initial operational concept
for ABIR, DOD has identified challenges in determining a concept of
operations for ABIR. DOD's initial operational concept is based on
persistent coverage of a threat area by ABIR platforms for a limited
duration, also referred to as a surge role. The intent is to maintain
non-stop pre-determined orbits during periods of heightened tension,
and thereby provide missile launch coverage. According to MDA
officials, MDA does not plan to acquire UASs specifically for ABIR.
Instead, MDA plans on adding missile-tracking capabilities to pre-
existing UASs. The UASs that serve the ABIR role will be able to
perform normal assignments and tasks when not being used for the BMDS
mission. Program officials also stated that they are exploring the
potential of using a detachable sensor pod or sensor processing "kit"
to enhance the flexibility of the ABIR operational system. However,
DOD officials have identified operational challenges, such as
operating UASs in controlled airspaces, developing a sensor that can
interface with multiple UASs, and matching availability of UASs to
meet operational needs of an effective ABIR system.
By allowing more time for ABIR experiments and demonstrations, MDA is
following a more knowledge-based acquisition approach. Program
officials stated that in order to meet timelines in the initial fiscal
year 2015 schedule, the program schedule included a lot of concurrency
where production decisions would occur before adequate testing had
been conducted. As a result, MDA decided, in part, to delay fielding
ABIR until fiscal year 2019 to ensure operationally realistic testing
occurs before new capabilities are deployed--a key tenet of the 2010
Ballistic Missile Defense Review. For years, we have reported that MDA
has allowed concurrent development, testing and fielding of BMDS
elements at the expense of cost and performance. By delaying ABIR
fielding to allow time to experiment and demonstrate planned
capabilities, MDA is following a more knowledge-based acquisition
approach.
In addition, MDA recognized budgetary constraints as a challenge to
fielding an operational ABIR system by fiscal year 2015. According to
MDA, accelerating ABIR and integrating the capability into Phase II of
the PAA in fiscal year 2015 would have required significant funding
and put the program on a high-risk path. MDA stated that the current
2018 capability delivery allows more time for sensor technology
development, integration and testing of sensor capabilities on an
unmanned aircraft, and integrating ABIR into the PAA Phase III
architecture.
Delays in Fielding ABIR Prolong Sensor Coverage Gaps for Additional
Early Intercept Capabilities:
Delays in fielding ABIR prolong sensor coverage gaps to track missiles
early after launch and delay plans for additional early intercept
capabilities. MDA discovered there were sensor coverage gaps in its
ability to acquire and track large ballistic missile raid sizes,
intercept ballistic missiles earlier in its trajectory, assess
intercept attempts in real-time, and launch additional interceptors if
necessary. Currently, the sensor systems of the BMDS consist of radar
sensors, such as Sea Based X-band Radar (SBX) and Army-Navy/
Transportable Radar Surveillance (AN/TPY-2). ABIR is being designed to
fill these sensor coverage gaps by tracking large missile raid sizes
soon after launch to enable earlier intercepts.
Although MDA plans to deploy a forward-based AN/TPY-2 radar that can
perform early missile tracking in southern Europe by fiscal year 2011,
the radar has limitations in providing early intercept capabilities.
The radar has limitations in its ability to search for missile
launches while simultaneously tracking missiles already in flight.
According to program officials, one of the primary benefits of ABIR is
its ability to free the AN/TPY-2 radar from its search roles, which
substantially increases AN/TPY-2's tracking capabilities. Utilizing
additional sensors, such as ABIR and PTSS, will increase capabilities
for sensor coverage for early missile intercepts.
MDA's Plan to Field ABIR by Fiscal Year 2019 Is Inconsistent with
Justification for Developing the Program:
ABIR will not be fielded sooner than PTSS, which is inconsistent with
a major justification for developing the program. MDA has stated that
a major reason for the ABIR program is that it could provide infrared
tracking sooner than fielding a space-based infrared system. Infrared
tracking is a necessary capability, according to MDA, because it can
fill gaps in sensor coverage that currently exist in the BMDS. In
2002, the Senate Armed Services Committee recognized that MDA had no
near-term plans to provide infrared tracking to missile defense
systems. Plans to develop a space-based infrared system had been
delayed so the committee urged MDA to aggressively pursue an airborne
infrared program, the AIRS program, to fill sensor coverage gaps.
According to program officials, MDA conducted some airborne data
collection activities under the AIRS program but did not test infrared
sensors with UASs until fiscal year 2010 under the ABIR program. MDA
currently plans to field an operational ABIR system by fiscal year
2019, near the same time PTSS will be fielded. Since developing ABIR
to fill the sensor coverage gaps until an operational space-based
sensor could be fielded is a major justification for the program,
MDA's current plan to field both systems at the same time is
inconsistent with that justification. MDA officials noted that while
both ABIR and PTSS are infrared systems, they are not duplicative
systems because they provide different capabilities. For example, ABIR
is capable of acquiring and tracking ballistic missiles earlier than
PTSS and has the flexibility to deploy to multiple combat theaters to
help meet combatant commander needs.
[End of section]
Appendix VI: Airborne Laser Test Bed (ALTB):
Fiscal Year 2010 Events:
* After nearly 14 years of development and more than $5 billion, the
airborne laser successfully conducted its first lethal destruction of
a target in February 2010;
* A subsequent attempt at lethal demonstration was conducted in
September 2010, but was unsuccessful due to corrupted beam control
software.
What You Need To Know:
* Continuing cost, schedule, and technology challenges led to changing
the program to a test bed;
* Technical issues continued to affect the test bed's experiments
throughout fiscal year 2010 and into early fiscal year 2011;
* MDA is working with the Director of Defense Research and Engineering
and High Energy Laser Joint Technology Office to shape the future of
the ALTB.
Background and Overview:
The Airborne Laser program has faced many challenges to demonstrating
that all of its leading technologies work. Since its inception in
1996, the program has also faced many schedule delays and cost
increases, totaling approximately 7-½ years and approximately $4
billion dollars. Consequently, affordability and technical problems as
well as concerns about the Airborne Laser's long-term operational role
prompted DOD to designate the program as a test bed. As a test bed,
the ALTB does not have an operational mission and is not equipped to
be an operational asset. The primary goal of the ALTB is to
demonstrate the potential of using directed energy as a viable
technology against ballistic missiles. The decision to change the role
of airborne laser came after spending more than $5 billion on its
development.
Test Bed's First Lethal Demonstration Was Successful:
In February 2010, MDA demonstrated that the ALTB could successfully
destroy a short-range threat-representative ballistic missile during
the boost phase. This test marked the first directed energy intercept
demonstration against a liquid-fueled boosting missile target from an
airborne platform. The entire engagement occurred within 2 minutes of
the target missile launch, while the target's rocket motors were still
thrusting.
Less than 1 hour later, a solid-fuel missile was launched, but the
system did not destroy the target because the laser shut down
prematurely. During this engagement, the system detected increased
laser light levels, which prompted the system to abort the test.
Historically, these types of aborts are due to scattering of laser
light which could prevent the system from successfully destroying the
target missile.
Subsequent Flight Tests Were Unsuccessful:
In September 2010, after overcoming a number of technical problems
during ground and flight test preparations, MDA attempted to destroy
another target using the ALTB, but failed to destroy the target. The
ALTB successfully detected and tracked the target, but corrupted beam
control software steered the high energy laser slightly off center.
The ALTB safety system detected this shift and shut down the high
energy laser.
MDA conducted another flight test in October 2010 against a solid-fuel
missile. However, while the system seems to have successfully acquired
and tracked the plume or rocket exhaust of the target, it never
transitioned to active tracking. As a result, the laser was not fired.
The laser incorrectly reported that it was not ready and the safety
default aborted the engagement. The program's failure review board
determined that the cause of the failure was a single micro-switch on
a valve that incorrectly reported that the valve was closed. Neither
the program's failure review board nor the contractor working with the
valve and micro-switch component vendors was able to determine the
root cause of the part failure. The board noted that it would take an
extensive test program to attempt to determine the root cause and/or
design a replacement micro-switch to determine or eliminate the root
cause. However, it recommended corrective actions which were
implemented by the program. According to program officials, the valves
were replaced and new software procedures were implemented to ensure
that this type of problem would not cause a system abort in the future.
The Future of the ALTB:
MDA is working with the Director of Defense Research and Engineering
and High Energy Laser Joint Technology Office to shape the future of
the ALTB. The Secretary of Defense directed a joint study of the ALTB
that was to be completed in June 2010. However, as of February 2011,
the report was not available. Agency officials also told us that MDA
has commissioned a Scientific Review Committee and an Executive
Steering Group to develop a science and technology plan for the ALTB.
The committee and steering group, consist of subject matter experts
from the Air Force Research Laboratory, the High Energy Laser Joint
Technology Office, and the Director of Defense Research and
Engineering.
The Director of Defense Research and Engineering has also been tasked
with annually assessing the ALTB for high power laser research and
development. MDA will maintain the airborne laser aircraft as a
potential test bed for ground and flight tests to characterize high
energy laser research pending the results of the Director of Defense
Research and Engineering study.
[End of section]
Appendix VII: BMDS Sensors:
Fiscal Year 2010 Events:
* MDA completed first version of common software development
qualification which increases the flexibility and interchangeability
of the AN/TPY-2 radar for forward-based and terminal-based modes;
* BMDS Sensors participated in ground and flight tests with other
elements, including GMD and THAAD;
* Joint Chiefs of Staff made the decision to deploy an AN/TPY-2 radar
to U.S. Central Command in fiscal year 2011;
* Transition of Thule Upgraded Early Warning Radar (UEWR) sustainment
to the Air Force was completed in fiscal year 2011.
What You Need To Know:
* AN/TPY-2 is a major component of Phases I and II of the Phased,
Adaptive Approach;
* Although AN/TPY-2 will provide early intercept capabilities,
additional sensors may be needed to enhance early intercept
capabilities;
* MDA is on track to deliver 13 operational AN/TPY-2 radars by fiscal
year 2017;
* MDA plans to hand over operational control of Sea-based X-band Radar
(SBX) to the Navy in fiscal year 2012;
* The SBX program experienced a significant failure during FTG-06 and
attempted to demonstrate a correction in FTG-06a;
* DOD has not yet made a decision to upgrade Cobra Dane, an important
part of the BMDS sensor suite.
Background and Overview:
The current generation of Ballistic Missile Defense System (BMDS)
sensors includes the following:
* AN/TPY-2 is a transportable X-band high resolution radar that is
capable of tracking all classes of ballistic missiles. AN/TPY-2 in the
forward-based mode (FBM) is capable of detecting missiles early after
launch to support Aegis Ballistic Missile Defense (BMD) and GMD
engagements. AN/TPY-2 in the terminal mode (TM) can track missiles in
the later stages of flight to support THAAD.
* SBX is a radar capable of tracking, discriminating, and assessing
the flight characteristics of ballistic missiles. SBX primarily
supports GMD for homeland defense and can guide interceptor missiles
while in flight.
* Upgraded Early Warning Radars (UEWR) are U.S. Air Force early
warning radars that are upgraded and, when integrated into the BMDS,
provide sensor coverage for critical early warning, tracking, object
classification, and cueing data. UEWRs are located in Beale,
California; Fylingdales, United Kingdom; and Thule, Greenland. MDA
also plans to upgrade the early warning radar in Clear, Alaska.
* Cobra Dane radar is a U.S. Air Force radar located in Shemya, Alaska
that has been upgraded and integrated into the BMDS to provide missile
acquisition, tracking, object classification, and cueing data.
AN/TPY-2 Is a Major Component in Phases I and II of the Phased
Adaptive Approach:
MDA currently plans to deploy an AN/TPY-2 (forward-based mode) radar
in southern Europe in 2011 as part of Phase I of the Phased, Adaptive
Approach (PAA). The addition of the radar will significantly increase
the size of the area that can be defended with Aegis BMD. Radar tracks
from AN/TPY-2 will be used to provide early tracking information to
enhance homeland defense assets. MDA will deploy AN/TPY-2 to southern
Europe as part of the PAA to give the BMDS a continuous tracking and
discrimination capability with more opportunities to engage the
target, when coupled with other sensors, resulting in a greater
probability for a successful intercept.
Although AN/TPY-2 Will Provide Early Intercept Capabilities,
Additional Sensors May Be Needed to Enhance Early Intercept
Capabilities:
Although AN/TPY-2 will provide missile coverage that will provide
early intercept capabilities, the radar also has limitations in its
capabilities. The AN/TPY-2 radar, like most other radars, is
susceptible to adverse weather conditions. In addition, X-band radars
can become overwhelmed due to their high detection sensitivity as
exhibited by AN/TPY-2 during a 2009 event. In addition, forward-basing
AN/TPY-2 radars come with diplomatic challenges to develop host nation
agreements, have significant operation and sustainment costs, and need
multi-layered force protection. Lastly, the radar has inherent
capability limitations that necessitate the need for additional
sensors.
AN/TPY-2 capability limitations can be mitigated, according to MDA
officials, by utilizing additional infrared sensor systems, such as
the future PTSS and ABIR programs. MDA is developing PTSS, a space-
based infrared sensor satellite constellation, and ABIR, infrared
sensors used aboard unmanned aircraft systems, to detect and track
missile launches. Infrared sensors can help provide early missile
launch acquisition and tracking while avoiding many of the limitations
of radars. For example, according to MDA budget documentation, a small
constellation of PTSS satellites can provide coverage equivalent to 50
AN/TPY-2 radars or 20 SBX radars. MDA plans to field a PTSS
constellation by fiscal year 2018 and ABIR system by fiscal year 2019.
Any delays in fielding additional infrared sensors to augment the AN/
TPY-2 in southern Europe could significantly affect the planned
capability to defend the United States and Europe from ballistic
missile attack.
MDA Is on Track to Deliver 13 Operational AN/TPY-2 Radars by Fiscal
Year 2017 for European Missile Defense, Forward-Based Missions, and
THAAD Deployment:
MDA plans to produce 14 radars by fiscal year 2017, the first of which
is developmental, and the other 13 of which will be operational. MDA
has currently delivered 4 AN/TPY-2 radars, all of which were delivered
on schedule. Table 8 describes MDA's current plans to deliver AN/TPY-2
radars.
Table 8: Current Delivery Plans for AN/TPY-2:
AN/TPY-2 ID: #1;
Planned assignment: Development;
Date of delivery to user: N/A.
AN/TPY-2 ID: #2;
Planned assignment: Japan;
Date of delivery to user: 2006.
AN/TPY-2 ID: #3;
Planned assignment: Israel;
Date of delivery to user: 2007.
AN/TPY-2 ID: #4;
Planned assignment: Southern Europe (location TBD);
Date of delivery to user: 2012.
AN/TPY-2 ID: #5;
Planned assignment: THAAD Battery #1 (location TBD);
Date of delivery to user: 2009.
AN/TPY-2 ID: #6;
Planned assignment: Central Command;
Date of delivery to user: 2011.
AN/TPY-2 ID: #7;
Planned assignment: THAAD Battery #2 (location TBD);
Date of delivery to user: 2010.
AN/TPY-2 ID: #8;
Planned assignment: THAAD Battery #3 (location TBD);
Date of delivery to user: 2013.
AN/TPY-2 ID: #9;
Planned assignment: THAAD Battery #4 (location TBD);
Date of delivery to user: 2014.
AN/TPY-2 ID: #10;
Planned assignment: THAAD Battery #5 (location TBD);
Date of delivery to user: 2015.
AN/TPY-2 ID: #11;
Planned assignment: THAAD Battery #6 (location TBD);
Date of delivery to user: 2016.
AN/TPY-2 ID: #12;
Planned assignment: THAAD Battery #7 (location TBD);
Date of delivery to user: 2016.
AN/TPY-2 ID: #13;
Planned assignment: THAAD Battery #8 (location TBD);
Date of delivery to user: 2017.
AN/TPY-2 ID: #14;
Planned assignment: THAAD Battery #9 (location TBD);
Date of delivery to user: 2017.
Source: MDA data.
Legend: TBD = to be determined.
Notes: Years are stated in fiscal years. Data is current as of October
21, 2010.
[End of table]
MDA recently decided to speed up production of radar #8 to be fielded
with THAAD Battery #3 to help meet warfighter demands. Although DOD
has not determined where THAAD batteries will be deployed, MDA has
stated that future THAAD batteries may be deployed to Europe to defend
critical assets against ballistic missile threats on a contingency
basis. In addition, although the remaining radars to be produced
(radars #8-14) are designated for THAAD batteries, MDA officials
stated that if the need for an additional forward-based AN/TPY-2
arose, these radars may be redesignated for forward-based use.
MDA Plans to Hand over Operational Control of SBX to the Navy in
Fiscal Year 2012:
MDA made progress toward fielding SBX and plans to hand over
operational control of SBX to the Navy in fiscal year 2012. During
fiscal year 2010, MDA completed a critical Navy inspection and
certification necessary to hand over operational control of SBX.
Planned operational areas include positions in the northern, western,
and middle Pacific Ocean. According to MDA, the Missile Defense
Executive Board approved a recommendation from the Navy to utilize a
more flexible approach allowing SBX to port at multiple locations
rather than establishing a dedicated port for SBX. U.S. Strategic
Command will exercise combatant commander authority of SBX and
delegate operational control to the Navy via Pacific Command. Although
the Navy will operate SBX, MDA will maintain the development
responsibility for improving radar capabilities.
The SBX Program Experienced a Significant Failure during FTG-06 and
Attempted to Demonstrate a Correction in FTG-06a:
During the GMD flight test FTG-06 in January 2010, SBX experienced a
significant failure. According to program officials, as the primary
sensor for the flight test, SBX's task was to track the missile
target, an intermediate-range missile, and provide a qualified track
on the target to GMD. During the flight test, SBX initially performed
as expected but then experienced a failure which prevented it from
establishing a reportable track on the target. According to MDA, high
sensitivity coupled with a large number of presented objects could
cause the SBX processor to become overwhelmed as exhibited in FTG-06.
MDA also states that software changes were incorporated into SBX to
mitigate this problem. Currently, computer models cannot replicate the
situation SBX experienced during FTG-06 but can replicate the effect
SBX experienced.
To address the failure in FTG-06, program officials developed
iterative software corrections. The first software correction, Spiral
1, has already been developed by the program office and was tested
during four targets of opportunity. During three of the tests,
computer simulators mimicked the effects experienced during FTG-06 to
test the software corrections. According to program officials, these
tests, in addition to other ground tests, served as risk reduction
leading up to a re-test of SBX objectives in FTG-06a.
MDA tested those software corrections in FTG-06a, which was conducted
in December 2010. This test was deemed a failure by MDA because GMD
was unable to intercept the target. However, the performance of SBX
during the flight test is unknown at this time because the test report
for this event was unavailable during our audit. SBX served as an
inline sensor for the test and was tasked to track the target over the
horizon, discriminate the warhead, and send a missile track of the
target to GMD.
Transition of Thule UEWR Sustainment to the Air Force Was Completed in
Fiscal Year 2011:
In fiscal year 2011, MDA transitioned Thule to the Air Force after
successfully transitioning sustainment of both Beale and Fylingdales
to the Air Force in 2009. According to program officials,
transitioning the UEWRs is a process during which MDA gradually hands
over control of the UEWRs to the Air Force. The official transfer of
the UEWRs will occur in fiscal year 2012 when all software upgrades
are completed. The most recent software build to add information
assurance upgrades that is currently under development will be
deployed in fiscal year 2011. According to MDA officials, once
certified for missile defense, the addition of Thule UEWR to the BMDS
reduces sensor coverage gaps and provides larger defended areas for
homeland defense.
DOD Has Not Yet Made a Decision to Upgrade Cobra Dane, an Important
Part of the BMDS Sensor Suite:
MDA and the Director, Operational Test and Evaluation believe that
both Clear and Cobra Dane are vital sensors for GMD. Both radars
provide data to GMD to enable ballistic missile intercepts. However,
Cobra Dane will soon be in need of large-scale hardware upgrades to
continue to operate, according to program officials. Although MDA has
upgraded UEWRs in the past for BMDS functions, those upgrades involved
small hardware and software processing additions to the radars. MDA
currently plans to upgrade Clear to bring it up to the current
configuration of the other UEWRs in order to efficiently manage all
the UEWRs. According to an official in the Office of the Under
Secretary of Defense for Acquisition, Technology and Logistics, a
decision to upgrade Cobra Dane will be a departmental decision, which
will be made after consultation with interagency partners.
DOT&E officials have emphasized the importance of keeping Cobra Dane a
part of the BMDS sensor suite. According to DOT&E officials, Clear
will not provide all necessary sensor coverage to take the place of
Cobra Dane. For GMD to have the necessary sensor coverage, it must
rely on both Clear and SBX to be available. However, since SBX may be
unavailable for missile tracking at times, GMD would also need Cobra
Dane in order to have robust sensor coverage. DOT&E officials stated
Cobra Dane is also an advantageous sensor for GMD because of its
unique geographic location to detect a launch from North Korea.
[End of section]
Appendix VIII: Command and Control, Battle Management and
Communications (C2BMC):
Fiscal Year 2010 Events:
* The C2BMC program demonstrates control of multiple AN/TPY-2 radars
during ground tests;
* C2BMC participates in several elements' flight tests including
THAAD, GMD, and BMDS Sensors.
What You Need To Know:
* Spiral 6.4 adds the capability to control more than one radar in one
region and better communicate and manage BMDS capabilities;
* Spiral 6.4 has experienced multiple delays and adjustments to
content since fiscal year 2008;
* C2BMC completed all ground testing in fiscal year 2010 to make
progress toward declaring Spiral 6.4 operational;
* C2BMC plans for new server at U.S. Central Command in fiscal year
2011.
Background and Overview:
C2BMC is a global network that links and integrates individual missile
defense elements. C2BMC also enables the U.S. President, Secretary of
Defense and combatant commanders at the strategic, regional, and
operational levels to systematically plan ballistic missile defense
operations, to collectively see the battle develop, and to dynamically
manage designated networked sensors and weapons systems to achieve
global and regional mission objectives. The network includes software,
as well as some hardware including high-end workstations, servers and
network equipment. The program delivers the software capabilities in
spirals--the current operational spiral is Spiral 6.2, which became
operational in December 2007. These software spiral deliveries are
first tested and then declared operational at servers located at
combatant commands, which are connected to each other as well as to
other strategic locations.
Spiral 6.4 Adds Capability to Control More Than One Radar in One
Region and Better Communicate and Manage BMDS Capabilities:
The next upgrade is Spiral 6.4, which is planned for operational use
in the third quarter of fiscal year 2011. Spiral 6.4 is the first
release of upgraded software since Spiral 6.2 became operational in
December 2007. Spiral 6.4 offers several upgrades to Spiral 6.2
including the Global Engagement Management, which will add the
capability to manage multiple AN/TPY-2 radars in a region to acquire
and discriminate threat tracks, then forward the best track to BMDS
weapon system fire controls. Spiral 6.4 will also improve C2BMC's
capability to send situational awareness data to European Command in
addition to the tri-node server which includes U.S. Strategic Command,
Northern Command, and Pacific Command. The program intends to declare
Spiral 6.4 operational for the tri-node in the third quarter of fiscal
year 2011. Concurrent with Spiral 6.4 fielding, the program is
preparing for the release of its next planned spiral capability
release, Spiral 8.2, in fiscal year 2015.
Spiral 6.4 Has Experienced Multiple Delays and Adjustments to Content
since Fiscal Year 2008:
The plan for Spiral 6.4 has changed significantly from when MDA
expected to release a single configuration for the tri-node in fiscal
year 2008. Since then, MDA has modified its releases to break-up
Spiral 6.4 into smaller increments of capabilities and for other
combatant commands. During fiscal year 2009, the program was replanned
to accelerate capabilities from Spiral 8.2 to Spiral 6.4 adding the
capability for C2BMC to manage multiple radars and to enhance the
BMDS' ability to perform early intercept.[Footnote 60] The following
year, in February 2010, the program decided to release its Spiral 6.4
multi-radar configuration in two separate releases--one for the tri-
node and then later for European Command. MDA added European Command
to address requirements for the European phased adaptive approach. In
addition, the program intended to later deliver a separate upgrade to
enhance the BMDS' ability to perform early intercept to both the tri-
node and European Command as well. Just 4 months later, MDA decided to
delay this early intercept capability until Spiral 8.2.
The C2BMC has experienced multiple delays in declaring Spiral 6.4
operational. It was originally planned to go operational in fiscal
year 2008. However, in 2008, the program delayed it to the first
quarter of fiscal year 2010 due to technical issues in both the
current operational capability, Spiral 6.2, and the developing
capability, Spiral 6.4. These delays were necessary because throughout
fiscal year 2008, Spiral 6.2 required more fixes than anticipated for
warfighter-identified deficiencies. In order to fix the deficiencies
the contractor delayed Spiral 6.4 work so that it could apply those
resources to the Spiral 6.2 problems. Specifically, experience with
testing the AN/TPY-2 with Spiral 6.2 identified the need to improve
radar track processing in Spiral 6.4. This, along with changes that
needed to be incorporated to meet new information assurance
requirements pushed Spiral 6.4 operational fielding to the first
quarter of fiscal year 2010. Then during fiscal year 2009, the program
added another year of development, delaying Spiral 6.4 to the first
quarter of fiscal year 2011 when it accelerated Spiral 8.2's
capabilities to control multiple radars, support early intercept, and
support deployment of Spiral 6.2 capability to European Command. In
June 2010, the program again delayed the tri-node server release of
Spiral 6.4 another 6 months to the third quarter of fiscal year 2011
because changes to the BMDS-level testing plan delayed the ground
testing necessary to declare the spiral operational.
C2BMC Completed All Ground Testing in Fiscal Year 2010 to Make
Progress toward Declaring Spiral 6.4 Operational:
During fiscal year 2010, the C2BMC program was able to successfully
complete ground testing as part of the series needed to declare Spiral
6.4 operational. MDA completed its first test of the initial C2BMC
Global Engagement Management capabilities during the second quarter of
fiscal year 2010. It was the first in a series of ground tests
necessary to declare Spiral 6.4 operational. This test successfully
demonstrated the capability of Global Engagement Manager to manage
operations of multiple AN/TPY-2 radars. This was the first major
system-level event using Spiral 6.4.
In addition, MDA completed a second ground test in the series during
the fourth quarter of fiscal year 2010. This integrated ground test
demonstrated system track forwarding between C2BMC and Aegis BMD as
well as supported C2BMC element-level verification. It also tested
mission functionality with GMD, AN/TPY-2, THAAD, Aegis, and Patriot.
Full analysis results of this testing are expected in fiscal year 2011.
C2BMC Plans for New Server at Central Command in Fiscal Year 2011:
During fiscal year 2010, MDA made the decision to install an
operational Spiral 6.2 server at Central Command during the second
quarter of fiscal year 2011. Program officials told us that this
capability was urgently needed in Central Command, so the agency made
Spiral 6.2 operational immediately rather than waiting until Spiral
6.4 was available.
[End of section]
Appendix IX: Ground-based Midcourse Defense (GMD):
Fiscal Year 2010 Events:
* The program completed the planned fielding of 30 GBIs;
* The GMD element continued the manufacturing and delivery of the
enhanced version of the kill vehicle known as the Capability
Enhancement II (CE-II) EKVs;
* The program failed to successfully intercept a target during its
only intercept test in fiscal year 2010. This was the first test
designed to assess the capability of the enhanced CE-II variant;
* The GMD element conducted a non-intercept flight test of its two-
stage GBI, which was originally designed for a European site.
What You Need To Know:
* GMD's expected service life is until 2032;
* To date, DOD has spent over $35 billion on this system and is
planning on spending approximately another $6 billion over the future
years defense plan;
* In response to the President's 2002 directive to deploy an initial
set of missile defense capabilities by 2004, MDA accelerated GMD
developmental activities and emplaced five Ground-based interceptors
(GBIs) by 2004;
* To date, GMD has fielded 30 GBIs: 20 with the original kill vehicle
known as the Capability Enhancement I (CE-I) and 10 with the enhanced
kill vehicle known as the Capability Enhancement II (CE-II);
* GMD has only successfully conducted 3 intercepts with the
operationally configured GBI;
* The CE-II EKV has failed in both flight test attempts to intercept a
target;
* GMD is expected to award a new development and sustainment contract
in fiscal year 2011, expected value of $600 million per year, not to
exceed 10 years.
Background and Overview:
The GMD element is a ground-based defense system designed to provide
combatant commanders the capability to defend the homeland against a
limited attack from intermediate-, and intercontinental-range
ballistic missiles from regional actors like North Korea and Middle
Eastern countries during the midcourse phased of flight. According to
the Director, MDA, the GMD program is expected to be in service until
2032:
The GMD element consists of a ground-based interceptor (GBI)--a
booster with an Exoatmospheric Kill Vehicle (EKV) on top--and a fire
control system that receives target information from BMDS sensors in
order to formulate a battle plan. GMD's planned acquisition cycle was
streamlined in response to the President's 2002 directive to deploy an
initial set of missile defense capabilities by 2004. To do so, the GMD
element concurrently matured technology, designed the element, tested
the design and produced and fielded a system. Additionally,
reliability and sustainability efforts normally addressed early in
development were deferred. Testing delays and cancellations have also
resulted in less knowledge than planned about the capabilities and
limitations of the system under development. For example, according to
MDA, with the focus on rapid development, there was not always
adequate opportunity to fully ground test the system prior to each
flight test attempt. Corrective actions focused, instead, on fixing
the problem at hand. According to officials from DOD, however, with
this approach, GMD was rapidly fielded for the limited defense of the
United States and its allies while development continued.
2010 Congressionally Mandated Reports:
The National Defense Authorization Act for Fiscal Year 2010[Footnote
61] mandated the Secretary of Defense to (1) conduct an assessment of
the Ground-based Midcourse Defense element and future options for GMD
and (2) establish a plan for the GMD element to cover the period of
the future years defense program. Additionally, the act mandated the
Comptroller General to review the assessment and plan and provide the
results to Congress. We briefed the Congress in October 2010 and
agreed to include the acquisition-related findings in this report.
Those findings are included below.
The two DOD reports were issued in May 2010 and covered numerous
topics including, but not limited to the following key areas:
* The capabilities as of the date of the assessment and any planned
capabilities.
* The plan to maintain the operational effectiveness of the GMD
element over the course of its service live, including sustainment
efforts.
* The plan for flight testing the GMD element, including aging and
surveillance tests to demonstrate the continuing effectiveness for the
system over its service life.
* The number of GBI missiles necessary for operational assets, test
assets, and spare missiles.
The following sections reflect GAO's findings on each of these topics.
GMD Fielded a Limited Defensive Capability in 2004:
The integrated capabilities of the GMD element are expressed as
performance baselines with associated performance metrics reported in
the BAR; however, DOD lacks the information needed to validate them.
DOD established performance metrics such as the Probability of
Engagement Success, Launch Area Denied, and Defended Area.[Footnote
62] To be credible, these metrics must to be informed by models that
are anchored by flight and ground test data, but test delays and
failures have provided less data than is needed for evaluation. For
example, at the end of fiscal year 2009, the data necessary for
validation, verification, and accreditation of GMD models was only 8
percent complete. Moreover, U. S. Northern Command officials stated
that they do not have confidence in the values provided by MDA for the
official metric of effectiveness (Probability of Engagement Success)
due to the low number of tests and the use of specification data
rather than test data.
Although uncertainties remain about the performance of GMD's
capabilities, a 2010 annual review of BMDS capability conducted by
U.S. Strategic Command highlighted an increasing confidence in GMD.
Additionally, the Director, Operational Test and Evaluation recently
concluded in its annual assessment that test results suggested GMD
provides a capability against limited, emerging, uncomplicated
threats. However, the lack of sufficient data for comprehensive model
and simulation validation and accreditation continues to preclude a
full evaluation of GMD performance.
DOD's Sustainment Program Critical to Ensure Effectiveness of the GMD
System through 2032:
GMD's sustainment program is expected to maintain and support an
effective defensive system over the expected 20-year lifecycle,
through 2032; however the decision to defer reliability and
sustainment efforts coupled with delays in collecting data has
hindered GMD's efforts to adequately plan sustainment efforts.
Although the program has been fielding interceptors since 2004, the
Director, MDA stated that the decision to maintain the GMD system
until 2032 is based on the fact that the expected lifespan for the
interceptors is 20 years and the last GBI is planned to be fielded in
2012 resulting in the 2032 timeframe.
The GMD sustainment program is comprised of multiple efforts. Key
among them is the Stockpile Reliability Program Plan, which is
intended to monitor the health of fielded interceptors, identify
reliability degraders, and mitigate obsolescence issues.[Footnote 63]
The Stockpile Reliability Program Plan was not finalized by GMD until
September 30, 2010[Footnote 64] and still requires additional data in
order for it to be fully implemented. For example, the reports states
that the "overall approach to accomplishing the GBI surveillance and
stockpile reliability program is to analyze data from GBI development,
sustainment, and flight testing activities throughout the lifecycle of
the deployed interceptor fleet." However, developmental testing to get
that data will not be completed until at least 2021.[Footnote 65] GMD
intercept tests conducted to date have already led to major hardware
or software changes to the GBIs--not all of which have been verified
through flight testing.
Formal Aging and Surveillance Testing[Footnote 66] Beginning; Data
Incomplete:
Aging and surveillance data, a key part of the Stockpile Reliability
Program Plan, for a certain limited set of GBI components are being
gathered by GMD contractors and other government organizations
including the Crane Division of the Naval Surface Warfare Center and
the U.S. Army Aviation & Missile Research, Development & Engineering
Center. However, testing will not be completed for many years.
Although Crane has been testing since 2008, a completion date has not
been determined because it is based on the sufficiency of data
received from ongoing component testing and funding. In addition,
according to Crane officials, the Aging and Surveillance Test Program
does not cover all Capability Enhancement-I (CE-I) component parts and
there are no current efforts to test any Capability Enhancement-II (CE-
II) specific components.
Comprehensive aging and surveillance testing is hampered by limited
availability of spare components for the booster and the EKV. For
example, according to Crane officials, they have had to obtain
components for testing from engineering units or returns. In addition,
artificially aged testing has not been conducted on the Inertial
Measurement Unit because there are insufficient numbers of components
available for testing.[Footnote 67] However, according to the DOD,
natural aging of the inertial measurement unit is being assessed.
Valuable, but Limited Data Provided by Current Maintenance Built-in
Test:
Maintenance Built-in Test (MBIT)[Footnote 68] testing provides trend
data for the status of the interceptor and determines the
interceptor's health, although the assessment is primarily pass/fail.
According to program officials, MBIT testing is conducted quarterly on
emplaced interceptors in the silos. However, an April 2007 report,
[Footnote 69] developed by a team that included the prime contractor,
warned that a lack of improvements to the MBIT may compromise GMD's
ability to make refurbishment decisions over the service life of
fielded GBIs.
GMD has developed enhanced MBIT testing to provide a better insight
into the health of the GBIs. For example, enhanced MBIT enables
program officials to gather more extensive and higher fidelity
telemetry data for components of the interceptor and develop detailed
graphical trends in the health and status for GBIs. According to
contractor officials, enhanced MBIT would add value to monitoring the
GBI fleet. However, currently only one silo is equipped with the
enhanced MBIT capability and according to MDA officials, there are no
plans to upgrade existing silos or to incorporate enhanced MBIT
capability in new silos being constructed.
Lack of Spare Component Parts Makes Planning for Refurbishments,
Repairs, and Unexpected Failures Difficult:
MDA lacks sufficient spare parts for EKV refurbishments and repairs.
According to MDA officials, besides the initial refurbishment kits
that were on contract, there were no other spare component parts
ordered for CE-I and CE-II EKVs. Consequently, there are no spare
components for CE-I refurbishments and only minimal spares for the CE-
II EKVs. Certain EKV components are specifically fitted for either the
CE-I or CE-II configuration, therefore these components are not
interchangeable. The lack of spare components could lead to difficult
choices if components that are no longer available fail. For example,
contractor officials stated that EKVs might need to be used as a
source for parts resulting in a reduction in available inventory.
MDA plans to purchase a specific amount of kits for scheduled
refurbishments, but GMD officials stated that the amount of additional
spare parts needed for unexpected failures and repairs has not been
determined. It is planned that as part of the development and
sustainment contract, which MDA expects to award in fiscal year 2011,
the contractor will define repair and spare hardware requirements for
each GBI. However, it is unclear when that will occur and at what cost.
Lower-tier GBI suppliers began completing delivery followed by a break
in production starting in 2007. All remaining third-and fourth-tier
GBI suppliers are expected to complete their deliveries in fiscal year
2010 with two exceptions--Aerojet and Rockwell Collins. Future GBI
procurements--five additional GBIs plus additional hardware to support
GBI scheduled maintenance activities--will require funding to restart
manufacturing lines. However, the full cost to restart and requalify
vendors is unknown. Although estimates for fiscal year 2010 and 2011
funding were provided, MDA has not yet developed a comprehensive cost
estimate for restart and requalification activities for all vendors
involved in GBI production beyond fiscal year 2011. Under the current
plan, any additional GBI purchases beyond that year will likely incur
redesign and development costs due to parts obsolescence and GBI
purchases after fiscal year 2013 will incur manufacturing line restart
costs for third-and fourth-tier GBI suppliers.
Reliability, Availability, and Maintainability Is Key for Developing
and Fielding Weapon Systems:
Reliability, Availability, and Maintainability (RAM) analysis provides
the probability that an item will perform its required function under
stated conditions for a specified period of time, measures failure
rates, sets corrective and preventative maintenance requirements, and
determines maintenance conditions and procedures. According to DOD's
Guide for Achieving Reliability, Availability, and Maintainability,
during system development, the most important RAM activity is to
identify potential failure mechanisms and to make design changes to
remove them. Achieving specified levels of RAM for a system is
important for many reasons; specifically because of the effect RAM has
on readiness, system safety, and mission success. Additionally, RAM
problems slow the development and fielding of systems, drive up total
cost, and degrade operational readiness and mission accomplishment.
However, according to a June 2010 MDA briefing on GMD's RAM program,
RAM was not designed into components nor were complete data collected
to inform RAM prior to 2007. Additionally, a comprehensive RAM program
was not developed until 2008.
Difficulty in Conducting GMD Flight Testing Delays Planned Knowledge:
Although MDA altered the GMD flight test tempo to one intercept per
year, it is unclear if it can still be executed successfully. Since
2004, we have continually reported that GMD has experienced difficulty
in conducting its annual flight test plan, a difficulty that continued
in 2010 as well. According to MDA's fiscal year 2010 budget request,
the GMD program expected to conduct two tests utilizing its two-stage
booster in fiscal year 2010. However, the program modified this plan
to include one intercept test (FTG-06) that utilized the enhanced kill
vehicle known as the CE-II EKV and one booster verification test for
the two-stage design.[Footnote 70] As we previously reported, FTG-06
was important because it was planned as the first intercept test of
this version of the EKV,[Footnote 71] and because it was designed to
demonstrate a long-flight time for the GBI and GMD's capability
against countermeasures. MDA officials told us that they will not add
the CE-II EKV to the operational baseline until after the successful
completion of an intercept test. One such test, FTG-06, was conducted
in January 2010, but was unsuccessful: the CE-II EKV failed to achieve
an intercept of the target. MDA chartered a failure investigation team
to investigate and determine the root cause of the failure.[Footnote
72] In light of the failure, the GMD program attempted to conduct a
similar test in December 2010--FTG-06a--but that test was also
unsuccessful due to a failure with the CE-II EKV.[Footnote 73]
The costs to conduct each GMD flight test are in the hundreds of
millions. For example, as we previously reported, MDA projected, prior
to FTG-06, that the test would cost over $236 million while the
Defense Contract Management Agency estimated that the cost was likely
to exceed $310 million. These costs were likely understated because
they did not include all of the cost increases of delaying the test
first to September 2009, nor did they include any cost increases of
further delaying the test to fiscal year 2010 or for investigating the
failure. Additionally, as noted above because FTG-06 failed MDA
inserted FTG-06a which was structured to capture the same objectives.
It is therefore likely that the cost to conduct the FTG-06a test was
similarly expensive.
It should be noted that although the program failed to successfully
complete its intercept tests in fiscal year 2010, MDA was able to
conduct a non-intercept flight test of its two-stage GBI (designated
BVT-01) in June 2010. Although all flight test objectives were
achieved, an EKV anomaly was experienced that might affect system
performance.
GMD testing delays and shortfalls have had three major consequences
for the program. First, delays in validating capability results in a
reduce level of knowledge needed to inform GMD models. Second the
production and fielding of the CE-II EKVs has gotten ahead of testing.
Currently, even though the CE-II has failed both intercept attempts,
12 of the 23 CE-II GBIs have already been delivered. Additionally,
according to the March 2010 plan, all CE-IIs under contract are
expected to be delivered prior to fully validating its capability.
[Footnote 74] Third, GMD's current flight test plan assumes success
and any flight test failures could require difficult decisions, such
as a reduction in planned developmental flight tests or the use of an
interceptor designated as an operational spares or for stockpile
reliability testing. For example, FTG-09, a salvo test planned for
fiscal year 2011, was canceled in order to re-conduct FTG-06. Although
the flight test objectives were moved to FTG-06a and FTG-08, this
removes an opportunity to collect performance data needed to develop
GMD models and to assess the capability of the EKV. Additionally, as
we previously reported, the repetition of intercept-related objectives
is important to build confidence in the intercept capability.[Footnote
75] Consequently, the delays in validating capability results in a
reduced level of knowledge needed to inform the GMD program leaving a
significant amount of data still needing to be gathered to fully
assess GMD capability. For example, the CE-I and CE-II capability
against countermeasures still is not validated, although MDA has been
attempting to obtain it since 2008 and EKV performance against its
main threat class--an intercontinental ballistic missile--will not
occur until at least 2014.
Planned Inventory of 52 GBIs Needed through 2032 Lacks Analysis:
In 2009, the Secretary of Defense reduced the number of planned
emplaced GBIs from 44 to 30, reducing the number of operational GBIs
needed. The reduced inventory includes 30 operational interceptors and
an additional 22 for testing and spares. Although officials from U.S.
Northern Command agree that 30 operational GBIs is currently
sufficient, as table 9 shows, the planned inventory lacks analysis:
Table 9: The Number of Ground-Based Interceptors Needed through 2032
Lacks Analysis:
GBIs: 30 Operational GBIs;
GMD analysis/justification for GBIs:
* The number of operational GBIs was a policy decision based on the
calculation of threat missiles;
Limitations:
* Sufficiency of operational GBI numbers is based on various
assumptions including the reliability of the interceptor. However, the
reliability of the interceptor is not fully known;
* MDA has not completed analysis to determine whether the 2032
timeframe for GBI lifespan is achievable.
GBIs: 16 flight test GBIs;
GMD analysis/justification for GBIs:
* According to DOD's Assessment, the number of necessary flight test
GBIs was dictated by the Integrated Master Test Plan;
Limitations:
* MDA's analysis for the number of GBIs necessary to conduct flight
testing assumes success: flight test failures could require an
adjustment to the remaining GBI inventory that supports operational
spares, stockpile reliability testing and flight testing.
GBIs: 6 Operational Spares and Stockpile Reliability Program Testing
GBIs;
GMD analysis/justification for GBIs:
* According to DOD's Assessment, the number of spare missiles needed
for spare requirements and Stockpile Reliability Program testing was
determined through reliability, availability, maintainability, and
testability analysis;
Limitations:
* We could not determine based on the RAM-T analytical materials
provided by MDA how it determined the number of GBIs needed for
operational spares and Stockpile Reliability Program testing;
* RAM was not designed into the components;
* Only limited RAM data are available; RAM quality data were not
collected prior to 2007;
* No GBIs are dedicated to aging and surveillance testing.
Source: GAO analysis of MDA data.
[End of table]
Appendix X: Precision Tracking Space System (PTSS):
Fiscal Year 2010 Events:
* MDA conducted architecture studies and system engineering, including
developing system concepts and determining capability needs.
What You Need To Know:
* Many aspects of the PTSS acquisition approach are consistent with
GAO-recommended best practices;
* However, MDA has developed an optimistic schedule to field an
operational constellation by fiscal year 2018;
* MDA faces significant design challenges in developing PTSS but has
mitigation plans in place to address them;
* Delays in fielding PTSS would significantly affect U.S. and European
missile defense.
Background and Overview:
PTSS is being designed to detect and track large ballistic missile
raid sizes beginning shortly after launch and throughout their
trajectories. Tracking ballistic missiles earlier in flight enables
earlier interceptor launches and the potential to shoot another
interceptor if necessary. Earlier intercept attempts improve ballistic
missile defensive capabilities and reduce the need for terrestrial
sensors and the size of deployable missile defense systems.
Many Aspects of PTSS's Acquisition Approach Are Consistent with GAO
Best Practices:
In alignment with GAO best practices, MDA plans to build two prototype
satellites to define the system performance and focus on cost-
effective production in an industrial environment. The prototype
design and operation will be heavily informed by the on-orbit STSS
demonstration satellites. Past GAO work identified Department of
Defense (DOD) programs that did not regularly test production-
representative prototypes before committing to production which led to
cost growth and schedule delays. We have recommended that DOD develop
fully-capable prototypes to demonstrate that the system can be built
efficiently and production and postproduction costs are minimized.
Also consistent with GAO best practices, MDA plans to separate
technology discovery from technology development by ensuring critical
technologies are matured before large-scale acquisition begins. In the
past, we have reported that some programs have attempted to satisfy
all requirements in a single step, regardless of the design challenge
or the maturity of technologies necessary to achieve the full
capability. We have recommended that DOD separate technology discovery
from acquisition and follow an incremental path toward meeting user
needs. MDA plans to utilize systems and components for the PTSS design
that are currently used in commercial satellite sensors without
significantly altering form, fit or function. In addition, the
Director, MDA stated that a key hallmark of the PTSS satellites will
be their relatively small size and simplistic design. For example,
rather than including a dedicated acquisition sensor to identify
ballistic missile launches, PTSS will rely on other existing DOD
infrared sensors to establish a ballistic missile launch, thus
removing the need for an acquisition sensor and simplifying the
overall design of the satellite.
MDA also plans to follow an incremental path toward meeting user needs
by using currently available technology to deliver near-term
capabilities while maintaining the flexibility to add capabilities
later. For example, combatant commanders identified a need for global
coverage of missile threats to the homeland. To address the need, PTSS
will initially be able to track regional medium-and intermediate-range
ballistic missile threats, with the potential to handle future
intercontinental ballistic missile threats to the United States. MDA
officials stated that they also have the flexibility to increase the
total constellation size by building and emplacing additional
satellites to further add to system capabilities, such as increasing
raid handling size. MDA plans to confine PTSS's program objectives to
track missile launches for the BMDS and exclude additional program
objectives to ensure that the design remains relatively simple. For
example, the program currently plans to exclude observation of space
objects, also known as space situational awareness, as a program
objective as it could complicate the design and scope of the program.
MDA officials stated that PTSS could potentially serve other
functions, such as space situational awareness, during times when the
satellite is not actively being used to serve the BMDS.
MDA Has Developed an Optimistic PTSS Schedule:
MDA has developed an optimistic PTSS acquisition approach to field an
operational constellation by fiscal year 2018. MDA plans to conduct
prototyping efforts beginning in fiscal year 2011 and launch two
prototype satellites in fiscal year 2015. MDA also plans to launch a
minimum of seven additional satellites by fiscal year 2018. According
to program officials, the two prototype satellites will become part of
the operational system forming a minimum nine-satellite constellation
in fiscal year 2018. Other DOD space programs have experienced long
development times to launch initial satellites. For example, Space
Based Infrared System (SBIRS) High, a program that will potentially
supply ballistic missile launch cues to PTSS, began development in
fiscal year 1997 and plans to deliver the first of six satellites in
fiscal year 2011, totaling approximately 15 years. Another example is
the MDA-developed Space Tracking and Surveillance System (STSS), a
program that will heavily inform PTSS. After years of research and
development efforts by the Air Force, MDA began refurbishing and
developing two demonstration STSS satellites in 2002 and launched the
satellites in fiscal year 2009, totaling about 8 years. PTSS intends
to develop and launch two prototype satellites in approximately 5
years. MDA stated that it has conducted three studies in recent years
and concluded that using current technologies for the payload design
may enable a rapid PTSS acquisition approach. However, it should be
noted that the program is not yet far enough along in development to
determine whether MDA's current acquisition plans will enable it to
develop and deploy the operational constellation faster than other DOD
space programs.
MDA Faces Significant PTSS Design Challenges but Has Mitigation Plans
in Place to Address Them:
Although MDA plans to follow many GAO-recommended best practices to
use mature technologies, MDA faces significant design challenges.
Officials in the Office of the Under Secretary of Defense for
Acquisition, Technology and Logistics (AT&L) have identified key
technical design challenges to PTSS that will benefit from long lead
analysis and prototyping activities, including payload design and
characterization. Key design risks include developing sufficient
sensitivity to detect and track post boost ballistic missiles,
tracking large raids of ballistic missiles, and mass-producing
payloads. According to AT&L officials, the program plans to address
these design challenges through the use of computer modeling and
simulations and refining payload design models. Modeling and
simulation is verified and validated by on-orbit test and activities
of STSS. Although the STSS program has experienced delays in obtaining
this data, MDA officials stated that they are confident that STSS will
collect the data in time to sufficiently inform PTSS.
MDA also faces significant design challenges integrating missile
launch cues from other DOD infrared sensors into the BMDS in order to
cue PTSS to track the detected missile launch. Since missile defense
applications run on a timescale of seconds to minutes, the overriding
challenges for receiving launch cues are obtaining on-demand tasking
priority for DOD infrared sensors and processing the cues on highly
compressed early intercept timelines. For example, to address
challenges with integrating launch cues, MDA is pursuing a
developmental initiative dedicated to incorporating DOD infrared
sensor cues within the BMDS. To obtain priority for DOD infrared
sensors, AT&L officials state that the main risk reduction effort is
to develop a joint concept of operations for their use.
MDA also faces challenges integrating C2BMC with PTSS, including
processing multiple PTSS missile tracks with other sensor tracks
simultaneously and filtering out false alarms without significant
processing delays. MDA plans to mitigate challenges by measuring and
planning for processing delays and simulating PTSS and C2BMC
interactions.
In addition, STSS, a program that heavily informs PTSS, has
encountered significant problems operating in a high radiation
environment in space. This environment is similar to the environment
PTSS will operate in. During fiscal year 2010, a radiation particle
collided with the STSS spacecraft processor while program officials
were conducting efforts to fully calibrate the STSS satellites.
Although program officials fully restored the affected processor, the
event delayed the STSS satellites reaching full operating capability.
MDA plans to mitigate environmental radiation issues by incorporating
lessons learned from STSS radiation issues into the PTSS program. For
example, PTSS program officials participated in STSS review meetings
to determine root causes and solutions for radiation issues that arose
during satellite calibration. In addition, MDA officials stated that
the radiation environment will be considered as a key factor during
the selection of PTSS satellite parts. PTSS also plans to use newer
satellite processors than STSS that have improved capabilities to
shield against radiation.
Delays in Fielding PTSS Would Significantly Affect U.S. and European
Missile Defense:
Delays in fielding a PTSS constellation in fiscal year 2018 would
significantly affect the implementation of the Phased Adaptive
Approach (PAA) to defend Europe and the United States against regional
ballistic missile attacks. MDA discovered that there were sensor
coverage gaps in its ability to acquire and track large ballistic
missile raid sizes, intercept ballistic missiles earlier in their
trajectories, assess intercept attempts in real time, and launch
additional interceptors if necessary. Currently, the sensor systems of
the BMDS consist of radar sensors, such as SBX and AN/TPY-2. According
to MDA, infrared satellites such as PTSS would have advantages over
terrestrial radars because they can limit the affect of weather
conditions, eliminate the need for host nation agreements, and observe
ballistic missile launches occurring in remote locations. In addition
PTSS is being designed to track large missile raid sizes soon after
launch to enable earlier intercepts. Such capabilities would alleviate
sensor coverage gaps and reduce the need for terrestrial sensors. For
example, according to MDA budget documentation, a small constellation
of PTSS satellites can provide coverage equivalent to approximately 50
AN/TPY-2 radars or 20 SBX radars. MDA plans to deploy a forward-based
AN/TPY-2 radar to southern Europe for Phase I of the PAA for the
defense of Europe and the United States. Although the AN/TPY-2 radar
can perform early missile tracking, the radar has inherent capability
limitations. It is therefore necessary to have additional sensors in
order to enhance early launch missile tracking capabilities. Delays in
the PTSS programs would prolong robust early intercept capabilities,
resulting in increased vulnerability to ballistic missile attacks.
[End of section]
Appendix XI: Space Tracking and Surveillance System (STSS):
Fiscal Year 2010 Events:
* Demonstration satellites progressed towards full capability
performance;
* STSS successfully tracked six missile targets;
* STSS performed two-dimensional and three-dimensional acquisition
sensor missile tracks;
* STSS performed a track of an intercontinental ballistic missile.
What You Need To Know:
* STSS has experienced several on-orbit issues following launch;
* MDA's decision to develop PTSS extended STSS's on-orbit activities
three years beyond its planned mission life;
* On-orbit issues and aggressive scheduling have led to significant
schedule delays;
* The program is at risk of not completing all data collections to
inform PTSS;
* Despite on-orbit issues, STSS has overcome significant challenges
and has reached full capability performance.
Background and Overview:
MDA is pursuing the STSS program as a space-based sensor component of
the BMDS. Over the past two decades, DOD has initiated several
programs and spent several billion dollars trying to develop a system
to track missiles from space. In 2002, MDA began refurbishing two
demonstration satellites from the Air Force SBIRS Low program that was
halted in 1999. MDA launched the demonstration satellites in September
2009 and fully calibrated the satellites in November 2010. Prior to
launch of the satellites, MDA officials stated the program experienced
2 years of delays because of development challenges which resulted in
over $400 million in cost growth. In addition, following launch of the
satellites, MDA encountered several on-orbit issues resulting in an 11-
month delay in fully calibrating the satellites. MDA initially planned
to begin fielding a follow-on operational STSS system in fiscal year
2011, however, MDA later decided against fielding an operational STSS
system, according to the Director, MDA, in favor of developing a
different satellite system, the PTSS. STSS will support the future
PTSS program by collecting critical risk reduction data during flight
tests to help inform PTSS design. MDA plans to launch two PTSS
prototypes in fiscal year 2015 and have a nine-satellite PTSS
constellation in place by fiscal year 2018.
MDA's Decision to Develop PTSS Extended STSS's On-Orbit Activities 3
Years beyond Its Planned Mission Life:
MDA's decision to develop PTSS significantly affected planned STSS on-
orbit activities. MDA developed on-orbit activities for the
demonstration satellites to help support and inform an operational
STSS system. Because of the decision to develop PTSS, MDA
significantly altered STSS's planned on-orbit activities almost 4
months after launch of the satellites. MDA decided to cancel the
dedicated flight tests for STSS because of language in the explanatory
statement related to the Defense Appropriations Act, 2010, that
suggested a reduction in funding. A report by the Senate Committee on
Appropriations related to a 2010 Defense Appropriation bill stated
that the demonstration satellites were built with payloads that would
demonstrate capabilities required under the former SBIRS-Low program
and that the PTSS constellation MDA is pursuing is very different from
the original SBIRS-Low concept and the STSS demonstration satellites.
The committee stated that while dedicated flight tests for STSS could
provide useful data to MDA, there was sufficient funding in the budget
request to demonstrate the STSS capability for which they were built.
STSS's revised on-orbit activities are planned to continue 3 years
past the satellites' planned mission life. As a result of MDA's
decision to cancel dedicated flight tests, program officials altered
their planned on-orbit activities for STSS to support PTSS by
collecting risk reduction data during BMDS test flights and targets of
opportunity. In fiscal year 2010, STSS successfully tracked six
missile targets over the last year producing very significant risk
reduction data for PTSS, according to program officials. Although MDA
has developed a plan to collect a majority of risk reduction data by
fiscal year 2013, the satellites will not complete the PTSS risk
reduction data collections until fiscal year 2016--3 years after the
satellites' planned mission life ends.
STSS has Experienced Several On-Orbit Issues Following Launch:
Since launch of the demonstration satellites in September 2009, STSS
has experienced over twenty-two on-orbit issues.[Footnote 76] For
example, shortly after launch, one of the satellites was unable to
autonomously stabilize itself during launch deployment. The operations
team had to manually rotate the satellite to a safe sun pointing
configuration. An anomaly review indicated that one of the satellite
alignment numerical matrices was missing a "comma," causing the
satellite to fire its stabilization thrusters inaccurately--a
potentially catastrophic failure. According to program officials, good
launch preparation enabled the team to successfully mitigate the
situation. Program officials stated that prior to launch, they had
practiced several contingency circumstances including the exact
scenario which occurred. According to program officials, whereas most
satellite programs only set up a few, if any, mobile command sites,
the STSS program set up multiple mobile command sites to monitor and
control the satellites throughout post-launch operations. Had the team
been unable to control the satellite, program officials said it was
possible that they could have lost the satellite entirely.
The most significant on-orbit issue STSS experienced delayed the
program by over 3 months. Less than 2 weeks after launch, program
officials discovered problems with the Attitude Determination and
Control System when one of the satellites lost lock on its alignment
stars. The satellite was conducting a system bake-out, a 3-week
process in which the satellite heats up so any remaining moisture in
the satellite evaporates, when the error occurred, forcing the
satellite to exit the system bake-out and rotate to a safe-sun
pointing position. Program officials uploaded corrective software
updates to the demonstration satellites about 5 months after the
problem was identified. Since the corrective software was uploaded,
program officials stated they have not experienced any additional
problems with the Attitude Determination and Control System.
The satellites have also experienced challenges operating in a high
radiation environment. About 11 months after launch, one of the
demonstration satellite's processors was struck by an atomic particle
resulting in a temporary memory issue. According to program officials,
they have fully restored the affected processor but anticipate that
such radiation events will happen approximately 4 times per year.
Although the program took measures to protect the satellites from
radiation damage, inherent risks remain while the satellites continue
to operate in a high radiation environment.
Program officials are also investigating the root cause of telemetry
problems with one of the demonstration satellites. While conducting a
payload software upgrade, the satellite experienced an anomaly that
prevented telemetry reporting of the cryocoolers, a system that
ensures the sensors are kept at an appropriately cool temperature
range. The lack of telemetry reporting prevented the sensor from
operating, resulting in over a 2-week delay. Program officials made
the decision to use backup hardware while they investigated the root
cause and now believe they have a better understanding of the problem.
On-Orbit Issues and Aggressive Scheduling Led to Significant Schedule
Delays:
Program officials stated that at launch, the program had an
aggressive, no schedule margin plan that was ultimately delayed by
approximately 11 months. Following launch of the demonstration
satellites, program officials planned to conduct initial satellite
check-out and sensors calibration to achieve full capability
performance of the satellites within 4 months. At that point, the
satellites would then begin collecting critical risk reduction data to
inform PTSS. However, due to on-orbit issues and aggressive
scheduling, the satellites did not reach full capability performance
until December 2010, approximately 15 months after launch.
STSS on-orbit issues resulted in significant delays in the program's
schedule. Half of the 22 on-orbit issues the program has experienced
to date resulted in schedule delays, ultimately delaying the
satellites from reaching full capability performance.[Footnote 77]
Because of on-orbit issues, MDA revised their test program and test
schedule to focus on achieving fully calibrated performance and
participating in interim BMDS-level flight tests.
The Program Is at Risk of Not Completing All Data Collections to
Inform PTSS:
The program is at risk of not completing all data collections before
the satellites' mission life is over, although the majority of data
collection will occur by fiscal year 2013. The STSS program expects to
fulfill all risk reduction data collection with the conclusion of
flight test FTG-17 in fiscal year 2016, resulting in a 7-year mission
life for the demonstration satellites. The STSS demonstration
satellites were designed to have a 4-year mission life and are
therefore at risk of not completing all data collections before the
satellites go inoperable. Program officials anticipate collecting a
large majority of risk reduction data by fiscal year 2013, within the
satellites' planned mission life.
STSS faces challenges coordinating flight tests to be able to collect
data when targets will be able to fly within the satellites' viewing
window. According to program officials, in order for STSS to view a
target during a flight test, the test has to be coordinated among STSS
program officials and testing officials when the STSS satellites will
be in a position to view the target. However, competing requirements
of other participating elements may require some tests to be conducted
without STSS's participation. For example, STSS was unable to collect
data in flight tests FTG-06, FTL-01, and FTG-06a because the target
did not fly within the satellite's view. Delays in collecting full
risk reduction data necessary for PTSS could result if STSS is unable
to collect data during planned flight tests.
In addition, program officials have identified insufficient funding as
a major risk to the program completing all data collections to inform
PTSS, a critical mission for the program. The STSS will support the
future PTSS program by collecting risk reduction data during flight
tests. As such, STSS is currently a mandatory asset for all BMDS-level
flight tests. Although the program has experienced almost 3 years in
schedule delays and over $400 million in cost overruns, program
officials assert that insufficient funding due to several years of
budget cuts may prevent the STSS program from collecting all the data
required for PTSS risk reduction.
Despite On-Orbit Issues, STSS Has Overcome Significant Challenges and
Reached Full Capability Performance:
Although the STSS demonstration satellites have encountered several on-
orbit issues, the STSS program has minimized the affect of these
issues and reached full capability performance in November 2010.
Program officials stated that both demonstration satellites have
healthy hardware and the remaining issues are understood by the
program office. Program officials stated that the satellites are
incrementally improving through testing and operations and are
currently exceeding sensor measurement requirements as well. Although
the satellites were delayed in reaching full capability performance in
fiscal year 2010, that capability has now been achieved and both
satellites routinely participate in BMDS flight tests and PTSS data
collection events. The satellites have been successfully participating
in flight tests and achieved several important accomplishments
including establishing a three-dimensional track of a ballistic
missile, tracking an intercontinental ballistic missile, and tracking
a medium-range missile early after launch through the midcourse phase.
Program officials are confident that on-orbit issues have not
disrupted risk reduction data collection to inform PTSS and that, the
majority of necessary data for PTSS will be collected by fiscal year
2013 according to the program's current schedule.
[End of section]
Appendix XII: Targets and Countermeasures:
Fiscal Year 2010 Events:
* Thirteen targets delivered and launched;
* There was one failure of a target, on the FTT-11 flight test;
* There were successful first launches of three new target types: LV-
2, JUNO, and ARAV-C;
* Solicitations for medium-and intermediate-range targets were issued;
* Medium-range solicitation was canceled after bids were received; no
contract was awarded;
* An undefinitized contract action with the prime contractor for
medium-range targets was issued.
What You Need To Know:
* Targets remain a source of delays in BMDS testing;
* Target failure in the FTT-11 flight test resulted in additional
costs and delays;
* A key MDA decision was not consistent with a targets acquisition
goal set in 2009;
* Reliance on the prime contractor may increase costs, and use of an
undefinitized contract action may increase the risk of further cost
growth;
* MDA will make more key acquisition decisions in fiscal year 2011,
which will have an impact on the extent of competition and the targets
industrial base.
Background and Overview:
The Targets and Countermeasures program provides ballistic missiles to
serve as targets in the MDA flight test program. The targets program
involves multiple acquisitions--including a variety of existing and
new missiles and countermeasures.
In response to cost and schedule problems, MDA initiated a new targets
acquisition strategy in 2009. Previously, MDA had relied on its prime
contractor, Lockheed Martin, for much of its target needs. However, we
found that this contracting approach had contributed to increased
costs because of higher labor costs and management fees imposed by the
prime contractor. In addition, the prime contractor's development of
new targets experienced recurring cost and schedule overruns,
contributing to delays in MDA's testing program. This Flexible Target
Family (FTF) approach, followed at the time, sought to design a group
of new targets with closely-related designs that could meet a range of
MDA needs for short, medium, and long-range targets. However, because
of the continuing cost and schedule problems, MDA suspended
development of the 52-inch FTF target in 2008, leaving only the 72-
inch FTF target, which experienced cost and schedule overruns of its
own.
In response to congressional concern about these problems and our
recommendations, MDA conducted a business case analysis that led in
2009 to a new approach to target acquisitions. This new approach was
to seek separate, competitive contract awards for different classes of
targets, allowing MDA to benefit from greater opportunities for
competition and reducing the role of the prime contractor.
MDA Had a Number of Successful Target Flights in Fiscal Year 2010,
Including New Targets:
In fiscal year 2010, MDA delivered 13 targets. The targets launched
during the year supported tests of several different BMDS elements,
including the THAAD, GMD, and Patriot systems. Three of the targets
launched were new developments.
MDA made important progress in target development during fiscal year
2010, launching three new targets. After a series of delays and cost
increases, the long-range 72-inch FTF target, referred to as the LV-2,
was launched for the first time in January 2010. According to MDA
officials, the target performed properly, although the interception by
the GMD system was unsuccessful. Two short-range targets, the JUNO and
the ARAV-C, were also successfully flown for the first time, in tests
of the Patriot system and Aegis BMD radar, respectively.
FTT-11 Failure Caused Delays and Cost Increases:
A target failure in the THAAD FTT-11 test resulted in additional
costs, delayed some other launches, and led to changes in MDA's
acquisition approach for air-launched targets. That short-range air-
launched target was the only unsuccessful launch in fiscal year 2010.
The target failed to initiate after it was dropped from the aircraft,
falling into the ocean, and as a result, FTT-11 was aborted. A
subsequent failure review board investigation identified the rigging
of cables to the missile in the aircraft as the immediate cause of the
failure. These cables are attached to the target while it remains
inside the aircraft, and are detached as the target is dropped from
the aircraft. However, the investigation identified shortcomings in
internal processes at the contractor as the underlying cause.
The agency took several actions in response to the failure and the
review board's findings. Through the Air Force Space and Missile
Systems Center, the holder of the underlying contract, it issued a
cure notice requiring the contractor to complete specific steps by
certain dates. If the contractor fails to do so, MDA may terminate or
descope the delivery orders. In addition, the government told the
contractor that it would halt further obligations of funding until the
first step called for in the cure notice--personnel and organizational
changes--was taken. MDA is in the process of a joint review and
"return to flight" process with the Space and Missile Systems Center.
According to MDA, the agency also incurred a total of $96.4 million in
costs because of the failure, including the loss of the target itself
and associated logistics ($38.5 million), the "return to flight" test
and related activities ($29 million), delays to other flight tests
($19.8 million), and increased mission assurance work ($9.1 million).
Targets Remained a Source of Delays for BMDS Testing:
Targets continued to be a source of delays for MDA's BMDS testing
program. We have previously reported that problems with the
availability and reliability of targets have caused delays in MDA's
testing of BMDS elements, and they continued to cause delays in fiscal
year 2010.[Footnote 78] According to MDA, 8 additional tests that had
been planned during fiscal year 2010 were delayed past the end of the
year or canceled. Five of these delayed tests were a result of the air
launch moratorium put in place after the failure of FTT-11. The
remaining 3 delays and cancellations were caused by factors outside
the targets program, such as congressional action modifying BMDS
elements.
In addition, MDA has changed its planned schedule of BMDS tests in
response to target availability. According to MDA officials, target
availability was a driving factor in determining the testing schedule
for the new version 10.2 of its Integrated Master Test Plan (IMTP). In
this revision, the agency delayed 11 tests compared to IMTP 10.1; 5 of
those tests were delayed for more than a year. MDA also accelerated 10
tests, 6 of which were accelerated by one fiscal year quarter.
[Footnote 79] In addition, MDA stated that the test program has been
restructured and the IMTP revised in support of the PAA.
Decisions on Acquisition of Targets Made in Fiscal Year 2010:
MDA issued a new competitive solicitation for medium-range targets in
the first quarter of 2010, as part of the new acquisition plan it
initiated in 2009. However, it canceled this solicitation in June
2010, after receiving proposals. According to MDA officials, the bids
received were more expensive than anticipated. The agency is presently
considering options for procuring medium-range targets. Officials said
that this includes the possibility of issuing a second medium-range
solicitation, but they have not yet done so. MDA additionally released
a draft solicitation for intercontinental-range targets in September
2010, also as part of its 2009 acquisition plan, but it was later
canceled as well.[Footnote 80]
Separately, MDA awarded a new undefinitized contract action to its
incumbent prime targets contractor.[Footnote 81] This action, signed
in April 2010, asked the prime contractor to build a new type of
medium-range air-launched target. The contract action initially
included three targets; the quantity was then increased to five
targets in September 2010. MDA officials stated that this new
acquisition was to obtain a second procurement source for air-launched
targets following the FTT-11 failure and was not in response to the
cancellation of the medium-range solicitation.
According to MDA officials, pursuing new air-launched targets through
an undefinitized action was necessary to meet the test schedule. The
extended use of undefinitized contract actions has previously been
identified by GAO and others as risky for the government. Because
contracting officers normally reimburse contractors for all allowable
costs they incur before definitization, contractors bear less risk and
have little incentive to control costs during this period. The
government also risks incurring unnecessary costs as requirements may
change before the contract is definitized.
The purchase of air-launched targets through this undefinitized
contract action is not consistent with the acquisition plan that MDA
established in 2009, which envisioned competitive contract awards that
would reduce the agency's reliance on its prime contractor.[Footnote
82] This purchase of air-launched targets increased MDA's reliance on
the prime contractor. We previously reported that conducting work
through the prime contractor had increased target costs. Likewise, in
comparing the prime contractor to other options prior to awarding the
contract action, MDA estimated that the prime contractor's management
and fees would add about $9 million per target compared to the Air
Force contract vehicle they had previously used. MDA still does not
know what the total cost will be for these targets--as of January
2010, the contract action had remained undefinitized for over 290
days, despite regulations that require such contract actions to
provide for definitization within 180 days.[Footnote 83] The current
not-to-exceed amount for this contract action is $496 million.
According to MDA officials, the delay in definitization is due to
changes in its requirements for the targets, and they anticipate
definitization in July 2011, by which time the contract action will
have remained undefinitized for about 450 days.
Key Targets Acquisition Decisions in Fiscal Year 2011 Will Shape
Program Outcomes:
The Targets and Countermeasures program will make several key
acquisition decisions in fiscal year 2011 that will shape outcomes
several years into the future, as well as decisions related to
contractor return to flight activities in the wake of the FTT-11
failure. (See table 10.)
Table 10: Key MDA Target Acquisition Decisions in Fiscal Year 2011:
Target class: Intercontinental;
Key fiscal year 2011 decisions: Release solicitation;
Anticipated date in fiscal year 2011: Canceled February 16.
Target class: Intermediate-range;
Key fiscal year 2011 decisions: Award contract;
Anticipated date in fiscal year 2011: Second quarter.
Target class: Medium-range;
Key fiscal year 2011 decisions: Definitize contract action;
Identify acquisition approach for additional targets;
Anticipated date in fiscal year 2011: July; No set timetable.
Source: GAO analysis of MDA information.
[End of table]
Officials stated that now that proposals have been received for the
intermediate-range target, they are in the process of evaluating the
proposals, and anticipate a contract award in the second quarter of
fiscal year 2011. A goal of this contract is to build an inventory of
targets that can be used to meet testing needs as they arise.
Likewise, MDA may also make a decision on its strategy for procuring
medium-range targets. Following the cancellation of the solicitation
in 2010, MDA officials reported that they are considering options for
procurement of future medium-range targets. The agency cited both a
new solicitation and the use of existing contracts as options they are
considering. Use of existing contracts--as MDA has already done for
five targets under the undefinitized contract action with its prime
contractor--would reduce planned opportunities for competition and not
be consistent with the acquisition approach the targets program
initiated in 2009.
Finally, the return to flight process for MDA's air-launch contractor
will also take place during fiscal year 2011. Following the December
2009 failure of FTT-11 and the subsequent failure review board report,
MDA halted flight tests that use the contractor's systems or
components, and has been working with the firm to address problems.
The results of the "return to flight" test, a target launch that is
presently scheduled for the third quarter of fiscal year 2011, will
inform MDA decisions regarding targets currently on contract with the
firm, as well as potential future contract awards.
[End of section]
Appendix XIII: Terminal High Altitude Area Defense (THAAD):
Fiscal Year 2010 Events:
* FTT-11 was declared a no-test due to a target failure;
* The program successfully conducted FTT-14 to prove out objective
software for THAAD batteries;
* The program completed ground component deliveries for THAAD Battery
1 and 2;
* The program successfully completed qualification on interceptor
ignition safety system.
What You Need To Know:
* THAAD interceptor design and qualification issues delay delivery of
the first two batteries;
* The THAAD program is currently mitigating production issues;
* Conditional release of THAAD Batteries to the Army is delayed 6
months;
* Successful THAAD flight test proves out objective software for
batteries during fiscal year 2010;
* Targets issues continued to delay test schedule and achievement of
knowledge points.
Background and Overview:
The THAAD element is a rapidly-deployable ground-based system able to
defend against short-and medium-range ballistic missile attacks during
their late midcourse and terminal stages. A THAAD battery consists of
interceptor missiles, three to six launchers, an X-band radar, and a
fire control and communications system. The THAAD program is producing
assets for initial operational use, but it is still qualifying
components, conducting flight tests, and having issues with targets.
THAAD Interceptor Design and Qualification Issues Have Delayed
Delivery of the First Two Batteries:
Delivery of the first two THAAD batteries has been delayed by
interceptor design and qualification issues. MDA's first THAAD battery
was originally to be delivered in the fourth quarter of fiscal year
2010 but due to design and qualification issues with an ignition
safety system on the interceptors, the 24 interceptors for the first
battery won't be completed until the fourth quarter of fiscal year
2011. The full 48 interceptors necessary for both batteries won't be
delivered until the second quarter of fiscal year 2012, three quarters
later than originally intended. All of the remaining radars, fire
controls, and other ground support equipment have been delivered for
the first two batteries except for the launchers for Battery 1 and
Battery 2 which are experiencing a 2-year delay in completing the
government acceptance process. The launchers were originally planned
to complete this process by the third quarter of fiscal year 2009, but
now the program does not expect this process to be completed until the
third quarter of fiscal year 2011. These delays stem from production
issues associated with manufacturing challenges, parts obsolescence,
design changes, and manufacturing defects. The government acceptance
process was also contingent upon launcher qualification which, due to
an ongoing development effort and changing designs, did not occur
until February 2011. In addition, discoveries during a recent ground
test have led to further design changes which are not expected to be
completed until the second or third quarter of fiscal year 2011.
MDA's delays in incorporating the requirement for the optical block,
an ignition safety system to prevent inadvertent launches, led to the
design and qualification issues. In 2003, an Army safety review board
identified the requirement to install an optical block on the THAAD
interceptor's initiation system. However, MDA did not modify the
development contract to include this requirement until 2006. In
addition, MDA awarded a production contract in December 2006 before a
design for the optical block was selected. To date, 7 years after the
optical block requirement was identified, program and contractor
officials told us that full recurring costs have not been determined
and the requirement has not been defined on the production contract.
Although the safety switch itself had been qualified, the program's
first qualification of the integrated design in early fiscal year 2010
failed due to contamination. After making changes to the manufacturing
process, the part was able to pass qualification in September 2010.
Although the program recently completed efforts to requalify the
optical block component, failures during recent in-processing testing
on the integrated design have again led the program to make minor
design changes and delayed production of the first interceptor for a
THAAD battery another quarter. The program was on-track to produce the
first interceptor for THAAD Battery #1 in the first quarter of fiscal
year 2011, but due to corrective actions to a circuit in the
integrated design, the program won't be able to produce its first
interceptor for a THAAD battery until the second quarter of fiscal
year 2011. This extra quarter is in addition to the more than a year
delay from the original planned date. According to program officials,
the program plans to develop another design of the optical block that
is more producible for use on THAAD battery interceptors in the future.
The THAAD Program Is Currently Mitigating Production Issues:
In addition to completing its optical block design qualification, the
THAAD program office is pursuing mitigation plans on other production
risks including production rates and production gaps.
The THAAD program has a plan in place to ensure the interceptors can
be produced at the necessary rate of four per month to meet planned
delivery dates. One of the parts that has yet to demonstrate the
required rate is the flight sequencing assembly, which houses the
optical block. Currently, the program has only demonstrated producing
one flight sequencing assembly every 2 months. A variety of issues
have prevented the subcontractor from demonstrating the necessary
production rate including design changes and producibility issues
associated with the optical block as well as availability of optical
block parts from the contractor that produces it. However, according
to the program office, the main issue that led to such a low level of
production was a time-consuming testing procedure during the
production process of the flight sequencing assembly. A new process
has been devised to significantly speed up this testing and program
officials are projecting that, with this process in place, production
rates will increase to one per week--meeting the four per month
required rates. The program hopes to demonstrate this new production
rate as production resumes.
The THAAD program also faces a production gap that poses cost and
schedule risks to retrain workers and recertify and requalify
production processes. The contract award for Battery 3 interceptors
was delayed by approximately 6 months to the end of fiscal year 2010
which contributed to a 1-year production gap for some interceptor
components. Program officials told us that the cost to restart
production for the subcontractors would be rolled up into the contract
during the negotiation process. In addition, the contract for THAAD
Battery 3 and 4 ground components and Battery 4 interceptors was not
awarded as planned in the first quarter of fiscal year 2011, adding to
the production gap of up to 3 years for some ground components.
Program officials told us that delays to the contract award are
because of ongoing contract negotiations. MDA is negotiating a
contract which will include sections priced on a fixed-price incentive
(firm target) basis for ground equipment and interceptors.[Footnote
84] The contract is expected to be awarded in the second quarter of
fiscal year 2011. Because there are fewer ground components than
interceptors to produce, the program anticipated these gaps but could
do nothing to prevent them. The program plans to negotiate these costs
with the future contract but the effect of these gaps on cost is not
yet known.
Conditional Release of THAAD Batteries to the Army Is Delayed 6 Months:
The THAAD program has delayed its conditional release of batteries to
the Army from September 2010 until April 2011 because of ongoing
safety issues with interceptor components. For the release to occur,
the Army must certify that the batteries are safe, suitable, and
logistically supported. According to program officials, the Army
Safety Review Board will perform safety testing on the integrated
design of the optical block to be completed in February 2011. These
results are needed before the release board can make its decision.
However, the review board would need to perform repeat testing on 21
integrated designs of the optical block in order to achieve full
materiel release, so THAAD will continue with conditional materiel
release after passing Army safety testing on 3 units of the integrated
designs.
In addition, program officials told us that THAAD is also accepting
conditional materiel release because of its inability to incorporate
another safety feature into the initial production units. This safety
feature, called a thermally initiated venting system (TIVS) prevents
explosion of the boost motor in the event that the canister holding
the interceptor heats up to a certain temperature. The THAAD program
provided an authorization to proceed on the requirement for TIVS in
June 2007--more than 6 months after the production contract was
signed. The scope of the work for TIVS on the production contract has
yet to be authorized by the THAAD program. A developmental test of the
early TIVS design resulted in a test failure. The program has planned
corrective actions which will be tested during an upcoming
verification test in the second quarter of fiscal year 2011. The THAAD
program will not be able to start producing interceptors with this
safety feature until it has produced more than half of its production
quantity for the first two batteries. Because it cannot deliver
interceptors with this safety feature to meet the requirement for full
materiel release up front, according to program officials, the Army
will accept conditional material release of THAAD and the THAAD
program will cut-in the TIVS design in the production process during
the fourth quarter of fiscal year 2011.
Successful THAAD Flight Test Proves Out Objective Software for
Batteries during Fiscal Year 2010:
Despite test delays over the past 2 years due to targets issues, the
THAAD program was able to conduct a flight test in June 2010 that
successfully demonstrated the complete objective software for the
THAAD battery. After reorganizing its testing schedule due to address
issues with air-launched targets, the program was able to accelerate
the next test that did not use the air-launched targets, FTT-14, from
the second quarter of fiscal year 2012 to the third quarter of fiscal
year 2010. The program changed FTT-14's objectives to demonstrate
component objective software for the THAAD battery in order to meet an
important knowledge point for the program. Also during the test, the
program was able to successfully demonstrate THAAD's performance
against a simulated mass raid scenario.
Targets Issues Continued to Delay Test Schedule and Achievement of
Knowledge Points:
Since 2009, the THAAD program has experienced multiple delays and test
restructures that have affected the program's ability to achieve
knowledge points. The THAAD program was unable to conduct planned
tests FTT-11 and FTT-12 in fiscal year 2009 due to target availability
issues and an agency-wide restructuring of its testing schedule. Both
of these tests were slated to meet key knowledge points to demonstrate
the AN/TPY-2 (THAAD mode) radar's advanced discrimination capabilities
and to demonstrate the component objective software for the THAAD
battery, respectively. These tests were delayed into fiscal year 2010.
However, in December 2009, FTT-11 resulted in a "no test" due to a
target failure related to air-launched targets. This target failure
led MDA to suspend all tests involving air-launched targets (see
appendix XII for a detailed discussion of target issues). The THAAD
program then had to reorganize its testing plans delaying FTT-12 and
FTT-13, accelerating FTT-14, and changing its test objectives to meet
the knowledge point originally planned for FTT-12 to prove out THAAD
battery objective software. Although the program was able to
successfully demonstrate this knowledge point, it won't be able to
demonstrate the AN/TPY-2 (THAAD mode) radar's advanced discrimination
capability until the fourth quarter of fiscal year 2011, nearly 2
years after it was originally planned. The third knowledge point to
demonstrate a flight test intercept against a medium-range ballistic
missile target to be met during FTT-13, has been delayed from the
second quarter of fiscal year 2011 until the third quarter of fiscal
year 2012 because of the lack of availability of a medium range air-
launched target. See table 11 for how THAAD's flight test objectives
have changed.
Table 11: THAAD's Knowledge Point Objectives by Test Before and After
the FTT-11 Failure in December 2009:
Knowledge points to achieve intercept versus medium-range target:
Demonstrate AN/TPY-2 (terminal mode) radar advanced discrimination;
Before FTT-11 failure: Flight test: FTT-11;
Before FTT-11 failure: Date: First quarter fiscal year 2010;
After FTT-11 failure: Flight test: FTT-12;
After FTT-11 failure: Date: Fourth quarter fiscal year 2011.
Knowledge points to achieve intercept versus medium-range target:
Demonstrate complete component objective software for THAAD batteries;
Before FTT-11 failure: Flight test: FTT-12;
Before FTT-11 failure: Date: Second quarter fiscal year 2010;
After FTT-11 failure: Flight test: FTT-14;
After FTT-11 failure: Date: Third quarter fiscal year 2010.
Knowledge points to achieve intercept versus medium-range target:
Demonstrate flight test intercept against a medium range ballistic
missile target;
Before FTT-11 failure: Flight test: FTT-13;
Before FTT-11 failure: Date: Second quarter fiscal year 2011;
After FTT-11 failure: Flight test: FTT-13;
After FTT-11 failure: Date: Third quarter fiscal year 2012.
Source: MDA (data); GAO (analysis).
[End of table]
[End of section]
Appendix XIV: Scope and Methodology:
To assess all six areas of MDA's progress, we examined the
accomplishments of nine BMDS elements that MDA is currently developing
and fielding: the Aegis Ballistic Missile Defense (Aegis BMD); Aegis
Ashore; BMDS Sensors; Command, Control, Battle Management, and
Communications (C2BMC); Ground-based Midcourse Defense (GMD);
Precision Tracking and Surveillance System (PTSS); Space Tracking and
Surveillance System (STSS); Targets and Countermeasures; and Terminal
High Altitude Area Defense (THAAD). We developed data collection
instruments that were completed by most elements' program offices
[Footnote 85] and reviewed the individual element responses. These
instruments collected detailed information on prime contracts, test
schedules and results, element performance, noteworthy progress,
lessons learned, and challenges facing the elements during the fiscal
year. We also performed detailed reviews of the progress made within
selected Missile Defense systems, or elements. The results of these
reviews are presented in detail in appendixes to this report and are
also integrated as appropriate in our findings related to progress in
delivering assets and implementing new initiatives. We also examined
the cost/resource, schedule and test baselines as presented in the
BMDS Accountability Report (BAR), test plans and reports, and
production plans. We sought to examine MDA's Baseline Execution
Reviews of each element's progress, but were unable to asses the
supporting backup materials as they were not made available to us
until February 2011--the very end of the audit.
To assess whether MDA elements delivered assets as scheduled, we
examined the 2009 BMDS Accountability Report, and compared it to the
2010 version, looking for similarities and differences between the
two. We also reviewed responses to GAO data collection instruments,
which detailed key accomplishments for fiscal year 2010, to include
some asset deliveries, as well as any delayed asset deliveries.
To follow up on the progress MDA made to improve transparency and
accountability, we held discussions with officials in MDA's Operations
Directorate to discuss the new phased adaptive approach as well as the
status of transparency and accountability issues the agency initiated
in early 2010. In addition, we reviewed pertinent DOD policies to
compare MDA's current level of accountability with that of other DOD
programs. We interviewed officials from the Office of the Under
Secretary of Defense for Acquisition Technology and Logistics to
discuss the oversight role of the Missile Defense Executive Board. We
also met with officials in MDA's Acquisition Directorate to discuss
how the agency is establishing and managing its internal baselines. We
also reviewed various MDA statements and documents related to MDA's
new phased adaptive approach. We reviewed DOD acquisition system
policy and various DOD directives to gain insight into other DOD
systems' accountability and oversight mechanisms. We also analyzed
MDA's acquisition directives and Missile Defense Executive Board
briefings to examine MDA's current level of oversight. In addition, we
reviewed MDA's Fiscal Year 2010 BMDS Accountability Report, Integrated
Master Test Plans, MDA budget estimate submission justifications, the
Ballistic Missile Defense Master Plan, and prior reports that outlined
the agency's baselines and goals.
To assess the management process to synchronize acquisitions for the
European Phased Adaptive Approach, we synthesized management and
oversight principles from the Office of Management and Budget, DOD,
the Missile Defense Agency (MDA), and GAO best acquisition practices
for large acquisition efforts similar to EPAA. We then compared EPAA
acquisition efforts to these principles. To determine the status of
those efforts, we reviewed DOD and MDA documentation related to EPAA,
including the Ballistic Missile Defense Review (BMDR) Report and MDA's
BMDS Accountability Report (BAR). We also requested the European PAA
cost estimate that was completed in fall of 2009. However, we did not
receive the cost estimate until near the end of our review and
therefore we could not perform and include the related analysis in our
review. We met with MDA and Office of the Secretary of Defense
officials. We also visited the U.S. European Command and U.S.
Strategic Command. In addition, to identify near-term development
risks, we reviewed MDA's BMDS acquisition documentation, including the
integrated master test plan and budget documents. We met with
officials from MDA directorates and element program offices as well as
the Offices of the Under Secretary of Defense for Policy and the Under
Secretary of Defense for Acquisition, Technology, and Logistics and
visited contractor facilities. We also used prior GAO work regarding
best acquisition practices to assess those risks.
We included the acquisition parts of our final analysis performed in
response to a congressional mandate that we review a DOD assessment
and plan related to the GMD system that included issues related to
acquisition, sustainment and refurbishment. To assess DOD's Assessment
and Plan for the GMD program, we reviewed the reports provided by DOD.
We sought the analysis and assumptions behind the statements in the
reports; however, in certain cases MDA was unable to provide
supporting documentation or the documentation provided was determined
to be insufficient to assess. Specifically, we analyzed sustainment,
refurbishment and test plans and program schedules. We also assessed
budget documents, and program reviews. We interviewed officials from
MDA, U.S. Strategic Command, U.S. Northern Command, and the Army. We
also interviewed officials from DOD's Office of the Director, Test and
Evaluation, and the Space and Missile Defense Command. We met with GMD
contractors, Boeing and Raytheon, and met with officials from the
Naval Warfare Center, Crane Division to discuss aging and surveillance
testing. Our analysis covered data ranging from January 2002 through
September 2010.
We assessed MDA's testing and target development progress by reviewing
the technical baselines in the BAR, MDA's Integrated Master Test
Plans, the target business case analysis, target contracts, and other
documents related to target planning and acquisitions. In addition, we
met with officials in the Targets and Countermeasures Program Office
to obtain information on the target acquisition strategy including
plans for cost, schedule, and testing as well as to discuss the
progress, challenges, and lessons learned during fiscal year 2010
testing. We also interviewed officials within program offices and
within MDA functional directorates, such as the Directorates for
Engineering and Testing. In addition, we discussed the elements' test
programs and test results with the BMDS Operational Test Agency and
DOD's Office of the Director, Operational Test and Evaluation. We held
discussions with the BMDS Operational Test Agency to follow up on BMDS
models and simulations.
As we agreed to with your staff, we do not include an analysis of
MDA's earned value management reporting this year. In prior years, in
the absence of full cost baselines for elements, we assessed the
earned value management progress of individual contracts. We issued
our findings on MDA's earned value progress during fiscal year 2009 in
July 2010 and found data reliability issues with two of the 14
contracts.[Footnote 86] Because of these issues with the GMD and
Targets and Countermeasures programs' earned value management data, we
were unable to report cost progress for these two contracts which
amounted to more than half of the total budgeted contract costs for
MDA prime contracts we reviewed. We plan to re-assess earned value
management data on MDA prime contracts in the future once MDA has had
time to address our recommendations to improve data reliability. In
our July report, MDA stated that it intended to take a key step in
addressing our recommendations by conducting a major review of the GMD
program's EVM data by the end of September 2010. Because MDA provided
documentation of its actions at the end of our audit--in February
2011--leaving no time for review, we will assess whether the steps MDA
has taken sufficiently address GMD's data reliability issues in next
year's report.
As noted above, during the course this audit, we experienced
significant delays in obtaining information from MDA. During the
audit, MDA did not always provide GAO staff with expeditious access to
requested documents and articles of information, which delayed some
audit analysis and contributed to extra staff hours. Notwithstanding
these delays, we were able to obtain the information needed to satisfy
our objectives in accordance with generally accepted government
auditing standards. However, we were not given access until Late
February 2011 to the September 2009 European Phased Adaptive Approach
cost estimate, the backup material for the Baseline Execution Reviews,
or the actions MDA took to respond to our previous recommendations on
Earned Value Management. As a result, we were unable to assess this
material as part of this year's annual review. We intend to review
this material as part of our next mandated annual assessment.
Our work was performed at MDA headquarters in Arlington, Virginia, in
Dahlgren, Virginia, at various program offices and contractor
facilities located in Huntsville, Courtland, and Troy, Alabama, and at
contractor facilities in Orlando, Florida. In Arlington we met with
officials from the Airborne Laser Testbed Program Office; Command,
Control, Battle Management, and Communications (C2BMC) Program Office;
MDA's Operations Directorate; DOD's Office of the Director,
Operational Test and Evaluation; and the Office of the Under Secretary
of Defense for Acquisition, Technology and Logistics. In Dahlgren we
met with officials from the Aegis Ballistic Missile Defense Program
Office. In Huntsville, Alabama we interviewed officials from the
Ground-based Midcourse Defense (GMD) Program Office, the Sensors
Program Office, the Space Tracking and Surveillance System Office, the
Terminal High Altitude Area Defense Project Office, the Targets and
Countermeasures Program Office, the Advanced Technology Directorate,
and Test Directorate. We also met with Lockheed Martin officials in
Huntsville and Courtland, Alabama to discuss their role on the MDA
Targets and Countermeasures prime contract, and production of
intermediate-range targets. In addition, we met with Orbital Sciences
officials to discuss their role as a contractor and subcontractor
providing medium-range targets. We also met with Coleman Aerospace
officials in Orlando, Florida to discuss their work on short-range
targets and the actions they are taking in response to a December 2009
target failure. We met with Lockheed Martin official in Troy, Alabama
to discuss their role in developing THAAD interceptors.
We conducted this performance audit from March 2010 to March 2011 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.
[End of section]
Appendix XV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Cristina Chaplain (202) 512-4841 or chaplainc@gao.gov:
Acknowledgments:
In addition to the contact named above, David Best, Assistant
Director; LaTonya Miller; Ivy Hübler; Teague Lyons; Steven Stern;
Gwyneth Woolwine; Meredith Allen Kimmett; Brian Tittle; Letisha
Antone; Kenneth E. Patton; Karen Richey; Hai Tran; Robert Swierczek;
Nicolaas Cornelisse; Matthew S. Spiers; Rebecca Guerrero; and Alyssa
Weir made key contributions to this report.
[End of section]
Footnotes:
[1] GAO, Defense Acquisitions: Missile Defense Transition Provides
Opportunity to Strengthen Acquisition Approach, [hyperlink,
http://www.gao.gov/products/GAO-10-311] (Washington, D.C. Feb.25,
2010).
[2] Knowledge-based acquisition practices are used by successful
developers to get quality products to customers as quickly and cost
effectively as possible. As a part of meeting this goal, developers
focus their technology programs on maturing technologies that have the
realistic potential for being incorporated into the product under
consideration. Accordingly, successful developers spend time to mature
technology in a technology setting, where costs are typically not as
great, and they do not move forward with product development until
essential technologies are sufficiently mature.
[3] An element of the BMDS is essentially a program that, together
with other BMDS elements or programs, comprises a complex system of
defense. MDA intends for each element to play an important role in a
system intended to defend against hostile missiles in any phase of
flight. An element may consist of several components.
[4] National Defense Authorization Act for Fiscal Year 2002, Pub. L.
No. 107-107, § 232(g) (2001); Ronald W. Reagan National Defense
Authorization Act for Fiscal Year 2005, Pub. L. No. 108-375, § 233
(2004); National Defense Authorization Act for Fiscal Year 2006, Pub.
L. No. 109-163, § 232; John Warner National Defense Authorization Act
for Fiscal Year 2007, Pub. L. No. 109-364, § 224 (2006); and National
Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, §
225.
[5] We did not assess MDA's progress in fiscal year 2002 as the agency
did not establish goals for that fiscal year. We delivered the
following reports for fiscal years 2003 through 2007: GAO, Missile
Defense: Actions Are Needed to Enhance Testing and Accountability,
[hyperlink, http://www.gao.gov/products/GAO-04-409] (Washington, D.C.:
Apr. 23, 2004); Defense Acquisitions: Status of Ballistic Missile
Defense Program in 2004, [hyperlink,
http://www.gao.gov/products/GAO-05-243] (Washington, D.C.: Mar. 31,
2005); Defense Acquisitions: Missile Defense Agency Fields Initial
Capability but Falls Short of Original Goals, [hyperlink,
http://www.gao.gov/products/GAO-06-327] (Washington, D.C.: Mar. 15,
2006); 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.: Mar. 15,
2007); 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.: Mar. 14,
2008); 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); and [hyperlink,
http://www.gao.gov/products/GAO-10-311].
[6] MDA reports its goals in the annual BAR. The agency did not issue
its 2010 goals report until June 2010--4 months later than required.
The National Defense Authorization Act for Fiscal Year 2002, Pub. L.
No. 107-107 § 232(c) required DOD to establish cost, schedule, testing
and performance goals for the BMDS and to submit a statement of these
goals to the congressional defense committees by February 1, each
year. The BAR currently is used to meet this requirement.
[7] The baseline is considered the program's initial business case--
evidence that the concept of the program can be developed and produced
within existing resources. The baseline, derived from the users' best
estimates of cost, schedule, and performance requirements, provides
decision makers with the program's total cost for an increment of
work, average unit costs for assets to be delivered, key dates
associated with a capability, and the weapon's intended performance
parameters
[8] GAO, Missile Defense: European Phased Adaptive Approach
Acquisitions Face Synchronization, Transparency, and Accountability
Challenges, [hyperlink, http://www.gao.gov/products/GAO-11-179R]
(Washington, D.C.: Dec. 21, 2010).
[9] According to MDA, the European PAA cost estimate was not a formal
cost estimate, but an interim work product to provide a sense of
budget requirements for European PAA considerations. The agency also
noted that the Office of the Secretary of Defense's Cost Analysis and
Program Evaluation does not endorse the estimate because of the
insufficient definition of mission requirements and technical
requirements, as well as a lack of validated, projected technical
capabilities that MDA states will be accomplished through its test
program.
[10] DOD was mandated in the National Defense Authorization Act for
Fiscal Year 2010 Pub. L. No. 111-84, § 232 (2009) to conduct an
assessment of the GMD element and establish a plan for GMD to cover
period of the future years defense program. Additionally, the
Comptroller General was mandated to review the plan and assessment and
provide our assessment, which we did in a briefing on October 15, 2010
to all four defense committees. We have included the key acquisition
related material in appendix IX.
[11] GAO, Defense Acquisitions: Missile Defense Program Instability
Affects Reliability of Earned Value Management Data, [hyperlink,
http://www.gao.gov/products/GAO-10-676] (Washington, D.C.: July 14,
2010).
[12] 7 of these missiles were redelivered in 2009, and the remaining 6
were redelivered in 2011.
[13] The GBI used during the fiscal year 2010 flight test was a two-
stage variant. The remaining 2010 GBI deliveries were the three-stage
variant, which are designed for operational use.
[14] [hyperlink, http://www.gao.gov/products/GAO-10-311].
[15] The operational capacity baseline, as defined in the 2010 BAR, is
a detailed timeline and set of steps required to certify that BMDS
capabilities are ready for operational use, including steps needed for
obtaining compliance with information assurance requirements,
documenting capabilities and limitations, and completing warfighter
training requirements. However, in commenting on a draft of this
report, DOD stated that an operational capacity baseline identifies
elements and approved hardware and software configuration available
for operational use by the combatant commanders.
[16] The technical baseline is a detailed technical description of the
capability being developed and planned improvements over time. The
description reflects system requirements and describes how particular
capabilities satisfy the combatant commanders' prioritized
capabilities and the key knowledge points that must be achieved for
continued program development.
[17] The contract baseline is a timeline for a set of MDA contracts
designed to deliver integrated BMDS capabilities. The timeline
highlights the steps in the contracting process from request for
proposals through proposal receipt, negotiations, and contract award.
[18] 10 U.S.C. § 2432 defines, with respect to a major defense
acquisition program, procurement unit cost as the amount equal to (1)
the total of all funds programmed to be available for obligation for
procurement for the program divided by (2) the number of fully
configured end items to be procured. In addition, program acquisition
unit cost is defined as the amount equal to (1) the total cost for
development and procurement of, and system-specific military
construction for, the acquisition program divided by (2) the number of
fully configured end items to be produced for the acquisition program.
[19] The AN/TPY-2 and SBX radars are both managed by the Sensors
program. See appendix VII for further details on these radars. In
addition, there are multiple shipset software upgrades planned for
Aegis BMD ships. Aegis BMD SM-3 Block IB missiles and associated
software upgrades for shipsets refers to software version 4.0.1.
Future Aegis BMD ship software upgrades refer to software version 5.0.
See appendix IV for details on these software versions.
[20] MDA also reported operation and sustainment costs for a sixth
element's effort, the C2BMC's Spiral 6.4, but the agency did not
clarify if the costs represented were the total operation and
sustainment costs necessary for the effort.
[21] We previously reported in 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) that DOD had not clearly identified
BMDS operation and sustainment costs because the department has not
required that these costs are to be developed, validated, and
reviewed, and it has not specified when this should be done or who is
responsible for doing this.
[22] GAO, GAO Cost Estimating and Assessment Guide: Best Practices for
Developing and Managing Capital Program Costs, [hyperlink,
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009).
[23] The Aegis BMD program office provided the life cycle cost
estimate that was the basis for the Aegis BMD SM-3 Block IB missile
and associated software upgrades for ship sets resource baseline
presented in the June 2010 BAR. The estimate did not directly match
information presented in the BAR. The program office provided an
updated resource baseline in September 2010, but did not provide the
life cycle cost estimate that supported the updated baseline in time
for us to include in our analysis. We therefore limited our analysis
of resource baselines to only those presented in the June 2010 BAR.
[24] 10 U.S.C. § 2434 requires an independent cost estimate of the
full life-cycle cost of the program before a major defense acquisition
program can advance into system development and demonstration (now
known as engineering and manufacturing development) or production and
deployment. The full life-cycle cost must be provided to the decision
maker for consideration.
[25] Because MDA has not yet formally entered the DOD acquisition
cycle, the requirement at 10 U.S.C. § 2434, which is triggered by the
phases of the cycle, does not yet apply.
[26] [hyperlink, http://www.gao.gov/products/GAO-10-311].
[27] THAAD did accelerate and conduct FTT-14 in fiscal year 2010. For
specifics regarding THAAD's fiscal year 2010 activity, see appendix
XIII.
[28] A salvo launch includes the firing of two interceptors at one
target.
[29] The Ike Skelton National Defense Authorization Act for Fiscal
Year 2011, Pub. L. No. 111-383, § 225 (2010) required the Secretary of
Defense to ensure that MDA establishes and maintains an acquisition
baseline for each program element of the BMDS. This law detailed
specific requirements for the contents of the acquisition baseline,
including a comprehensive schedule, a detailed technical description,
a cost estimate (including life cycle cost estimate), and a test
baseline. Annually, MDA is to submit a report on the baselines to the
congressional defense committees. After the first such report, each
subsequent report shall identify the significant changes or variances,
if any, in any baseline from any earlier report.
[30] [hyperlink, http://www.gao.gov/products/GAO-11-179R].
[31] GAO, Ballistic Missile Defense: DOD Needs to Address Planning and
Implementation Challenges for Future Capabilities in Europe,
[hyperlink, http://www.gao.gov/products/GAO-11-220] (Washington, D.C.:
Jan. 26, 2011).
[32] Although the number of planned emplacements was reduced, funding
continued to achieve a total inventory of 52 GBIs; 30 are planned for
operational interceptors with an additional 22 for testing and spares.
[33] GMD canceled GMD flight test FTG-07 in order to conduct FTG-06a.
[34] At the time of our review, MDA had initiated a failure review
team to investigate the cause(s) of the failure.
[35] GMD's sustainment program is comprised of multiple activities to
maintain and support an effective defensive system, to meet warfighter
requirements over the expected 20-year lifecycle, and to support a
service life extension decision in 2027.
[36] GAO, 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.: Sept. 26,
2008).
[37] According to the notice posted by MDA on the FedBizOpps Web site,
the solicitation was canceled due to reprioritization of planned
tests, and the agency plans to compete intercontinental-range target
requirements in the future at a time to be determined.
[38] To meet urgent needs, DOD can issue undefinitized contract
actions, which authorize contractors to begin work before reaching a
final agreement on contract terms. Undefinitized contract action means
any contract action for which the contract terms, specifications, or
price are not agreed upon before performance is begun under the
action. Defense Federal Acquisition Regulation Supplement (DFARS)
217.7401(d).
[39] Under DFARS, undefinitized contract actions are to contain
definitization schedules that provide for definitization by the
earlier of 180 days after issuance of the action or the date on which
the amount of funds obligated under the action is equal to more than
50 percent of the not to exceed price. The 180 days threshold may be
extended, but may not exceed the date that is 180 days after the
contractor submits a qualifying proposal. DFARS 217.7404-3(a) (1) and
(2) and 216.603-2(c)(5).
[40] GAO, Defense Acquisitions: Charting a Course for Improved Missile
Defense Testing, [hyperlink, http://www.gao.gov/products/GAO-09-403T]
(Washington, D.C.: Feb. 25, 2009).
[41] The AN/TPY-2 and SBX radars are both managed by the Sensors
program. See appendix VII for further details on these radars. In
addition, there are multiple ship set software upgrades planned for
Aegis BMD ships. Aegis BMD SM-3 Block IB missiles and associated
software upgrades for ship sets refers to software version 4.0.1.
Future Aegis BMD ship software upgrades refer to software version 5.0.
See appendix IV for details on these software versions.
[42] 10 U.S.C. § 2432, with respect to major defense acquisition
programs, defines the procurement unit cost as the amount equal to (1)
the total of all funds programmed to be available for obligation for
procurement for the program, divided by (2) the number of fully-
configured end items to be procured.
[43] 10 U.S.C. § 2432, with respect of major defense acquisition
programs, defines the program acquisition unit cost as the amount
equal to (1) the total cost for development and procurement of, and
system-specific military construction for, the acquisition program,
divided by (2) the number of fully-configured end items to be produced
for the acquisition program.
[44] The BMDS program meets the definition of a major defense
acquisition program, which is defined in 10 U.S.C. § 2430 and
implemented by DOD in instruction and guidance commonly referred to as
its 5000 series. A major defense acquisition program is an acquisition
program that is not a highly sensitive classified program and is
designated as a major defense acquisition program or is estimated to
require an eventual total expenditure for research, development, test,
and evaluation of more that $365 million in fiscal year 2000 constant
dollars or, for procurement, of more than $2.190 billion in fiscal
year 2000 constant dollars.
[45] 10 U.S.C. § 2435 requires a baseline description for major
defense acquisition programs.
[46] Department of Defense, Chapter 2.1.1, "The Acquisition Program
Baseline," of Defense Acquisition Guidebook (2009).
[47] Though MDA is not yet required to establish an acquisition
program baseline pursuant to 10 U.S.C. § 2435 and related DOD policy
because of the acquisition flexibilities it has been granted, Congress
has enacted legislation requiring MDA to establish some baselines. The
Ronald W. Reagan National Defense Authorization Act for Fiscal Year
2005, Pub. L. No. 108-375, § 234(e) (2004), required the Director,
MDA, to establish and report annually to Congress a cost, schedule,
and performance baseline for each block configuration being fielded.
MDA has since terminated its block approach. In addition, the National
Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, §
223(g) required that no later than the submittal of the budget for
fiscal year 2009, MDA shall "establish acquisition cost, schedule and
performance baselines" for BMDS elements that have entered the
equivalent of system development and demonstration or are being
produced and acquired for operational fielding. Most recently, the Ike
Skelton National Defense Authorization Act for Fiscal Year 2011, Pub.
L. No. 111-383, § 225 (2010) required the Secretary of Defense to
ensure that MDA establishes and maintains an acquisition baseline for
each program element of the BMDS. This law detailed specific
requirements for the contents of the acquisition baseline, including a
comprehensive schedule, a detailed technical description, a cost
estimate, and a test baseline. The cost estimate is to include a life
cycle cost estimate, PAUC, APUC, and identify when the program joint
cost analysis requirements description document is scheduled to be
approved. Annually, MDA is to submit a report on the baselines to the
congressional defense committees. After the first such report, each
subsequent report shall identify the significant changes or variances,
if any, in any baseline from any earlier report. As this law was
passed in December 2010, we do not yet know its impact on the problems
discussed here.
[48] Sunk costs are costs incurred prior to the time at which the life
cycle cost analysis occurs.
[49] MDA also reported operation and sustainment costs for a sixth
element's effort, the C2BMC's Spiral 6.4, but the agency did not
clarify if the costs represented were the total operation and
sustainment costs necessary for the effort.
[50] Base year dollars are created by converting projected future
annual budgets into a single base year by removing the projected
effects of inflation. In addition, one can convert prior years budgets
(sunk costs) into a single base year by adding inflation.
[51] GAO, GAO Cost Estimating and Assessment Guide: Best Practices for
Developing and Managing Capital Program Costs, [hyperlink,
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009).
[52] The Aegis BMD program office provided the life cycle cost
estimate that was the basis for the Aegis BMD SM-3 Block IB missile
and associated software upgrades for shipsets resource baseline
presented in the June 2010 BAR. The estimate did not directly match
information presented in the BAR. The program office provided an
updated resource baseline in September 2010, but did not provide the
life cycle cost estimate that supported the updated baseline in time
for us to include in our analysis. We therefore limited our analysis
of resource baselines to only those presented in the June 2010 BAR.
[53] The 12 steps for developing credible cost estimates are (1)
defining the project's purpose, (2) developing the estimating plan,
(3) defining the project's characteristics, (4) determining the
estimating approach, (5) identifying ground rules and assumptions, (6)
obtaining data, (7) developing the point estimate, (8) conducting
sensitivity analysis, (9) performing a risk or uncertainty analysis,
(10) documenting the estimate, (11) presenting the estimate to
management for approval, and (12) updating the estimate to reflect
actual costs and changes.
[54] A point estimate is the best guess or most likely value for the
cost estimate, given the underlying data. The level of confidence for
the point estimate is the probability that the point estimate will
actually be met. For example, if the confidence level for a point
estimate is 80 percent, there is an 80 percent chance that the final
cost will be at or below the point estimate and a 20 percent chance
that costs will exceed the point estimate.
[55] 10 U.S.C. § 2434 requires an independent cost estimate of the
full life-cycle cost of the program before a major defense acquisition
program can advance into system development and demonstration (now
known as engineering and manufacturing development) or production and
deployment. The full life-cycle cost must be provided to the decision
maker for consideration.
[56] Because MDA has not yet formally entered the DOD acquisition
cycle, the requirement at 10 U.S.C. § 2434, which is triggered by the
phases of the cycle, does not yet apply.
[57] Japanese flight tests help understand performance but because
they are not US assets, they are not considered developmental flight
tests from a programmatic perspective.
[58] GAO, Defense Acquisitions: Many Analyses of Alternatives Have Not
Provided a Robust Assessment of Weapon System Options, [hyperlink,
http://www.gao.gov/products/GAO-09-665] (Washington, D.C.: Sep. 24,
2009).
[59] The Office of the Secretary of Defense, Office of Cost Assessment
and Program Evaluation provides independent analytic advice to the
Secretary of Defense on all aspects of the Defense program, including
alternative weapon systems and force structures, the development and
evaluation of defense program alternatives, and the cost-effectiveness
of defense systems.
[60] Early intercept is the interception of threat missiles early
enough in their flight to allow for a shoot-look-shoot tactic.
[61] The National Defense Authorization Act for Fiscal Year 2010, Pub.
L. No. 111-84 § 232 (2009).
[62] The Probability of Engagement Success is the probability that the
BMDS will prevent an adversary warhead from carrying out its mission.
Launch Area Denied is the geographic area that is defended by the
BMDS. Defended area is the geographic area that the BMDS is capable of
defending against adversary ballistic missiles.
[63] The Stockpile Reliability Program Plan includes, but is not
limited to the following activities: Aging and Surveillance Test
Program, Maintenance Built-in Test, GBI Refurbishment Strategy, Flight
Test Rotation Strategy, GBI Sustainment Program, and the Service Life
Extension Plan.
[64] According to GMD program officials, the GMD program expected it
to be finalized in June 2010. However, the original plan was directed
to undergo significant revisions. This delayed the release of the
Stock Reliability Program Plan until September 2010.
[65] According to MDA, however, results from developmental testing are
being incorporated incrementally as test results are analyzed and
sufficient conclusions can be drawn from all test data.
[66] The Aging and Surveillance test program is a subcomponent to the
Stockpile Reliability Program Plan and is designed to examine aged
hardware to determine natural degradation characteristics and to
understand performance changes.
[67] The inertial measurement unit is designed to aid the kill vehicle
in its flight location and has undergone several significant design
changes and alterations.
[68] The MBIT is the primary method for determining and monitoring the
health and status of the fielded interceptor. In addition, the MBIT
verifies the readiness of stored interceptors.
[69] Task Assignment-23 Interceptor Refurbishment Plan (April 2007).
[70] According to MDA, the two-stage design is an alternative for the
PAA and the test was utilized as a risk reduction for future tests.
However, there are no current plans to produce two-stage GBIs for
operational use.
[71] GAO, Defense Acquisitions: Missile Defense Transition Provides
Opportunity to Strengthen Acquisition Approach, [hyperlink,
http://www.gao.gov/products/GAO-10-311] (Washington, D.C.: Feb. 25,
2010).
[72] The failure investigation team concluded that the failure was
caused by a quality control event. Corrective actions include design
enhancements to improve vehicle processing, which according to MDA,
mitigates the risk of reoccurrence.
[73] At the time of our review, MDA had initiated a Failure Review
Team to investigate the cause(s) of failure.
[74] According to the Director, MDA, based on the issues that arose in
FTG-06a, he directed the agency to stop taking deliveries of any more
completed CE-II EKVs.
[75] [hyperlink, http://www.gao.gov/products/GAO-09-338].
[76] Data is current as of October 20, 2010.
[77] Data is current as of October 20, 2010.
[78] GAO, Defense Acquisitions: Missile Defense Transition Provides
Opportunity to Strengthen Acquisition Approach, [hyperlink,
http://www.gao.gov/products/GAO-10-311] (Washington, D.C.: Feb. 25,
2010); Defense Acquisitions: Charting a Course for Improved Missile
Defense Testing, [hyperlink, http://www.gao.gov/products/GAO-09-403T]
(Washington, D.C.: Feb. 25, 2009); and 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.: Sept. 26, 2008).
[79] In addition, 9 tests were added in IMTP 10.2 and 14 were removed.
[80] The draft intercontinental solicitation was canceled in February
2011, prior to being finalized. According to the notice posted by MDA
on the FedBizOpps Web site, the solicitation was canceled due to
reprioritization of planned tests, and the agency plans to compete
intercontinental-range target requirements in the future at a time to
be determined.
[81] To meet urgent needs, DOD can issue undefinitized contract
actions, which authorize contractors to begin work before reaching a
final agreement on contract terms. Undefinitized contract action means
any contract action for which the contract terms, specifications, or
price are not agreed upon before performance is begun under the
action. DFARS 217.7401(d).
[82] To the extent MDA has experienced circumstances that warrant a
departure from its 2009 acquisition plan, section 7.104 of the FAR
requires planners to review at key dates specified in the plan or
whenever significant changes occur, and no less often than annually,
acquisition plans and, if appropriate, revise them.
[83] DFARS 217.7404-3 states that UCAs shall provide for
definitization by the earlier of either, 180 days after issuance of
the action or the date on which more than 50% of the not-to-exceed
price has been obligated. The 180 day threshold may be extended but
may not exceed the date that is 180 days after the contractor submits
a qualifying proposal.If a contractor submits a qualifying proposal
before the 50 percent threshold has been reached, then the limitation
on obligations may be increased to no more than 75 percent.
[84] According to FAR 16.403-1, a fixed-price incentive (firm target)
contract specifies a target cost, a target profit, a price ceiling
(but not a profit ceiling or floor), and a profit adjustment formula.
These elements are all negotiated at the outset. The price ceiling is
the maximum that may be paid to the contractor, except for any
adjustment under other contract clauses. When the contractor completes
performance, the parties negotiate the final cost, and the final price
is established by applying the formula. When the final cost is less
than the target cost, application of the formula results in a final
profit greater than the target profit. When final cost is more than
target cost, application of the formula results in a final profit less
than the target profit, or even a net loss. If the final negotiated
cost exceeds the price ceiling, the contractor absorbs the difference
as a loss.
[85] Instead of requesting data collection instrument information from
the GMD element, we relied on the information that had already been
collected for the GMD briefing to Congress, "DOD's Assessment and Plan
for the GMD Program."
[86] [hyperlink, http://www.gao.gov/products/GAO-10-676].
[End of section]
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