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Highlights

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.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense 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.
Closed - Implemented

Recommendation status is Closed - Implemented.

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.
Department of Defense 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.
Closed - Implemented

Recommendation status is Closed - Implemented.

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.
Department of Defense 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.
Closed - Implemented

Recommendation status is Closed - Implemented.

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.
Department of Defense 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.
Closed - Not Implemented

Recommendation status is Closed - Not Implemented.

In providing comments on our report, the agency concurred with this recommendation but did not take the actions necessary to implement it. Specifically, while the Missile Defense Agency (MDA) has received independent cost estimates from its internal independent cost group for some programs and components that support the baselines provided in MDA's Ballistic Missile Defense System Accountability Report (BAR), MDA officials told us they have not completed independent estimates for all the BAR baselines as the recommendation requires. In addition, the independent estimates will not have full lifecycle costs which will hamper their effectiveness. Therefore, in August 2018,. we are closing this recommendation as not implemented.
Department of Defense 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.
Closed - Implemented

Recommendation status is Closed - Implemented.

Since 2011, we have found deficiencies in the quality of MDA's cost estimates that underpin the resource baselines reported in its annual Ballistic Missile Defense System (BMDS) Accountability Report (BAR). However, in our December 2014 report, GAO-15-210R, we found that MDA has taken positive steps that are in-line with GAO best practices to improve the quality of its cost estimates. These steps include releasing an internal cost estimating handbook that it is well aligned with the standards in the GAO cost guide, performing internal cost reviews to evaluate the estimates against the standards presented in the handbook, assembling an independent cost group to perform an additional independent review of the quality of MDA's estimates, and receiving independent cost estimates from an external organization. Together, these are positive steps forward to ensuring that MDA's cost estimates are high quality, reliable cost estimates that are documented to facilitate external review.
Department of Defense 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.
Closed - Implemented

Recommendation status is Closed - Implemented.

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.
Department of Defense 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.
Closed - Implemented

Recommendation status is Closed - Implemented.

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.
Department of Defense 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.
Closed - Implemented

Recommendation status is Closed - Implemented.

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. We also remained concerned that the variances did not include all changes to test objectives, detail when tests are deleted, nor when the altered objectives will be satisfied. In addition, as we tracked the progress of the implementation of this recommendation, we noted our concern that while MDA utilized a "mid-year" test change memorandum, the change explained the difference from the prior master test plan, but was not reported. Thus, changes that were included in the mid-year memorandum were not able to be tracked if there's only one annual test plan. However, MDA completed an effort with DOT&E and the OTA to track the movement of test objectives, and made changes to its annual Integrated Master Test Plan. Those changes now satisfy the intent of our recommendation as the variances from the prior year's test plan are now identified in response to a related recommendation we made in GAO-17-381.
Department of Defense 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.
Closed - Not Implemented

Recommendation status is Closed - Not Implemented.

In providing comments on this report, the Department of Defense concurred with our recommendation but has not taken any actions necessary to implement it in either the BAR or the budget justification documentation. NDAA language now requires MDA to report the cost effects of cancelled tests moving forward. We will track to assess whether MDA satisfies the new requirement(s).
Department of Defense 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.
Closed - Not Implemented

Recommendation status is Closed - Not Implemented.

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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