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United States Government Accountability Office: 


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 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, 

*	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 

*	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 

*	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,] or key 
components. For more information, contact Cristina T. Chaplain at 
(202) 512-4841 or 

[End of section] 

Chairman Nelson, Ranking Member Sessions, and Members of the 

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 

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 

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 

* 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 

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 

* 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 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] 


[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, § 

[2] GAO, Missile Defense: Actions Needed to Improve Transparency and 
Accountability, [hyperlink,] 
(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) 

[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,] (Washington, D.C. Feb. 25, 

[10] GAO, Missile Defense: European Phased Adaptive Approach 
Acquisitions Face Synchronization, Transparency, and Accountability 
Challenges, [hyperlink,] 
(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,] (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 

[15] GAO, Defense Acquisitions: Production and Fielding of Missile 
Defense Components Continue with Less Testing and Validation Than 
Planned, [hyperlink,] 
(Washington, D.C.: Mar.13, 2009). 

[16] [hyperlink,]. 

[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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