Defense Acquisitions: Missile Defense Acquisition Strategy Generates Results but Delivers Less at a Higher Cost

GAO-07-387 Published: Mar 15, 2007. Publicly Released: Mar 15, 2007.
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Highlights

Over the next 5 years, the Missile Defense Agency (MDA) expects to invest $49 billion in the BMD system's development and fielding. MDA's strategy is to field new capabilities in 2-year blocks. In January 2006, MDA initiated its second block--Block 2006--to protect against attacks from North Korea and the Middle East. Congress requires GAO to assess MDA's progress annually. This year's report addresses MDA's progress during fiscal year 2006 and follows up on program oversight issues and the current status of MDA's quality assurance program. GAO assessed the progress of each element being developed by MDA, examined acquisition laws applicable to major acquisition programs, and reviewed the impact of implemented quality initiatives.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense To increase transparency in the missile defense program, the Secretary of Defense should develop a firm cost, schedule, and performance baseline for those elements considered far enough along to be in system development and demonstration, and report against that baseline.
Closed – Implemented
In December 2007, the Missile Defense Agency (MDA) modified its approach used to define its cost, schedule, and performance baselines. In addition, the Fiscal Year 2008 National Defense Authorization Act included language that directs MDA to establish a number of specific acquisition improvements, including acquisition baselines for cost, schedule, and performance for those missile defense elements that have either entered the equivalent of the System Development and Demonstration phase of acquisition, or are being produced and fielded for operational use. In addition, in a 2010 Senate Report, the committee noted that GAO had recommended numerous times that MDA develop and use acquisition baselines for cost, schedule, and performance in order to permit objective assessments of their progress on missile defense programs. In light of GAO's recommendations, the committee further noted that it believed that it was important to require such baselines in law to ensure that they will be an enduring feature of MDA program management and oversight in the future. Consequently, in December 2010, Congress established new requirements for missile defense baselines in the National Defense Authorization Act for Fiscal Year 2011. The Ike Skelton National Defense Authorization Act for Fiscal Year 2011, required the Secretary of Defense to ensure that MDA establishes and maintains an acquisition baseline for each program element of the BMDS. This law detailed specific requirements for the contents of the acquisition baseline, including a comprehensive schedule, a detailed technical description, a cost estimate (including life cycle cost estimate), and a test baseline. Annually, MDA is to submit a report on the baselines to the congressional defense committees. After the first such report, each subsequent report shall identify the significant changes or variances, if any, in any baseline from any earlier report.
Department of Defense To increase transparency in the missile defense program, the Secretary of Defense should propose an approach for those same elements that provides information consistent with the acquisition laws that govern baselines and unit cost reporting, independent cost estimates, and operational test and evaluation for major DOD programs. Such an approach could provide necessary information while preserving the MDA Director's flexibility to make decisions.
Closed – Implemented
The Missile Defense Agency (MDA) is providing additional information to Congress to promote accountability, consistency, and transparency while (1) preserving the MDA Director's flexibility to make decisions and (2) continuing to emphasize its single, integrated program of development. In addition, the Fiscal Year 2008 National Defense Authorization Act Report directed MDA to establish acquisition baselines for cost, schedule, and performance for those missile defense elements far enough along to be in system development and demonstration, and that the agency provide unit cost data, and other information that would help improve accountability. Also, in its June 2010 BMDS Accountability Report, MDA reported program acquisition unit costs, which includes research and development funding, for MDA program elements that produce countable weapons, sensors, launch systems, and fire control systems.
Department of Defense To increase transparency in the missile defense program, the Secretary of Defense should include in blocks only those elements that will field capabilities during the block period and develop a firm cost, schedule, and performance baseline for that block capability including the unit cost of its assets.
Closed – Implemented
The Missile Defense Agency (MDA) did not agree with this recommendation, but modified its biennial block approach in December 2007 to include only those elements that will be fielded during each block.
Department of Defense To increase transparency in the missile defense program, the Secretary of Defense should request and use procurement funds, rather than research, development, test, and evaluation funds, to acquire fielded assets.
Closed – Implemented
The Fiscal Year 2008 National Defense Authorization Act includes language directing the MDA, starting in fiscal year 2009, to submit the budget request using regular budget categories (research and development, procurement, operation and maintenance, and military construction). Additionally, the Fiscal Year 2008 National Defense Authorization Act includes language directing the MDA to submit, no later than March 1, 2008, to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives, a plan for transitioning the Missile Defense Agency from using research, development, test, and evaluation funds for missile defense fielding activities to using procurement funds for those activities, where practicable. In the 2010 President's budget, MDA requested procurement funding for Terminal High Altitude Area Defense (THAAD) and Aegis Ballistic Missile Defense assets.
Department of Defense To increase transparency in the missile defense program, the Secretary of Defense should conduct an independent evaluation of the Airborne Laser and Kinetic Energy Interceptor after key demonstrations, now scheduled for 2008 and 2009, to inform decisions on the future of the two programs.
Closed – Implemented
The Missile Defense Agency terminated the Airborne Laser and Kinetic Energy Interceptor programs citing affordability, feasibility, and technical issues as justification.

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