Missile Defense:

Actions Are Needed to Enhance Testing and Accountability

GAO-04-409: Published: Apr 23, 2004. Publicly Released: Apr 23, 2004.

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The Department of Defense (DOD) has treated ballistic missile defense as a priority since the mid-1980s and has invested tens of billions of dollars to research and develop such capabilities. In 2002 two key events transformed DOD's approach in this area: (1) the Secretary of Defense consolidated existing missile defense elements into a single acquisition program and placed them under the management of the Missile Defense Agency (MDA) and (2) the President directed MDA to begin fielding an initial configuration, or block, of missile defense capabilities in 2004. MDA estimates it will need $53 billion between fiscal years 2004 and 2009 to continue the development, fielding, and evolution of ballistic missile defenses. To fulfill a congressional mandate, GAO assessed the extent to which MDA achieved program goals in fiscal year 2003. While conducting this review, GAO also observed shortcomings in how MDA defines its goals.

MDA accomplished many activities in fiscal year 2003--such as software development, ground and flight testing, and the construction of facilities at Fort Greely, Alaska--leading up to the fielding of the initial block of the Ballistic Missile Defense System. During this time, however, MDA experienced schedule delays and testing setbacks, resulting in the fielding of fewer components than planned in the 2004-2005 time frame. For example, delays in interceptor development and delivery have caused flight tests (intercept attempts) of the Ground-based Midcourse Defense (GMD) element to slip over 10 months. In flight tests conducted during fiscal year 2003, MDA achieved a 50 percent success rate in intercepting target missiles. While MDA is increasing the operational realism of its developmental flight tests--e.g., employing an operational crew during its late 2003 ship-based intercept attempt--the GMD element has not been tested under unscripted, operationally realistic conditions. Therefore, MDA faces the challenge of demonstrating whether the capabilities being fielded, consisting primarily of the GMD element, will perform as intended when the system becomes operational in 2004. Finally, MDA's cost performance during fiscal year 2003 was mixed. The prime contractors of four system elements completed work at or near budgeted costs during this time, but prime contractors for two system elements overran budgeted costs by a total of about $380 million. GAO found that program goals do not serve as a reliable and complete baseline for accountability purposes and investment decision making because they can vary year to year, do not include all costs, and are based on assumptions about performance not explicitly stated. For example, between its budget requests for fiscal years 2004 and 2005, MDA revised its estimated cost for the first fielded block of missile defense capability. This first block is costing $1.12 billion more and consists of fewer fielded components than that planned a year earlier. In addition, MDA's acquisition reports for Congress do not include life-cycle costs, which normally provide explicit estimates for inventory procurement, military construction, operations, and maintenance. Finally, MDA does not explain some critical assumptions-- such as an enemy's type and number of decoys--underlying its performance goals. As a result, decision makers in DOD and Congress do not have a full understanding of the overall cost of developing and fielding the Ballistic Missile Defense System and what the system's true capabilities will be.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Missile Defense Agency expects to explain variations in program baselines (cost, schedule, and performance) beginning in its fiscal year 2005 Selected Acquisition Report prepared for the Congress, which is expected to be delivered in FY 2006. GAO notes, in addition, that variations are explained to some extent in the Staffer Day Briefings and the R-2 budget documents.

    Recommendation: To provide decision makers in DOD and Congress with a reliable and complete basis for carrying out oversight of the BMDS program, the Secretary of Defense should direct the Director, MDA, to explain year-to-year variations from the baselines in the Selected Acquisition Report to Congress.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD concurred with this recommendation and Congress wrote this recommendation into law (see Sec. 234(e) of the FY 2005 Defense Authorization Act). In carrying out GAO's recommendation, MDA generated baselines for its Block 2004 and Block 2006 configurations; they are presented in the April 2004 document, "BMDS Baseline Package." So-called life-cycle costs presented in the baseline package are not typical in the sense that they do not represent total development, procurement, O&S, and disposal costs over an extended period of time. Rather, such costs are given through fiscal year 2011.

    Recommendation: To provide decision makers in DOD and Congress with a reliable and complete basis for carrying out oversight of the BMDS program, the Secretary of Defense should direct the Director, MDA, to establish cost, schedule, and performance baselines (including full life-cycle costs) for each block configuration of the BMDS being fielded.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: In disagreeing with this recommendation, DOD stated that the reporting responsibilities of the Director, Operational Test and Evaluation (DOT&E) are already established in statute. 10 USC 139 requires that DOT&E submit an annual report to the Secretary of Defense and the Congress on the adequacy of DOD's operational test and evaluation activities during the previous fiscal year. In addition, 10 USC 2399 requires that DOT&E submit a report to the Secretary and the congressional defense committees on major defense acquisition programs prior to a decision that those programs proceed beyond low-rate initial production. The Director is to assess the items or components tested are effective and suitable for operational use. Technically, however, since MDA has not made milestone decisions, such as low rate initial production, before fielding assets, DOT&E has not been required to report on such testing for missile defense. However, Congress has since directed DOT&E to annually evaluate all Ballistic Missile Defense System elements, which includes an assessment of the operational realism of BMDS element tests.

    Recommendation: To provide increased confidence that a fielded block of the BMDS will perform as intended when placed in the hands of the warfighter and that further investments to improve the BMDS through block upgrades are warranted, the Secretary of Defense should direct DOT&E to report its evaluation of the results of such tests to the Secretary and the congressional defense committees.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: The Department of Defense (DOD) concurred with GAO's recommendation to prepare for and to conduct operationally realistic testing for each BMDS block configuration being fielded. In addition, Congress wrote this recommendation into law (see Sec. 234(a-d) of the FY 2005 Defense Authorization Act), as applied to Block 2004. In carrying out this recommendation, MDA is preparing for such a test in collaboration with the Director, Operational Test and Evaluation (DOT&E). Planning began in October of 2004 and will culminate with the execution of FTG 04-3, which is likely to be conducted in FY 2006.

    Recommendation: To provide increased confidence that a fielded block of the BMDS will perform as intended when placed in the hands of the warfighter and that further investments to improve the BMDS through block upgrades are warranted, the Secretary of Defense should assign the Director of Operational Test and Evaluation (DOT&E) responsibility for approving such test plans.

    Agency Affected: Department of Defense

  5. Status: Closed - Not Implemented

    Comments: Although Department of Defense (DOD) concurred with GAO's recommendation, they did not implement the recommendation. Missile Defense Agency (MDA) did not appoint an independent operational test agent to plan and conduct tests for the Ballistic Missile Defense System (BMDS) bock configuration.

    Recommendation: To provide increased confidence that a fielded block of the BMDS will perform as intended when placed in the hands of the warfighter and that further investments to improve the BMDS through block upgrades are warranted, the Secretary of Defense should direct the Director, MDA, to prepare for independent, operationally realistic testing and evaluation for each BMDS block configuration being fielded and appoint an independent operational test agent to plan and conduct those tests.

    Agency Affected: Department of Defense

  6. Status: Closed - Implemented

    Comments: MDA conducted the uncertainty analysis and concluded that software is not a high-risk program component. Specifically, the analysis found that (1) $200 to $300 million is a realistic cost range for software development, (2) the program estimate of $212 million is at the 65 percent point for the most likely estimate, (3) software development is not on the KEI program critical path, and (4) software development represents 4-6 percent of the contract value.

    Recommendation: We recommend that the Missile Defense Agency analyze the degree of risk associated with the Kinetic Energy Interceptor software components by performing an uncertainty analysis that quantifies the reliability of the proposed estimates.

    Agency Affected: Department of Defense

 

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