Defense Acquisitions:

Actions Needed to Ensure Adequate Funding for Operation and Sustainment of the Ballistic Missile Defense System

GAO-05-817: Published: Sep 6, 2005. Publicly Released: Sep 6, 2005.

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In 2002, the Department of Defense (DOD) implemented a new acquisition model to develop a Ballistic Missile Defense System (BMDS) that included all major missile defense acquisitions, some of which were being developed by the military services. The model called for the management and funding responsibility for production, operation, and sustainment of a capability to be transferred to a military service when a BMDS element or major component is technically mature and plans for production are well developed. The Missile Defense Agency (MDA) was given responsibility for developing the BMDS and recommending the transfer of management and funding responsibilities to the services. In 2004, MDA emplaced an initial missile defense capability, but DOD did not transfer management and funding responsibility for that capability. Because a formal transfer did not occur, GAO was asked to (1) identify DOD's criteria for deciding when a missile defense capability should be transferred to a service and (2) determine how DOD is managing the costs of fielding a BMDS capability.

There is currently uncertainty as to which assets may eventually be transferred to each military service and under what conditions those transfers should occur. This uncertainty makes it difficult for the services to plan to address the requirements of DOD acquisition regulations and realign their budgets to support the missile defense mission. According to MDA and other DOD officials, when transfer criteria were established in 2002, the Department did not fully understand the complexity of the BMDS and how it could affect transfer decisions. For example, it has been difficult to determine whether MDA or a military service will be responsible for managing and funding some assets, such as stand-alone missile defense radars, because these assets are not integrated on service platforms or do not perform core service missions. MDA officials suggested that these components could be operated by either contractors or military personnel and MDA might fund their operation and sustainment. A team that includes representatives from the military services, the combatant commands, MDA, and other DOD offices was established early this year to address transfer issues. However, because MDA and the services have been unable to reach agreement on the transfer of some missile defense assets, a unit under the Joint Chiefs of Staff was tasked in July 2005 with recommending revisions to the existing transfer criteria. MDA budgeted $1.5 billion of its fiscal year 2005 research and development funds to acquire interceptors and radars and upgrade various BMDS components. It expects to continue to acquire and upgrade BMDS assets through 2011 and beyond. However, MDA and the services disagree as to who should pay for operating and sustaining the initial defensive capability after fiscal year 2005. Additionally, although DOD has budgeted $68.5 billion to develop, procure, operate, and sustain a missile defense capability between 2005 and 2011, it has not completely determined whether additional operation and sustainment funds will be needed, and it has not included all known operation and sustainment costs in its budget. Until DOD decides who will fund these costs, the services will likely continue to provide only the funding that they have been directed to provide. As a result, some needs--for which neither MDA nor the services have planned--will go unfunded. Additionally, if the funds budgeted for some purposes, such as logistical support for the BMDS, turn out to be insufficient, DOD will either have to take funds from other programs or spend less on missile defense.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Working together, the Missile Defense Agency, Combatant Commands, and military services generated a transition and transfer plan in July 2006. The annexes included in the plan identify the time line for transferring an asset, the military service that is to receive the asset, and any unique requirements that must be met before transfer takes place. Although the action taken by DOD is different from the action GAO recommended, DOD achieved the intent of the recommendation, which was to clarify--in a timeframe that would allow for appropriate planning--when the transfer of BMDS elements would take place and which organization would be responsible for each assets' management and funding.

    Recommendation: The Under Secretary of Defense for Acquisition, Technology and Logistics should revise the criteria for deciding when management and funding responsibility for missile defense assets should be transferred from MDA to a military service so that those criteria are clear and complete.

    Agency Affected: Department of Defense: Office of the Secretary of Defense: Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics

  2. Status: Closed - Implemented

    Comments: The Missile Defense Agency (MDA) and the military services have worked together to develop a Ballistic Missile Defense System (BMDS) Transition and Transfer Plan. The plan is responsive to our recommendation because it addresses agreements reached as to the organization that will budget for and provide funding support for elements that will not transfer from MDA to a military service.

    Recommendation: The Secretary of Defense should ensure that a decision is made as to which DOD organization will fund the operation and sustainment of missile defense assets that are part of the initial defensive capability but have not been transferred from MDA to a military service and direct that organization, or those organizations, to budget for those costs.

    Agency Affected: Department of Defense


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