Defense Acquisitions:

Missile Defense Agency Fields Initial Capability but Falls Short of Original Goals

GAO-06-327: Published: Mar 15, 2006. Publicly Released: Mar 15, 2006.

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The Department of Defense (DOD) has spent nearly $90 billion since 1985 to develop a Ballistic Missile Defense System (BMDS). In the next 6 years, the Missile Defense Agency (MDA), the developer, plans to invest about $58 billion more. MDA's overall goal is to produce a system that is capable of defeating enemy missiles launched from any range during any phase of their flight. MDA's approach is to field new capabilities in 2-year blocks. The first--Block 2004--was to provide some protection by December 2005 against attacks out of North Korea and the Middle East. Congress requires GAO to assess MDA's progress annually. This year's report assesses (1) MDA's progress during fiscal year 2005 and (2) whether capabilities fielded under Block 2004 met goals. To the extent goals were not met, GAO identifies reasons for shortfalls and discusses corrective actions that should be taken.

MDA made good progress during fiscal year 2005 in the development and fielding of two of the seven elements reviewed. Most of the others encountered problems that slowed progress. Meanwhile, contractors for the seven elements exceeded their fiscal year budget by about $458 million, or about 14 percent, most of which was attributable to cost overruns in developing the Ground-based Midcourse Defense (GMD) element. Accelerating Block 2004 allowed MDA to successfully field missile defense assets faster than planned. But, MDA delivered fewer quantities than planned and exceeded the cost goal of $6.7 billion by about $1 billion. The increased cost is primarily the added cost of sustaining fielded assets. However, the increase would have been greater if some development and other activities had not been deferred into Block 2006. Also, MDA has been unable to verify actual system performance because of flight test delays. Time pressures caused MDA to stray from a knowledge-based acquisition strategy. Key aspects of product knowledge, such as technology maturity, are proven in a knowledge-based strategy before committing to more development. MDA followed a knowledge-based strategy with elements not being fielded, such as Airborne Laser and Kinetic Energy Interceptor. But it allowed the GMD program to concurrently mature technology, complete design activities, and produce and field assets before end-to-end testing of the system--all at the expense of cost, quantity, and performance goals. For example, the performance of some GMD interceptors is questionable because the program was inattentive to quality assurance. If the block approach continues to feature concurrency as a means of acceleration, MDA's approach may not be affordable for the considerable amount of capability that is yet to be developed and fielded. MDA has unusual flexibility to modify its strategies and goals, make trade-offs, and report on its progress. For example, MDA's Director may determine when cost variations are significant enough to report to Congress. MDA is taking actions to strengthen quality control. These actions are notable, but they do not address the schedule-induced pressures of fielding or enhancing a capability in a 2-year time frame or the need to fully implement a knowledge-based acquisition approach.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In its report on the fiscal year 2007 authorization bill, the House Armed Services Committee strongly encouraged the Missile Defense Agency (MDA) to adopt a knowledge-based acquisition strategy, which would be consistent with Department of Defense acquisition regulations and GAO's recommendation. In 2010, MDA began implementing a new acquisition strategy that incorporates key knowledge points leading up to major milestone decisions as well as distinct acquisition phases.

    Recommendation: To better ensure the success of future MDA development efforts, the Secretary of Defense should direct the Director, MDA, to direct all BMDS elements to implement a knowledge-based acquisition strategy that provides for demonstrating knowledge points for major events or steps leading up to those events. These knowledge points should be consistent with those called for in DOD's acquisition regulations. For example, markers could be established that would demonstrate that programs have the knowledge to meet design review standards and are ready to hold those reviews.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: The Congress has directed the Missile Defense Agency to assess its block structure with an emphasis on implementing a knowledge-based acquisition strategy.

    Recommendation: To better ensure the success of future MDA development efforts, the Secretary of Defense should direct the Director, MDA, to assess whether the current 2-year block strategy is compatible with the knowledge-based development strategy recommended above. If not, the Secretary should develop event-driven time frames for future blocks. Events could represent demonstrated increases in capability, such as the addition of software upgrades, stand-alone components, or elements.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD did not initially concur with this recommendation. However, MDA has implemented a new acquisition strategy, citing GAO recommendations and DOD acquisition policy, that includes more transparent criteria for identifying and reporting significant changes in quantities, cost, or performance.

    Recommendation: To better ensure the success of future MDA development efforts, the Secretary of Defense should direct the Director, MDA, to adopt more transparent criteria for identifying and reporting on significant changes in each element's quantities, cost, or performance, such as those that are found in DOD's acquisition regulations. Coupled with a more knowledge-based acquisition strategy, such criteria would enable MDA to be more accountable for delivering promised capability within estimated resources.

    Agency Affected: Department of Defense


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