United States Government Accountability Office Report to Congressional Committees GAO March 2009 DEFENSE ACQUISITIONS Production and Fielding of Missile Defense Components Continue with Less Testing and Validation Than Planned GAO-09-338 March 2009 DEFENSE ACQUISITIONS Accountability Integrity Reliability Production and Fielding of Missile Defense Highlights Components Continue with Less Testing and Highlights of GAO-09-338, a report to Validation Than Planned Congressional Committees Why GAO Did This Study What GAO Found The Missile Defense Agency (MDA) Cost has spent about $56 billion and will MDA has not yet established baselines for total costs or unit costs, both spend about $50 billion more fundamental markers most programs use to measure progress. Consequently, through 2013 to develop a Ballistic for the sixth year, GAO has not been able to assess MDA’s actual costs against Missile Defense System (BMDS). a baseline of either total costs or unit costs. MDA planned to establish such GAO was directed to assess the baselines in 2008 in response to past GAO recommendations, but has delayed annual progress MDA made in developing the BMDS as well as this until 2009. GAO was able to assess the cost performance on individual improvements in accountability contracts, and project an overrun at completion of between $2 billion and $3 and transparency in agency billion. However, because in some cases the budgeted costs at completion— operations, management processes, the basis for our projection—has changed significantly over time as and the new block strategy. To adjustments were made, this projection does not capture as cost growth the accomplish this, GAO reviewed difference between the original and current budgeted costs at completion. In contractor cost, schedule, and one case, these costs increased by approximately five times its original value. performance; tests completed; and the assets fielded during 2008. GAO Performance and Testing also reviewed pertinent sections of While MDA completed several key tests that demonstrated enhanced the U.S. Code, acquisition policy, performance of the BMDS, all elements of the system had test delays and and the activities of the new Missile Defense Executive Board (MDEB). shortfalls. Overall, testing achieved less than planned. For example, none of An appendix on the effect the the six Director’s test knowledge points established by MDA for 2008 were cancellation of a Ground-based achieved. Poor performing target missiles have been a persistent problem. Midcourse Defense flight test Testing shortfalls have slowed the validation of models and simulations, (FTG-04) had on BMDS which are needed to assess the system’s overall performance. Consequently, development is also included. the performance of the BMDS as a whole can not yet be determined. What GAO Recommends Schedule Although fewer tests have been conducted than planned, the production and GAO recommends that the MDEB fielding of assets has proceeded closer to schedule. Except for no ground- assess how the transparency and accountability of MDA acquisitions based interceptors being delivered, all other radars, standard missiles, and can be strengthened without losing software were delivered as planned. However, some deliveries, such as the benefits of MDA’s existing enhanced Exoatmospheric Kill Vehicles, will now precede test results. In flexibilities. Meanwhile, MDA most cases, MDA has also reduced the bases it planned to use to declare when should improve its cost and test capabilities are operational in the field. Thus, fielding decisions are being baselines; tie modeling and made with a reduced understanding of system effectiveness. simulation needs into test objectives; provide more time to Transparency, Accountability, and Oversight analyze tests; better coordinate Improvement in this area has been limited. The Missile Defense Executive with independent testers; Board (MDEB) has acted with increased authority in providing oversight of synchronize development, MDA and the BMDS. However, transparency and accountability into MDA’s manufacturing, and fielding with testing and validation; complete a work is limited by the management fluidity afforded through the lack of cost key developmental test; and baselines, an unstable test baseline, continued use of development funds to strengthen the basis for capability produce assets for fielding, and renewed potential for transferring work from declarations. DOD agreed with 10 one predefined block to another. A better balance must still be struck of the 11 recommendations and between the information Congress and the Department of Defense need to partially agreed with one. conduct oversight of the BMDS and the flexibility MDA needs to manage To view the full product, including the scope across the portfolio of assets that collectively constitute the system’s and methodology, click on GAO-09-338. capability. At this point, the balance does not provide sufficient information For more information, contact Paul Francis at for effective oversight. (202) 512-4841 or [email protected]. United States Government Accountability Office Contents Letter 1 Background 3 Cost Tracking Deficiencies Hinder Assessment of Cost Performance 9 While Some Tests Succeeded, Others Were Deferred; Overall System Performance Cannot Yet Be Assessed 25 Production, Fielding, and Declaration of Capabilities Proceed despite Delays in Testing and Assessments 40 Production and Fielding of BMDS Systems Getting Ahead of Testing 42 Limited Progress Made in Improving Transparency and Accountability 52 Conclusions 59 Recommendations for Executive Action 60 Agency Comments and Our Evaluation 62 Appendix I Comments from the Department of Defense 65 Appendix II BMDS Prime Contractors Exceed Budgeted Cost and Schedule Performance during Fiscal Year 2008 69 Aegis BMD Contractors Experienced Mixed Performance during the Fiscal Year 70 ABL Contractor Overran Budgeted Fiscal Year Cost 73 C2BMC Program Incurred Negative Cumulative and Fiscal Year Variances 74 GMD Contractor Maintained Negative Cumulative Cost and Schedule Variances throughout the Fiscal Year 76 KEI Cost and Schedule Performance Continued to Decline after Replan 78 Limited Contractor Data Prevented Analysis of All MKV Task Orders 79 Sensors’ Radar Experienced Fiscal Year Cost and Schedule Growth 83 Technical Issues Drove STSS Cost Growth during the Fiscal Year 84 Targets and Countermeasures Program’s Rebaseline Positively Affected Fiscal Year Schedule Variances 86 THAAD Contractor Spent More Money and Time Than Budgeted 87 Page i GAO-09-338 Defense Acquisitions Appendix III FTG-04 Flight Test Cancellation 90 Faulty Telemetry Component Caused Delay and Subsequent Cancellation of FTG-04 90 Most FTG-04 Test Objectives Will Be Allocated to Follow-on Tests 93 Cancellation Eliminates One of Few Opportunities to Demonstrate GMD Capabilities 94 Conclusions 96 Appendix IV Reduced Basis for Capability Declarations 97 Appendix V Scope and Methodology 101 Appendix VI GAO Contact and Staff Acknowledgments 104 Tables Table 1: MDA BMDS Elements 4 Table 2: MDA Block Construct 6 Table 3: Fiscal Year 2008 Capability Goals for Blocks 1.0, 2.0, and 3.1/3.2 9 Table 4: Analysis of Contractor Realignments from Contract Start through Fiscal Year 2008 18 Table 5: Prime Contractor Fiscal Year 2008 and Cumulative Cost and Schedule Performance 22 Table 6: Test and Targets Issues 26 Table 7: Status of Fiscal Year 2008 Director’s Test Knowledge Points 33 Table 8: BMDS Deliveries and Total Fielded Assets as of September 30, 2008 41 Table 9: MDA BMDS Test Baseline Revisions 58 Table 10: Timeline of Events 91 Table 11: Engagement Sequence Groups with Revised Basis for Fiscal Year 2008 Capability Declarations 97 Table 12: Block 1.0 Engagement Sequence Groups with Revised Basis for Completion at End of Fiscal Year 2009 99 Page ii GAO-09-338 Defense Acquisitions Figures Figure 1: Estimated Percentage of Total BMDS Block and Capability Development Funds through Fiscal Year 2013 Expected to Be Baselined in 2009 12 Figure 2: Difference in Traditional Unit Cost Reporting and MDA’s Unit Cost Reporting 14 Figure 3: GMD Reduction in Flight Tests from January 2006 to March 2010 29 Figure 4: GMD Flight Test and Fielding Plan for Interceptors Comparison—September 2006 versus January 2009 43 Figure 5: Timeline Showing Declaration of Capabilities in Fiscal Year 2008 47 Figure 6: Timeline Showing Deferred Declaration of Capabilities from Fiscal Year 2008 to 2009 50 Figure 7: Aegis BMD Weapon System Fiscal Year 2008 Cost and Schedule Performance 71 Figure 8: Aegis BMD SM-3 CLIN 1 Fiscal Year 2008 Cost and Schedule Performance 72 Figure 9: ABL Fiscal Year 2008 Cost and Schedule Performance 73 Figure 10: C2BMC Fiscal Year 2008 Cost and Schedule Performance 75 Figure 11: GMD Fiscal Year 2008 Cost and Schedule Performance 77 Figure 12: KEI Fiscal Year 2008 Cost and Schedule Performance 78 Figure 13: MKV Task Order 6 Fiscal Year 2008 Cost and Schedule Performance 80 Figure 14: MKV Task Order 7 Fiscal Year 2008 Cost and Schedule Performance 81 Figure 15: MKV Task Order 8 Fiscal Year 2008 Cost and Schedule Performance 82 Figure 16: Sensors Fiscal Year 2008 Cost and Schedule Performance 83 Figure 17: STSS Fiscal Year 2008 Cost and Schedule Performance 85 Figure 18: Targets and Countermeasures Fiscal Year 2008 Cost and Schedule Performance 87 Figure 19: THAAD Fiscal Year 2008 Cost and Schedule Performance 88 Page iii GAO-09-338 Defense Acquisitions Abbreviations ABL Airborne Laser Aegis BMD Aegis Ballistic Missile Defense