Missile Defense: Opportunity to Refocus on Strengthening Acquisition Management

GAO-13-432 Published: Apr 26, 2013. Publicly Released: Apr 26, 2013.
Jump To:
Skip to Highlights
Highlights

What GAO Found

Although the Missile Defense Agency (MDA) has made some progress, the new MDA Director faces challenges developing and deploying new systems to achieve increasingly integrated capabilities as well as supporting and upgrading deployed systems while providing decision makers in the Department of Defense (DOD) and Congress with key oversight information in an era of fiscal constraints.

Challenge: Improve Investment Decisions

Determining the most promising and cost effective new missile defense systems to buy--considering technical feasibility and cost--remains a challenge for MDA. While MDA has conducted some analyses that consider alternatives in selecting which acquisitions to pursue, it has not conducted robust analyses of alternatives for two of its new programs. Because of its acquisition flexibilities, MDA is not required to do so. Robust analyses, however, could be particularly useful to DOD and congressional decision makers as they decide how to manage the portfolio of missile defense acquisitions. GAO has reported in the past that without analyses of alternatives, programs may not select the best solution for the warfighter, are at risk for cost increases, and can face schedule delays.

Challenge: Expand on Steps Taken to Place Investments on a Sound Footing

In the past year, MDA gained important knowledge by successfully conducting several important tests, including a test to show how well its systems will operate together. MDA has also taken steps to lower the acquisition risks of two newer programs by adding more development time. However, development issues discovered after three programs prematurely committed to production continue to disrupt both interceptor production and flight test schedules. In addition, two other programs plan to make premature commitments to production before testing confirms their designs work as intended. MDA is planning to fly targets for the first time in its first operational test using several systems, adding risk that key information may not be obtained in this major test.

Challenge: Ensure Program Baselines Support Oversight

While MDA has made substantial improvements to the clarity of its cost and schedule baselines since first reporting them in 2010, they are still not useful for decision makers to gauge progress. For example, the information they include is not sufficiently comprehensive because they do not include operation and support costs from the military services. By not including these costs, the life cycle costs for some MDA programs could be significantly understated.

Challenge: Developing and Deploying U.S. Missile Defense in Europe

DOD declared the first major deployment of U.S. missile defense in Europe operational in December 2011, but MDA is faced with resolving some issues to provide the full capability and is facing delays to some systems planned in each of the next three major deployments. MDA has also struggled for years to develop the tools--the models and simulations--to credibly assess operational performance of systems before they are deployed. It recently committed to a new approach to resolve this problem.

Why GAO Did This Study

Since 2002 MDA has spent approximately $90 billion to provide protection from enemy ballistic missiles by developing battle management systems, sensors that identify incoming threats, and missiles to intercept them. MDA plans to spend about $8 billion per year through 2017. For nearly a decade, we have reported on MDA's progress and challenges in developing and fielding the Ballistic Missile Defense System.

GAO is mandated by law to assess the extent to which MDA has achieved its acquisition goals and objectives, as reported through acquisition baselines. This report examines the agency's progress and remaining challenges in (1) selecting new programs in which to invest; (2) putting programs on a sound development path; (3) establishing baselines that support oversight; and (4) developing and deploying U.S. missile defense in Europe for defense of Europe and the United States. To do this, GAO examined MDA's acquisition reports, analyzed baselines reported over several years to discern progress, and interviewed a wide range of DOD and MDA officials.

Skip to Recommendations

Recommendations

GAO makes four recommendations to DOD to ensure MDA (1) fully assesses alternatives before selecting investments, (2) takes steps to reduce the risk that unproven target missiles can disrupt key tests, (3) reports full program costs, and (4) stabilizes acquisition baselines. DOD concurred with two recommendations and partially concurred with two, stating the decision to perform target risk reduction flight tests should be weighed against other programmatic factors and that its current forum for reporting MDA program costs should not include non-MDA funding. GAO continues to believe the recommendations are valid as discussed in this report.

For more information- contact Cristina Chaplain at (202) 512-4841 or chaplainc@gao.gov.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense In order to strengthen investment decisions, place the chosen investments on a sound acquisition footing, provide a better means of tracking investment progress, and improve the management and transparency of the U.S. missile defense approach in Europe, the Secretary of Defense should direct MDA's new Director to undertake robust alternatives analyses for new major missile defense efforts currently underway, including the SM-3 Block IIB, and before embarking on any other major new missile defense programs. In particular, such analyses should consider a broad range of alternatives.
Closed – Implemented
DOD concurred with our recommendation that MDA undertake robust alternative analyses for new efforts currently underway and before embarking on any other new major programs. With respect to new efforts currently underway, MDA did not conduct such analyses for the Precision Tracking Space System and Aegis Standard Missile-3 Block IIB programs because DOD cancelled both in April 2013. However, in 2015 MDA began alternative analyses for the homeland missile defense and ballistic missile defense sensor architecture, but did so in accordance with specific direction in the National Defense Authorization Act for Fiscal Year 2014. As of August 2017, MDA has not released the final reports for either of these analyses due to the lack of a sufficiency review from the Director for Cost Assessment and Performance Evaluation, which has noted setbacks due to staffing levels and competing priorities. Despite the lack of final reports, MDA officials briefed the results of the analyses to congressional defense committees and senior DOD leadership and used the results as a basis for the decision to pursue the Ground-based Midcourse Defense's Redesigned Kill Vehicle. Consequently, we believe that MDA met the intention of our recommendation with respect to new efforts currently underway, although it was action taken based on explicit direction from Congress. Whether or not MDA will perform such alternatives analyses on any other new major programs remains to be seen and we will continue to monitor its progress in this regard.
Department of Defense In order to strengthen investment decisions, place the chosen investments on a sound acquisition footing, provide a better means of tracking investment progress, and improve the management and transparency of the U.S. missile defense approach in Europe, the Secretary of Defense should direct MDA's new Director to add risk reduction non-intercept flight tests for each new type of target missiles developed.
Closed – Not Implemented
Despite partially concurring with our recommendation in 2013, as of August 2019, MDA has not adjusted its test plans to include risk-reduction flight tests (i.e., non-intercept) for new target types prior to their inclusion in an intercept flight test. MDA officials have not done so because such decisions must be balanced against potential cost, schedule, and programmatic impacts. Also, MDA officials contest that flight test preparation processes, like dry-runs and quality control checks, are sufficient to discover issues prior to an intercept test. While test preparation processes are valuable, they are not a substitute for risk reduction flight tests. This was proven in June 2015 when MDA launched a new intermediate-range target that had 6 different test preparation processes but not a risk-reduction flight test and the target failed, which resulted in significant cost, schedule, and programmatic impacts. Moving forward, despite the impacts from such target failures, MDA plans to use a new medium-range target during a major intercept test for the Terminal High Altitude Area Defense (THAAD) program in the fourth quarter of fiscal year 2019, in support of an urgent operational need for the warfighter deployed to Korea. The use of a new target during this flight test significantly increases the risk that it will not go as planned, which could result in a costly retest and defer the demonstration of urgent capabilities needed by the warfighter. We maintain our stance that risk reduction flight tests would reduce the risk for the associated test and the overall flight test plan; however, MDA's actions to-date suggest that it has no intention of including risk-reduction flight tests for new targets.
Department of Defense
Priority Rec.
This is a priority recommendation.
In order to strengthen investment decisions, place the chosen investments on a sound acquisition footing, provide a better means of tracking investment progress, and improve the management and transparency of the U.S. missile defense approach in Europe, the Secretary of Defense should direct MDA's new Director to include in its resource baseline cost estimates all life cycle costs, specifically the operations and support costs, from the military services in order to provide decision makers with the full costs of ballistic missile defense systems.
Open
DOD partially concurred with our 2013 recommendation that decisionmakers should have insight into the full lifecycle costs, including the military services' operations and sustainment (O&S) costs, for the Missile Defense Agency's (MDA) weapon systems. O&S can represent up to 70 percent of a weapon system's cost over its entire life and both MDA and the military services have O&S costs, the former as the developer and overarching manager of the Missile Defense System and the latter as the user. In 2020, DOD submitted a memo to us that noted MDA's preparation of joint cost estimates (JCE) with the military services to capture their respective O&S costs and requested closure of this recommendation as implemented. From May 2020 to February 2022 we conducted an in-depth review of MDA's cost estimates and baseline reporting to assess the extent to which the agency's actions meet the intent of our recommendation. Overall, we found that MDA's lifecycle cost estimates have improved, but they continue to omit the military services' O&S costs. Specifically, we found that while MDA has made progress preparing JCEs with the military services, not all applicable weapon systems have a JCE as required by policy, some existing JCEs are outdated, and none of the JCEs have been independently verified by DOD's office of Cost Analysis and Program Evaluation (CAPE) as advised by policy. Next, we found that the O&S costs for some weapon systems are captured in multiple and disparate sources that are not connected in any centralized way, which made it difficult or, in some instances, impossible for us to quantify the full lifecycle costs for some weapon systems. Last, we found that MDA does not include the JCEs or other sources for the O&S costs in its lifecycle cost estimates or baseline reporting. Thus, decisionmakers and others do not have the necessary insight into the full lifecycle costs of MDA's weapon systems to (1) make investment and funding determinations or to cancel an effort if costs become untenable, (2) prepare independent cost estimates now required by policy, and (3) plan for future transfers of system ownership. As such, we determined that MDA has not met the intent of our recommendation. Accordingly, we advised MDA to add a citation in its lifecycle cost estimates and baseline reporting to the JCE or other source(s) for the O&S costs as a practical means of providing decisionmakers and others insight into the full lifecycle costs of these weapon systems.
Department of Defense
Priority Rec.
This is a priority recommendation.
In order to strengthen investment decisions, place the chosen investments on a sound acquisition footing, provide a better means of tracking investment progress, and improve the management and transparency of the U.S. missile defense approach in Europe, the Secretary of Defense should direct MDA's new Director to stabilize the acquisition baselines, so that meaningful comparisons can be made over time that support oversight of those acquisitions.
Open
DOD concurred with our 2013 recommendation regarding the need for MDA to stabilize its program baselines to enable meaningful comparisons over time, but noted MDA's authority to adjust baselines to remain responsive to evolving requirements and threats. Our recommendation, however, does not seek to impugn the MDA Director's authority to adjust baselines, as appropriate. Rather, the intention of our recommendation is to ensure that MDA's baselines clearly and accurately depict a program's progress over time, which includes the ease and ability to trace and reconcile any adjustments. In 2020, DOD submitted a memo to us that highlighted MDA's addition of a list of significant changes to its baseline reporting and requested closure of this recommendation as implemented. MDA told us that a program's cost performance can be discerned by simply collating the list of significant changes from each annual baseline reporting. From May 2020 to February 2022 we completed an in-depth review of MDA's baseline reporting to assess the extent to which the agency's actions meet the intent of our recommendation. We found that MDA's baseline reporting is improving, but MDA continues to make adjustments to program baselines in such a way that a program's cost performance is no longer traceable when comparing over time. We also found that MDA shifts costs across and outside of program baselines, which further complicates the collating and reconciliation of adjustments. These untraceable adjustments and shifts undermine the utility of program baselines as an oversight tool for Congress. Thus, we determined that MDA's actions do not meet the intent of our recommendation. Accordingly, we advised MDA to explore potential causes for the traceability issues in its baseline reporting and to implement the appropriate correction actions.

Full Report