Missile Defense
Actions Needed to Improve Transparency and Accountability Gao ID: GAO-11-555T April 13, 2011In order to meet its mission, the Missile Defense Agency (MDA) is developing a highly complex system of systems--land-, sea-, and spacebased 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 ballistic missile defense system. GAO was asked to testify on its annual review of MDA and on progress made to improve transparency and accountability. This statement is based on our March 2011 report.
When MDA was established in 2002, it was granted exceptional flexibility in setting requirements and managing the acquisition, in order to meet a Presidential directive to deliver an initial defensive capability in 2004. However, the flexibility also came at the expense of transparency and accountability. For example, unlike certain other Department of Defense (DOD) major defense acquisition programs, a cost, schedule, and performance baseline does not have to be established or approved outside MDA. In addition, while most major defense acquisition programs are required by statute to obtain an independent verification of cost estimates, MDA has only recently developed cost estimates for selected assets and plans to work with DOD's Office of the Director for Cost Assessment and Program Evaluation to develop independent cost estimates for more MDA elements. Further, assessments of a system's suitability and effectiveness in combat have only been accomplished, with limitations, for the currently deployed Aegis Ballistic Missile Defense weapon system. Since its inception, MDA has employed at least three different strategies to acquire and deploy missile defense systems. Because these changes involved different structures for reporting cost, schedule, and performance data, they have exacerbated transparency and accountability challenges--each time a strategy changes, the connection between the old and new strategy planned scope and resources is obscured. In 2010, MDA made significant progress in addressing previously reported concerns about transparency and accountability. Specifically, MDA : (1) Established resource, schedule, test, operational capacity, technical, and contract baselines for several missile defense systems. It reported these to Congress in its June 2010 BMDS Accountability Report. (2) 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. (3) Established processes for reviewing baselines and approving product development and initial production jointly with the military services that will ultimately be responsible for those assets. GAO also reported last year that MDA extensively revised the test plan to increase its robustness and ability to inform models and simulations for assessing missile defense performance. While it is clear that progress has been made in terms of implementing new acquisition reviews and reporting detailed baselines, there remain critical gaps in the material reported, particularly the quality of the underlying cost estimates needed to establish baselines. Moreover, GAO still has concerns about realism in test planning and acquisition risks associated with the rapid pace of fielding assets. These risks are particularly evident in MDA's efforts to develop systems to support a new approach for missile defense in Europe as well as the Ground-based Midcourse Defense system. GAO does not make new recommendations in this testimony but emphasizes the importance of implementing past recommendations, including: (1) Establishing and reporting complete, accurate, reliable cost information. (2) Strengthening test planning and resourcing. (3) Following knowledge-based acquisition practices that ensure sufficient knowledge is attained on requirements, technology maturity, design maturity, production maturity and costs before moving programs into more complex and costly phases of development. DOD has committed to take action on many of our recommendations.
GAO-11-555T, Missile Defense: Actions Needed to Improve Transparency and Accountability
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United States Government Accountability Office:
GAO:
Testimony:
Before the Subcommittee on Strategic Forces, Committee on Armed
Services, U.S. Senate:
For Release on Delivery:
Expected at 2:30 p.m. EDT:
Wednesday, April 13, 2011:
Missile Defense:
Actions Needed to Improve Transparency and Accountability:
Statement of Cristina Chaplain:
Director, Acquisition and Sourcing Management:
GAO-11-555T:
GAO Highlights:
Highlights of GAO-11-555T, a testimony before the Subcommittee on
Strategic Forces, Committee on Armed Services, U.S. Senate.
Why GAO Did This Study:
In order to meet its mission, the Missile Defense Agency (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 ballistic
missile defense system. GAO was asked to testify on its annual review
of MDA and on progress made to improve transparency and
accountability. This statement is based on our March 2011 report.
What GAO Found:
When MDA was established in 2002, it was granted exceptional
flexibility in setting requirements and managing the acquisition, in
order to meet a Presidential directive to deliver an initial defensive
capability in 2004. However, the flexibility also came at the expense
of transparency and accountability. For example, unlike certain other
Department of Defense (DOD) major defense acquisition programs, a
cost, schedule, and performance baseline does not have to be
established or approved outside MDA. In addition, while most major
defense acquisition programs are required by statute to obtain an
independent verification of cost estimates, MDA has only recently
developed cost estimates for selected assets and plans to work with DOD‘
s Office of the Director for Cost Assessment and Program Evaluation to
develop independent cost estimates for more MDA elements. Further,
assessments of a system‘s suitability and effectiveness in combat have
only been accomplished, with limitations, for the currently deployed
Aegis Ballistic Missile Defense weapon system.
Since its inception, MDA has employed at least three different
strategies to acquire and deploy missile defense systems. Because
these changes involved different structures for reporting cost,
schedule, and performance data, they have exacerbated transparency and
accountability challenges-”each time a strategy changes, the
connection between the old and new strategy planned scope and
resources is obscured.
In 2010, MDA made significant progress in addressing previously
reported concerns about transparency and accountability. Specifically,
MDA:
* Established resource, schedule, test, operational capacity,
technical, and contract baselines for several missile defense systems.
It reported these to Congress in its June 2010 BMDS Accountability
Report.
* 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.
* Established processes for reviewing baselines and approving product
development and initial production jointly with the military services
that will ultimately be responsible for those assets.
GAO also reported last year that MDA extensively revised the test plan
to increase its robustness and ability to inform models and
simulations for assessing missile defense performance.
While it is clear that progress has been made in terms of implementing
new acquisition reviews and reporting detailed baselines, there remain
critical gaps in the material reported, particularly the quality of
the underlying cost estimates needed to establish baselines. Moreover,
GAO still has concerns about realism in test planning and acquisition
risks associated with the rapid pace of fielding assets. These risks
are particularly evident in MDA‘s efforts to develop systems to
support a new approach for missile defense in Europe as well as the
Ground-based Midcourse Defense system.
What GAO Recommends:
GAO does not make new recommendations in this testimony but emphasizes
the importance of implementing past recommendations, including:
* Establishing and reporting complete, accurate, reliable cost
information.
* Strengthening test planning and resourcing.
* Following knowledge-based acquisition practices that ensure
sufficient knowledge is attained on requirements, technology maturity,
design maturity, production maturity and costs before moving programs
into more complex and costly phases of development.
DOD has committed to take action on many of our recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-11-555T] or key
components. For more information, contact Cristina T. Chaplain at
(202) 512-4841 or chaplainc@gao.gov.
[End of section]
Chairman Nelson, Ranking Member Sessions, and Members of the
Subcommittee:
I am pleased to be here today to discuss the transparency and
accountability progress made by the Department of Defense's (DOD)
Missile Defense Agency (MDA). MDA has been charged with developing and
fielding the Ballistic Missile Defense System (BMDS), a system
expected to be capable of defending the United States, deployed
troops, friends, and allies against ballistic missiles of all ranges
in all phases of flight. The BMDS is DOD's single largest acquisition
program--spending between approximately $7 billion to $9.5 billion per
year--to develop and field nine elements and supporting efforts. 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.
In fulfilling this charge, MDA began delivering an initial defensive
capability in 2004. In meeting this challenge, MDA was afforded much
more flexibility than DOD's other major weapons programs. However,
this flexibility also introduced transparency and accountability
challenges that persisted after the 2004 date for initial capability.
Today, I will highlight significant progress that MDA has recently
made to strengthen accountability and transparency and also the
shortfalls that still need to be addressed in order to further
strengthen MDA's oversight posture and ensure new capabilities are
fiscally sustainable for the long term.
Since 2002, the National Defense Authorization Acts have mandated that
we prepare annual assessments of MDA's ongoing cost, schedule,
testing, and performance progress.[Footnote 1] In March 2011, we
issued our report covering MDA's progress toward achieving its goals
during fiscal year 2010 as well as its efforts to improve
transparency, accountability, and oversight.[Footnote 2] My statement
today will focus on the issues covered in that 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. Additional information on
our scope and methodology is available in the issued report.
Acquisition Flexibility Given to MDA has Downsides for Oversight and
Accountability:
MDA is a unique agency with extraordinary acquisition flexibility and
a challenging mission, however while that flexibility has helped it to
rapidly field systems, it has also hampered oversight and
accountability.
Over the years, Congress has created a framework of laws that makes
major defense acquisition programs accountable for their planned
outcomes and cost, gives decision makers a means to conduct oversight,
and ensures some level of independent program review. Application of
many of these laws is triggered by the phases of the Department of
Defense's acquisition cycle, such as entry into engineering and
manufacturing development. Specifically, major defense acquisition
programs are generally required by law and policy to do the following:
* Document program parameters in an acquisition program baseline that,
as implemented by DOD, has been approved by the Milestone Decision
Authority, a higher-level DOD official prior to the program's entry
into the engineering and manufacturing development phase.[Footnote 3]
The baseline provides decision makers with the program's best estimate
of the program's total cost for an increment of work, average unit
costs for assets to be delivered, the date that an operational
capability will be fielded, and the weapon's intended performance
parameters.
* Once approved, measure the program against the baseline, which is
the program's initial business case, or obtain the approval of a
higher-level acquisition executive before making changes.
* Obtain an independent life-cycle cost estimate prior to beginning
engineering and manufacturing development, and/or production and
deployment.[Footnote 4] Independent life-cycle cost estimates provide
confidence that a program is executable within estimated cost.
* Regularly provide detailed program status information to Congress,
including information on cost, in Selected Acquisition Reports.
[Footnote 5]
* Report certain increases in unit cost measured from the original or
current program baseline.[Footnote 6]
* Covered major defense acquisition programs and subprograms are
required to complete initial operation test and evaluation before
proceeding beyond low-rate initial production.[Footnote 7] After
testing is completed, the Director for Operational Test and Evaluation
assesses whether the results of the test confirm that the system or
components are effective and suitable for combat.
When MDA was established in 2002, it was granted exceptional
flexibility in setting requirements and managing the acquisition, in
order that its BMDS be developed as a single program, using a
capabilities-based, spiral upgrade approach to quickly deliver a set
of integrated defensive capabilities. This decision deferred
application of DOD acquisition policy to BMDS until a mature
capability is ready to be handed over to a military service for
production and operation. Because the BMDS program has not formally
entered the DOD acquisition cycle, application of laws that are
designed to facilitate oversight and accountability of DOD acquisition
programs and that are triggered by phases of this cycle, such as the
engineering and manufacturing development phase, has also effectively
been deferred. This gives MDA unique latitude to manage the BMDS and
it enabled MDA to begin delivering an initial defensive capability in
2004. However, the flexibility also came at the expense of
transparency and accountability.
Specifically, a BMDS cost, schedule, and performance baseline does not
have to be established or approved by anyone outside MDA. Recent laws
have created some baseline-related requirements for parts of the BMDS.
[Footnote 8] In addition, while most major defense acquisition
programs are required by statute to obtain an independent verification
of cost estimates, MDA has only recently developed cost estimates for
selected assets and plans to work with the DOD Office of the Director
for Cost Assessment and Program Evaluation to develop independent cost
estimates for more MDA elements. Further, assessments of a system's
suitability and effectiveness in combat have only been accomplished,
with limitations, for the currently deployed Aegis BMD weapon system.
The limited amount of testing completed, which has been primarily
developmental in nature, and the lack of verified, validated, and
accredited models and simulations prevent the Director of Operational
Test and Evaluation from fully assessing the effectiveness,
suitability, and survivability of the BMDS in annual assessments. MDA
has agreed to conduct an operational flight test in 2012.
As we concluded in a prior report, having less transparency and
accountability than is normally present in a major weapon program has
had consequences.[Footnote 9] The lack of baselines for the BMDS along
with high levels of uncertainty about requirements and program cost
estimates effectively set the missile defense program on a path to an
undefined destination at an unknown cost. Across the agency, these
practices left programs with limited knowledge and few opportunities
for crucial management oversight and decision making concerning the
agency's investment and the warfighter's continuing needs. At the
program level, these practices contributed to quality problems
affecting targets acquisitions, which in turn, hampered MDA's ability
to conduct tests as planned.
Numerous Strategy Changes Have Exacerbated Transparency and
Accountability Challenges:
MDA has employed at least three strategies to acquire and deploy
missile defense systems, which has exacerbated transparency and
accountability challenges. From its inception in 2002 through 2007,
MDA developed missile defense capability in 2-year increments, known
as blocks, each built on preceding blocks intended to enhance the
development and capability of the BMDS. However, there was little
visibility into baseline costs and schedules associated with the
systems that comprised the blocks or how the blocks addressed
particular threats.
In response to our recommendations, in December 2007, MDA announced a
new capabilities-based block structure intended to improve the
program's transparency, accountability, and oversight. Instead of
being based on 2-year time periods, the new blocks focused on fielding
capabilities that addressed particular threats. Because the new block
structure was not aligned to regular time periods, multiple blocks
were under way concurrently. This approach included several positive
changes, including a DOD commitment to establish total acquisition
costs and unit costs for selected block assets, including only those
elements or components of elements in a block that would be fielded
during the block and abandoning deferrals of work from one block to
another.
MDA was still transitioning to this new capabilities-based block
approach when the Director, MDA terminated it in June 2009. According
to MDA, this was done in order to address congressional concerns
regarding how to structure MDA's budget justification materials. This
termination marked the third acquisition management strategy for the
BMDS in the prior 3 years and effectively reduced transparency and
accountability for the agency. The agency then began to manage BMDS as
a single integrated program but planned to report on cost, schedule,
and performance issues by each element within the program.
Changing the acquisition strategy is problematic because each time it
is changed, the connection is obscured between the old strategies'
scope and resources and the new strategy's rearranged scope and
resources. This makes it difficult for decision makers to hold MDA
accountable for expected outcomes and clouds transparency of the
agency's efforts.
We also reported in December 2010 that the adoption of the European
Phase Adaptive Approach (PAA) for deploying missile defense assets has
limitations in transparency and accountability.[Footnote 10]
Specifically, we reported that DOD 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. We concluded
that for the European PAA, the flexibility desired by DOD is not
incompatible with appropriate visibility into key aspects of
acquisition management. Moreover, 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. We made
recommendations also in January 2011 regarding the development of life-
cycle cost estimates and an integrated schedule for the acquisition,
infrastructure and personnel activities to help identify European PAA
implementation risks.[Footnote 11] DOD partially concurred with the
first recommendation and fully concurred with the second.
Prior GAO Recommendations and Congressional Actions to Improve
Transparency and Accountability:
Congress has taken action to address concerns regarding the
acquisition management strategy, accountability, and oversight of MDA.
For example, in the National Defense Authorization Act for Fiscal Year
2008, Congress required MDA to establish acquisition cost, schedule,
and performance baselines for each system element that has entered the
equivalent of the engineering and manufacturing development phase of
acquisition or is being produced or acquired for operational fielding.
[Footnote 12] Most recently, the Ike Skelton National Defense
Authorization Act for Fiscal Year 2011 requires the Secretary of
Defense to ensure that MDA establishes and maintains an acquisition
baseline for each program element of the BMDS.[Footnote 13]
Since our first MDA report in 2004, we have made a series of
recommendations to improve transparency and accountability, many of
which are designed to adapt the key transparency and accountability
features already embedded in the DOD acquisition regulation and apply
them to MDA. Some of our key recommendations include:
* Establishing and reporting to Congress costs and unit costs,
including development costs in unit costs, including sunk costs in
cost estimates, reporting top-level test goals, obtaining independent
cost estimates and taking steps to ensure the underlying cost
estimates are high quality, reliable, and documented reporting
variances.
* Improving transparency by requesting and using procurement funds
instead of research, development, testing and evaluation funds to
acquire fielded assets.
* Strengthening the test program by establishing baselines for each
new class of target in development, including sufficient schedule and
resource margin, including spare test assets and targets, and
strengthening the role of the Director, Operational Test and
Evaluation in assessing missile defense progress.
* Implementing a knowledge-based acquisition strategy[Footnote 14]
consistent with DOD acquisition regulations, and ensure that items are
not manufactured for fielding before their performance has been
validated through testing.
DOD has committed to take action on many of these recommendations.
While agreeing with our recommendations to enhance baseline reporting,
there are differences in MDA's perspectives on such issues as sunk
costs and changes in unit cost.
MDA Has Recently Made Significant Progress in Increasing Transparency
and Accountability:
In 2010, MDA made significant progress in implementing some of 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, technical,
and contract baselines for several BMDS components. It reported these
to Congress in its June 2010 BMDS Accountability Report.
MDA also 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 BMDS
Accountability Report is more comprehensive than its 2009 report.
MDA also undertook a new approach to testing in recent years to
address our prior findings. In March 2009, we reported that MDA's
Integrated Master Test Plan--its test baseline--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 15] In addition, the BMDS Operational Test Agency identified
several limitations in the previous BMDS test program, including
unaccredited models and simulations, flight test artificialities, and
inadequate modeling of some environmental conditions. Congress also
expressed concern with MDA's test approach. For example, in the fiscal
year 2008 National Defense Authorization Act conference report,
conferees noted that MDA failed to ensure an adequate testing program
and that its test and targets program needed to be managed in a way
that fully supported high-priority near-term programs.
We reported last year that MDA extensively revised the test plan to
address these concerns.[Footnote 16] MDA's new approach now bases test
scenarios on modeling and simulation needs and extends the test
baseline to cover the Future Years Defense Program which allows for
better estimation of target needs, range requirements, and test
assets. Also, as part of its new test plan, MDA scheduled dedicated
periods of developmental and operational testing, during which the
system configuration will remain fixed to allow the warfighter to
carry out training, tactics, techniques, and procedures for
developmental and operational evaluation. Additionally, the new test
plan is expected to provide sufficient time after test events to
conduct a full post-test analysis. As we reported last year, these
improvements are important because BMDS performance cannot be fully
assessed until models and simulations are accredited and validated and
the test program cannot be executed without meeting its target needs.
These steps represent significant progress in providing a better
foundation for managing and overseeing the missile defense system.
Given the breadth, scope and complexities of systems involved in the
missile defense mission and the wide range of stakeholders and gaps in
past data, these were not easy achievements. Nevertheless, there is a
significant amount of work ahead to ensure oversight and management
data is clear, complete, accurate and reliable. Specifically:
* We found that the cost baselines that have been established are not
clear, consistent and complete nor are they based on high quality
estimates and therefore we remain unable to assess cost progress for
the 8th year until MDA develops high-quality, reliable cost estimates.
For example, we found that the unit cost baselines and the baselines
for portions of and sometimes all the life cycle costs reported to
Congress did not provide clear, consistent and complete information.
We also assessed the 12 life cycle cost estimates that were the basis
for these baselines and found that half did not support the baselines
and the other half were insufficient to be considered high-quality,
reliable cost estimates.
* Our assessment of the schedule baselines determined that we could
not compare the asset delivery schedule to the prior year's baseline
because MDA has stopped reporting a comprehensive list of planned
asset deliveries.
* Finally, we found the test baseline to be well documented. However,
because it is success oriented, any problems encountered in executing
the plan can cause ripple effects throughout remaining test events.
The frequent changes that continue to occur undermine the value of the
test baseline as an oversight tool.
Rapid Pace of Fielding Assets Makes Transparency and Accountability
Even More Important:
Over the past 10 years, we have conducted extensive research on
successful programs and have found that successful defense programs
ensure that their acquisitions begin with realistic plans and
baselines prior to the start of development. We have previously
reported that the key cause of poor weapon system outcomes, at the
program level, is the consistent lack of disciplined analysis that
would provide an understanding of what it would take to field a weapon
system before system development begins. We have reported that there
is a clear set of prerequisites that must be met by each program's
acquisition strategy to realize successful outcomes. These
prerequisites include establishing a clear, knowledge-based,
executable business case for the product. An executable business case
is one that provides demonstrated evidence that (1) the identified
needs are real and necessary and can best be met with the chosen
concept and (2) the chosen concept can be developed and produced
within existing resources--including technologies, funding, time, and
management capacity. Knowledge-based acquisition principles and
business cases combined are necessary to establish realistic cost,
schedule and performance baselines. Without documented realistic
baselines there is no foundation to accurately measure program
progress. Our work has shown that when agencies do not follow a
knowledge-based approach to acquisition, high levels of uncertainty
about requirements, technologies, and design often exist at the start
of development programs. As a result, cost estimates and related
funding needs are often understated.
MDA has begun to institute some key aspects of a knowledge-based
approach to acquisition as we noted. Moreover, in its Ballistic
Missile Defense Review, DOD emphasized that it is no longer necessary
to pursue a high-risk acquisition strategy that simultaneously
develops and deploys new systems. However, we continue to identify and
report on areas of high levels of acquisition risk associated with the
rapid pace of fielding assets. We see this effect most pronounced in
three key areas--testing, the Aegis Ashore program and the Ground-
based Midcourse Defense (GMD) program.
* Testing and Targets: As in previous years, failures and delays in
testing have continued to delay the validation of models and
simulations used to assess BMDS performance. Target availability was a
significant, though not the only, driver to the test plan delays.
Since 2006, we have reported that target availability has delayed and
prompted modifications to planned test objectives. This trend
continued in 2010. We reported this year that five tests scheduled for
fiscal year 2010 were canceled because of a moratorium on air launches
of targets. The moratorium was imposed following the failure of an air
launched target participating in MDA's December 2009 Theater High
Altitude Area Defense (THAAD) flight test. A failure review board
investigation identified the rigging of cables to the missile in the
aircraft as the immediate cause of the failure and shortcomings in
internal processes at the contractor as the underlying cause.
Additionally, target shortfalls contributed to delays in flight tests,
reduced the number of flight tests, and altered flight test objectives.
Another area of risk related to targets identified in this year's
report is MDA's extended use of an undefinitized contract action to
acquire targets from its incumbent prime targets contractor.[Footnote
17] 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. 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.
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. MDA officials stated
that this new acquisition was to obtain a second procurement source
for air-launched targets following the December 2009 THAAD flight test
failure. The extended use of undefinitized contract actions has
previously been identified by GAO and others as risky to 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.
* Aegis Ashore: 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 become available. 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. 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
Vertical Launching System; 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
make production decisions for the first operational Aegis Ashore
before conducting both ground and flight tests. We concluded in this
year's report that it is a highly concurrent effort, with significant
cost, schedule and performance risk.
* Ground-based Midcourse Defense: GMD 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 during the midcourse phase
of flight. The GMD consists of a ground-based interceptor--a booster
with an Exoatmospheric Kill Vehicle on top--and a fire control system
that receives target information from sensors in order to formulate a
battle plan. GMD continues to deliver assets before testing has fully
determined their capabilities and limitations. The Director, MDA
testified on March 31, 2011 that he considers the GMD interceptors
essentially prototypes. In the urgency to deploy assets to meet the
Presidential directive to field an initial capability by 2004, assets
were built and deployed before developmental testing was completed.
During the ongoing developmental testing, issues were found that led
to a need for retrofits. GMD intercept tests conducted to date have
already led to major hardware or software changes to the interceptors--
not all of which have been verified through flight testing. In
addition, manufacturing of a new variant called the Capability
Enhancement II is well underway and more than half of those variants
have already been delivered although their capability has not been
validated through developmental flight tests. To date, the two flight
tests utilizing this variant have both failed to intercept the target.
According to MDA, as a result of the most recent failure in December
2010, deliveries of this variant have been halted. Again, because of
the urgency to deploy some capability, limited work was undertaken on
long-term sustainment for the system which is critical to ensure the
system remains effective through 2032. In September 2010, MDA
finalized the GMD Stockpile Reliability Program Plan, a key step in
developing the knowledge needed to determine the sustainment needs of
the GMD system.
Concluding Observations:
This year MDA has made significant strides in providing a better
foundation for Congress and others to assess progress and hold senior
leadership accountable for outcomes. Undoubtable progress has been
made in terms of implementing new acquisition reviews and reporting
detailed baselines, but critical gaps remain in the material reported,
particularly the quality of the underlying cost estimates needed to
establish baselines. We look forward to continuing to work with DOD
and MDA in addressing these gaps and further strengthening the
underpinnings for sound oversight. Moreover, as we have recommended
previously, improvements to oversight reporting should be complemented
by knowledge-based acquisition approaches that ensure programs
complete developmental activities before proceeding into production;
that test plans are stabilized and adequately resourced; and that
targets used for testing are reliable, available, and affordable.
Given the breadth and scope of the European Phased Adaptive Approach
it is also important that Congress have assurance that this policy is
working as intended and is cost-effective.
Chairman Nelson, Ranking Member Sessions, and Members of the
Subcommittee, this completes my prepared statement. I would be happy
to respond to any questions you may have at this time.
Contact and Staff Acknowledgments:
For questions about this statement, 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 statement. Individuals making key contributions to this
statement include David Best, Assistant Director; LaTonya Miller;
Steven Stern; Meredith Allen Kimmett; Letisha Antone; Gwyneth
Woolwine; Teague Lyons; Kenneth E. Patton; Robert Swierczek; and
Alyssa Weir.
[End of section]
Footnotes:
[1] 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.
[2] GAO, Missile Defense: Actions Needed to Improve Transparency and
Accountability, [hyperlink, http://www.gao.gov/products/GAO-11-372]
(Washington, D.C.: Mar. 24, 2011).
[3] 10 U.S.C. § 2435 requires an approved program baseline description
for major defense acquisition programs before the program enters
system development and demonstration, production and deployment, and
full rate production. The system development phase of the DOD
acquisition cycle is now known as the engineering and manufacturing
development phase.
[4] 10 U.S.C. § 2434.
[5] 10 U.S.C. § 2432.
[6] 10 U.S.C. § 2433, also known as "Nunn-McCurdy".
[7] 10 U.S.C § 2399 requires completion of initial operational test
and evaluation of a weapon system before a program can proceed beyond
low-rate initial production. According to DOD policy, low-rate initial
production is intended to result in completion of manufacturing
development in order to ensure adequate and efficient manufacturing
capability and to produce the minimum quantity necessary to provide
production or production-representative articles for initial
operational test and evaluation, establish an initial production base
for the system; and permit an orderly increase in the production rate
for the system, sufficient to lead to full-rate production upon
successful completion of operational (and live-fire, where applicable)
testing.
[8] National Defense Authorization Act for Fiscal Year 2008, Pub. L.
No. 110-181, § 223(g); Ike Skelton National Defense Authorization Act
for Fiscal Year 2011, Pub. L. No. 111-383, § 225.
[9] 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).
[10] 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).
[11] 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).
[12] Pub. L. No. 110-181, § 223(g).
[13] Pub. L. No. 111-383, § 225.
[14] A knowledge-based acquisition approach is a cumulative process in
which certain knowledge is acquired by key decision points before
proceeding.
[15] GAO, Defense Acquisitions: Production and Fielding of Missile
Defense Components Continue with Less Testing and Validation Than
Planned, [hyperlink, http://www.gao.gov/products/GAO-09-338]
(Washington, D.C.: Mar.13, 2009).
[16] [hyperlink, http://www.gao.gov/products/GAO-10-311].
[17] 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. Department of Defense Federal Acquisition Regulation
Supplement 217.7401(d).
[End of section]
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