Missile Defense:

Actions Needed to Improve Transparency and Accountability

GAO-11-372: Published: Mar 24, 2011. Publicly Released: Mar 24, 2011.

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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.

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.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: 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, and to improve clarity, consistency, and completeness of the baselines reported to Congress, the Secretary of Defense should ensure that MDA, for resource baselines, provide more detailed explanations and definitions of information included in resource baselines; particularly operations and support costs and unit cost calculations.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In providing comments on this report, the Department of Defense concurred with our recommendation. The Missile Defense Agency (MDA) improved the clarity for costs presented in its February 2012 Ballistic Missile Defense System Accountability Report (BAR). For example, the agency included information in its resource baseline to describe the number of years the operation and sustainment estimate covers and added a description in an appendix to the 2012 BAR on how all of its unit costs were constructed. As such, MDA has implemented GAO's recommendation.

    Recommendation: 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, and to improve clarity, consistency, and completeness of the baselines reported to Congress, the Secretary of Defense should ensure that MDA, for resource baselines, label cost estimates to appropriately reflect the content reported and explain any exclusions.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In providing comments on this report, the Department of Defense concurred with our recommendation. The Missile Defense Agency (MDA) changed some of the labels in the cost estimate reported in the February 2012 Ballistic Missile Defense System Accountability Report (BAR). Updating these labels better reflects what costs are being represented. In addition, the agency specifically highlighted what costs were excluded for specific portions of its resource baselines. As such, MDA has implemented GAO's recommendation.

    Recommendation: 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, and to improve clarity, consistency, and completeness of the baselines reported to Congress, the Secretary of Defense should ensure that MDA, for resource baselines, include all sunk costs in all of its cost estimates and baselines.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In providing comments on this report, the Department of Defense partially concurred with our recommendation. However, in response to our recommendations, MDA updated its February 2012 Ballistic Missile Defense System Accountability Report (BAR) to include sunk costs into its short range ballistic missile, medium range ballistic missile, and intermediate range ballistic missile unit cost baselines. Incorporating the full costs into the calculations for its unit costs makes it more consistent with other program resource baselines and gives Congress and other decision makers better insights into costs associated with the BMDS so they can make more informed decisions going forward.

    Recommendation: 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, and to improve clarity, consistency, and completeness of the baselines reported to Congress, the Secretary of Defense should ensure that MDA, for resource baselines, obtain independent cost estimates for each baseline.

    Agency Affected: Department of Defense

    Status: Open

    Comments: In providing comments on our report, the agency concurred with this recommendation, but has not yet taken all actions necessary to implement it. Although the Missile Defense Agency (MDA) has provided cost estimates for some of its programs and components that support the baselines provided in the Missile Defense Agency's (MDA) Ballistic Missile Defense System Accountability Report (BAR), independent cost estimates for all of the programs and components in the BAR have not yet been developed by the Cost Assessment and Program Evaluation Office.

    Recommendation: 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, and to improve clarity, consistency, and completeness of the baselines reported to Congress, the Secretary of Defense should ensure that MDA, for resource baselines, 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.

    Agency Affected: Department of Defense

    Status: Open

    Comments: In providing comments on this report, the Department of Defense concurred with our recommendation. In our April 2013 report on the progress of the Missile Defense Agency (MDA) against its resource baselines as reported in the annual Ballistic Missile Defense System Accountability Report (BAR) (GAO-13-432), we found that the agency has developed plans to improve its cost estimates but has not yet implemented the actions necessary to improve the quality and reliability of its cost estimates. For example, the agency completed an internal cost estimating handbook, largely based on the GAO cost estimating guide (GAO-09-3SP), which, if implemented, could help address nearly all the shortfalls we identified in 2011. However, because the handbook was only recently completed, it was too early to assess whether the quality of MDA's cost estimates have improved. In addition, during the course of that audit, according to MDA's Director of Operations, the agency was in the process of assembling an independent cost group to carry out the processes outlined in that handbook. During the course of our next annual review of MDA's baselines, we will continue to assess the progress MDA is making toward improving the quality and reliability of the cost estimates underlying the BAR resource baselines.

    Recommendation: 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, and to improve clarity, consistency, and completeness of the baselines reported to Congress, the Secretary of Defense should ensure that MDA, for schedule baselines, 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.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: The Missile Defense Agency (MDA) reported acquisition baselines for program elements or major subprograms in the engineering and the manufacturing development phase and the production and deployment phase in the 2011 and 2012 Ballistic Missile Defense Systems (BMDS) Accountability Reports (BARs). Additionally, MDA added a chart to the 2012 BAR that identifies annual quantities for purchase, delivery, and inventory for each program in product development, initial production, or production phases.

    Recommendation: 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, and to improve clarity, consistency, and completeness of the baselines reported to Congress, the Secretary of Defense should ensure that MDA, for schedule baselines, 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.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: The Missile Defense Agency (MDA) reported schedule baselines that included deliveries for program elements or major subprograms in the engineering and the manufacturing development phase and the production and deployment phase in 2012 Ballistic Missile Defense Systems (BMDS) Accountability Report (BAR). MDA also reported variances to the schedule baseline and the reasons for these variances.

    Recommendation: 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, and to improve clarity, consistency, and completeness of the baselines reported to Congress, the Secretary of Defense should ensure that MDA, for schedule baselines, 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.

    Agency Affected: Department of Defense

    Status: Open

    Comments: In providing comments on this report, the Department of Defense concurred with our recommendation and has taken initial steps to report the test variances, by laying out the dates of the proposed changes. However, the variances do not include all changes to test objectives, nor when the altered objectives will be satisfied. MDA has initiated an effort with DOT&E to track the movement of test objectives, but it has yet been completed. We will continue to monitor MDA's progress in fiscal year 2013 and determine whether MDA lays out the changes in their upcoming integrated master test plan.

    Recommendation: 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, and to improve clarity, consistency, and completeness of the baselines reported to Congress, the Secretary of Defense should ensure that MDA, for test baselines, report the cost effects of those test changes in either the BAR or the budget justification documentation.

    Agency Affected: Department of Defense

    Status: Open

    Comments: In providing comments on this report, the Department of Defense concurred with our recommendation but has not yet taken any actions necessary to implement it in either the BAR or the budget justification documentation.

    Recommendation: 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 includes sufficient schedule and resource margin, including spare test assets and targets, based on recent test experience and forecasted testing demands.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: In providing comments on this report, the Department of Defense partially concurred with our recommendation. However, as the agency slowly builds an inventory of targets and begins to implement a rolling-spare backup strategy, many tests, such as FTO-01, have not been given sufficient schedule or resource margin to allow for backups of key targets. MDA is also building, in parallel, three test assets for two GMD tests, but there is not sufficient margin to recover schedule delays or to cover additional resources if any design changes are needed.

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