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entitled 'The Department of Homeland Security Needs to Fully Adopt a 
Knowledge-based Approach to Its Counter-MANPADS Development Program' 
which was released on January 30, 2004.

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January 30, 2004:

The Honorable Duncan Hunter:

Chairman:

The Honorable Ike Skelton:

Ranking Minority Member:

Committee on Armed Services:

House of Representatives:

The Honorable John L. Mica:

Chairman:

The Honorable Peter A. DeFazio:

Ranking Minority Member:

Subcommittee on Aviation:

Committee on Transportation and Infrastructure:

House of Representatives:

Subject: The Department of Homeland Security Needs to Fully Adopt a 
Knowledge-based Approach to Its Counter-MANPADS Development Program:

In late 2002, terrorists fired surface-to-air missiles at an Israeli 
airliner departing from Mombasa, Kenya--the first time man-portable air 
defense systems (MANPADS) had been used to attack commercial aircraft 
in a non-combat zone. Given concerns about the vulnerability of the 
commercial airline industry and the potential impact of an attack in 
the United States, you requested that we conduct an assessment of the 
federal government's efforts to address the MANPADS threat against 
commercial aircraft, including its nature and extent; the Department of 
Defense's monitoring of Stinger missiles exported to other countries; 
and U.S. bilateral and multilateral efforts to address international 
MANPADS proliferation. After we began work on this assessment, the 
Department of Homeland Security (DHS) took steps to initiate a 2-year 
system development and demonstration program for a counter-MANPADS 
system and awarded the initial contracts in January 2004. On December 
4, 2003, we briefed your staff on our views about DHS's approach to 
developing the system. This report summarizes that information and 
transmits the portion of the briefing related to DHS's counter-MANPADS 
development effort (see encl. I). Our assessment of the other federal 
efforts to address the threat is ongoing, and we expect to complete our 
report in the spring of 2004.

Background:

Due in part to the Mombasa attack, the White House convened a task 
force to develop a strategy to reduce the MANPADS threat against 
commercial aircraft. In reviewing available technical countermeasures, 
the task force identified an on-board jammer (directed infrared 
countermeasure, or DIRCM) as the most promising technology to meet 
current threats while potentially satisfying operational constraints 
imposed by the commercial aircraft industry such as minimizing the cost 
to operate and maintain these systems.

The Congress directed DHS to submit a plan to develop and demonstrate a 
counter-MANPADS device for commercial aircraft.[Footnote 1] On October 
3, 2003, DHS released a solicitation that outlines a 2-year, two-phased 
system development and demonstration program to produce prototype 
systems that would satisfy performance, operational, and cost 
constraints. In Phase I, which begins in January 2004, DHS intends to 
conduct preliminary design and analysis activities. In Phase II, which 
begins about 6 months later, they plan to develop and test the 
prototypes.

The objective of the DHS program is to (1) migrate existing military 
countermeasure technologies to the civil aviation environment and (2) 
minimize the total life-cycle cost of the system, which includes 
development, procurement, installation, operation and support costs. 
The solicitation focuses primarily on the DIRCM concept, which combines 
a missile warning system (MWS) to detect a missile launch and a laser 
to jam the guidance system of the missile. DOD currently uses DIRCM 
technology on some of its large transport aircraft, such as the C-17.

Results in Brief:

DHS faces significant challenges in adapting a military counter-MANPADS 
system to commercial aircraft. These challenges include establishing 
system requirements, maturing technology and design, and setting 
reliable cost estimates. For instance, DHS has to account for a wide 
variety of aircraft types in designing and integrating the system. Our 
past work on the best practices of product developers in government and 
industry has found that the use of a knowledge-based approach is a key 
factor in successfully addressing such challenges. This approach 
includes the use of exit criteria or controls to ensure that sufficient 
knowledge has been attained at critical phases of the product 
development process. Based on input we provided during the course of 
our review, DHS updated its initial solicitation to incorporate these 
knowledge-based exit criteria. We think this a positive first step, and 
we are recommending that the Secretary of Homeland Security ensure that 
the knowledge-based approach is fully implemented throughout the course 
of its counter-MANPADS development program. DHS fully concurred.

DHS Faces Challenges in Adapting Military Counter-MANPADS System to 
Commercial Aircraft:

In proceeding through Phases I and II of the counter-MANPADS 
development program, DHS intends to establish system requirements, 
mature technology and design, and set reliable cost estimates. Such 
issues are interrelated and their resolution will have a direct impact 
on DHS's ability to effectively implement its program. A brief 
discussion of these program issues follows:

Requirements involving new technologies, system maintenance, system 
integration, and system security for the counter-MANPADS system are to 
be developed and this may involve trade-offs between competing 
objectives. For example, DHS intends to study the trade-off of system 
performance objectives with total cost to derive the most effective 
solution at a realistic life-cycle cost.

Technology and design problems include a high false alarm rate 
affecting the current generation of Missile Warning Systems (MWS) used 
by the military; changes needed to adapt military countermeasures to 
commercial aircraft; and the use of classified jam codes by civilian 
aircrews. MWS's current high false alarm rate may increase system 
failures. Whenever the MWS detects a missile launch, the system cycles. 
If a false alarm has been received and the system is cycling 
unnecessarily, it will reach its mean-time-between-failure (MTBF) rate 
threshold much faster. A new MWS that would resolve this issue is being 
developed but is not yet mature. The solicitation also requires a "call 
back notification system" that would alert air traffic controllers once 
it detects a missile launch, but it has not been developed. A MWS with 
a high false alarm rate connected to a call back system could cause 
unnecessary airport closures.

The DHS solicitation also requires a system reliability MTBF rate of 
greater than 3,000 hours--10 times the current rate for DIRCM systems 
on military aircraft of 300 hours. A low reliability rate drives the 
operations and support costs and the ability of the airlines to 
maintain the system. DHS also intends to require a common system 
attached to the wide variety of commercial aircraft, even though the 
design, placement, and integration of this system are all unknowns that 
will affect each aircraft type differently. For example, a system 
container that causes a 1-percent excess drag on a Boeing 747 aircraft 
will cause greater drag on a smaller 737-model aircraft, which will 
affect the airlines' fuel consumption and increase costs.

Design issues surround the classified jam codes used in DIRCM. Military 
pilots are cleared to handle the classified material and military 
aircraft are safeguarded, but DHS has not yet developed a plan to 
handle the classified material and safeguard the hardware on a 
commercial aircraft. According to DHS officials, any system developed 
will need to have a tamper-proof design.

Operational test requirements are not clearly specified by the 
solicitation. DHS compressed its development cycle to comply with 
congressional direction. According to program officials, DHS has acted 
to reduce the time and cost required to conduct testing by having the 
contractor conduct required testing. However, DHS intends to approve 
both test concepts and the test plans. They stated that DHS will 
closely monitor all contractor conducted testing to ensure tests are 
correctly executed and accurately reported. Finally, operational 
testing will be conducted on DOD ranges using its test facilities. DOD 
uses independent live fire and operational test and evaluation that are 
not under the control of the developers to demonstrate that the 
developed system is suitable and effective before authorizing full-
scale production.

Reliable cost estimates regarding the procurement, integration, 
operation, and support of DIRCM system on commercial aircraft do not 
currently exist. DHS intends to conduct its own cost estimates and also 
require independent analysis, which will be difficult because (1) DHS 
does not know how many units will be required and, therefore, cannot 
determine a price based on economies of scale; (2) costs for 
integrating the system on different types of aircraft are not yet 
determined; and (3) the reliability rate is unknown and therefore 
operations and support costs are difficult to estimate.

In addition, the production of a large number of countermeasure systems 
quickly would probably require a significant capital investment to 
increase production capacity. An industry official placed their current 
production capability at roughly four DIRCM systems per month. 
According to a program official, DHS does not currently know how many 
or what combination of the estimated 6,800 aircraft in the U.S. fleet 
might be equipped. One option would be to initially equip the planes of 
the Civil Reserve Air Fleet (CRAF),[Footnote 2] but doing even that 
could take years.

Knowledge-based Approach Has Been Adopted by Successful Product 
Developers:

In the last several years, we have undertaken a body of work on how 
leading developers in industry and government use a knowledge-based 
approach to develop products that reduces risks and increases the 
likelihood of successful outcomes. This best practices model enables 
decision makers to be reasonably certain about their products at three 
critical junctures or knowledge points during development and helps 
them make informed investment decisions.

Knowledge Point 1: Before product development is started, a match must 
be made between the customer's needs and the available resources--which 
include technical and engineering knowledge, time, and funding.

Knowledge Point 2: A product's design must be able to meet performance 
requirements and become stable about midway through development.

Knowledge Point 3: The developer must show that the product can be 
manufactured within cost, schedule, and quality targets and is 
demonstrated to be reliable before production begins.

A knowledge-based approach also involves the use of controls or exit 
criteria to ensure that the required knowledge has been attained at 
each critical juncture. It ensures that managers will (1) conduct 
activities to capture relevant product development knowledge, (2) 
provide evidence that knowledge was captured, and (3) hold decision 
reviews to determine that appropriate knowledge was captured to allow a 
move to the next phase. If the knowledge attained at each juncture does 
not confirm the business case on which the effort was originally 
justified, the program does not go forward.

Use of a knowledge-based approach has enabled leading organizations to 
deliver high quality products on time and within budget. Product 
development efforts that have not followed a knowledge-based approach 
can be frequently characterized by poor cost, schedule, and performance 
outcomes.

DHS Has Begun to Use Knowledge-based Approach:

DHS included a number of knowledge-based elements in its original 
solicitation released on October 3, 2003. Among other things, it plans 
to conduct design reviews, require periodic performance assessments 
from the contractor, utilize an integrated product team to identify and 
resolve issues, conduct systems engineering work in both phases, and 
require the development of a prototype to help identify and resolve 
specific design and manufacturing risks. In terms of systems 
engineering, for example, DHS intends to use a comprehensive, iterative 
technical management process that includes translating operational 
requirements into configured systems, integrating technical inputs, 
managing interfaces, and characterizing and managing risks.

During our review, we asked DHS to identify its controls or exit 
criteria for use in determining whether needed knowledge had been 
attained by the end of Phases I and II of its program. In its 
solicitation of October 3, 2003, DHS had required the contractor to 
satisfy certain criteria in order to receive payment for each 
milestone. However, the Phase I exit criteria were not knowledge-based. 
Rather, they were based on the contractor providing information, such 
as the Long Lead Items List, at key payment milestones. They did not 
require the contractor to demonstrate that key product knowledge has 
been obtained. Also, the Phase II exit criteria were not identified and 
were to be proposed by the contractor and subject to negotiation.

We presented DHS officials with recommended exit criteria from our past 
reports (see examples in encl. I, p. 20), and they agreed to integrate 
them into an updated solicitation and use them in monitoring the 
contractors' progress. For example, at Knowledge Point 1, exit criteria 
include the demonstration that critical technologies are mature and 
system requirements are finalized. At Knowledge Point 2, criteria 
include the completion of 90 percent of engineering drawings at design 
review and the demonstration that a prototype's design meets 
requirements. At Knowledge Point 3, criteria include the demonstration 
that manufacturing processes are under statistical control.

Conclusion:

To address the significant challenges involved in adapting a military 
counter-MANPADS system to commercial aircraft, DHS would benefit from 
fully adopting the knowledge-based approach used by leading developers 
in government and industry. This approach is predicated on the use of 
exit criteria at each phase of the development process to ensure that 
needed knowledge is attained before proceeding to the next phase. To 
their credit, DHS officials responsible for this effort have agreed to 
this approach, successfully incorporated exit criteria into their 
updated solicitation, and agreed to use them to monitor 
progress.[Footnote 3] This is a positive first step, but DHS needs to 
ensure that the knowledge-based approach is fully utilized throughout 
this development effort.

Recommendation for Executive Action:

We recommend that the Secretary of Homeland Security fully adopt the 
knowledge-based approach, including the use of exit criteria, to help 
ensure that key decisions in DHS's effort to develop and demonstrate a 
counter-MANPADS system are based on sufficient information.

Agency Comments and Our Evaluation:

In written comments to a draft of this report (see encl. II), DHS fully 
concurred with our findings and recommendation. DHS also provided 
separate technical comments, which we have incorporated as appropriate.

Scope and Methodology:

In conducting our review, we compared DHS's plan for its counter-
MANPADS system development and demonstration program plan against the 
best practices of commercial and military acquisitions identified in 
our past reports and focused whether DHS will have sufficient 
information to make knowledge-based decisions at each milestone. To 
determine what military countermeasures are available for adaptation to 
commercial aircraft and what their performance capabilities, cost, and 
schedule ramifications might be, we met with DOD, Air Force, Army, and 
Navy officials and analyzed relevant documentation, including studies 
and test reports. We interviewed representatives from Northrop Grumman, 
Boeing, BAE Systems, Raytheon Corporation, and Sanders Design 
International regarding countermeasure systems currently in production 
or development. We also met with representatives from the airline 
industry, air transportation association, and RAND. We conducted our 
work from April 2003 through January 2004 in accordance with generally 
accepted government auditing standards.

We are sending copies of this report to the Secretary, Department of 
Homeland Security; the Director, Office of Management and Budget; and 
other interested congressional committees. Copies are available to 
others upon request. In addition, the report will be available at no 
charge on the GAO Web site at http://www.gao.gov.

Should you or your staff have any questions on matters discussed in 
this report, please contact me on (202) 512-4841 or Jim Morrison at 
(202) 512-7078. Principal contributors to this report were Mike Aiken, 
Natalie Britton, Terry Parker, and Richard Strittmatter.

Robert E. Levin:

Director, Acquisition and Sourcing Management:

Signed by Robert E. Levin: 

Enclosures:

[See PDF for image]

[End of figure]

Comments from the Department of Homeland Security:

U.S. Department of Homeland Security 
Washington, DC 20528:

Homeland Security:

January 22, 2004:

R.E. Levin:

Director, Acquisition and Sourcing Management 
United States General Accounting Office:

Dear Mr. Levin:

Thank you for the opportunity to comment on your GAO Draft Report, 
dated January 12, 2004, titled: The Department of Homeland Security 
Needs to Fully Adopt a Knowledge-based Approach to Its Counter-MANPADS 
Development Program. As you know, the Department of Homeland Security 
considers the Counter-MANPADS program one of its vital initiatives in 
air transportation security for the American people. We appreciate the 
GAO's participation effort, and your insights and suggestions in the 
execution of the program. As we launch into the validation phase of 
transitioning existing military technologies to civilian aircraft, 
there are many technical, schedule, and cost unknowns.

We fully concur with your assessment that knowledge-based evaluations 
of technical requirements, schedules, total system cost estimates, etc. 
are essential to the success of this program. In fact, each of the 
contractors selected to perform phase one of this effort have been told 
the Government evaluators are employing knowledge-based evaluations 
throughout the program. Based on the GAO's preliminary recommendations, 
we had developed preliminary milestone exit criteria for the 
solicitation.

For your consideration we have included two enclosures: the first is a 
formal response to your recommendation that C-MANPADS Program Office 
use a knowledge-based management approach. The second attachment 
contains comments or suggests word or phrase changes that we hope would 
prove useful in clarifying the C-MANPADS SPO's direction.

Again, thank you for the opportunity to comment.

Respectfully,

Dr. Charles E. McQueary, Under Secretary for Science and Technology:

Signed by Dr. Charles E. McQueary: 

Enclosures: As stated:

GAO DRAFT REPORT - DATED JANUARY 12, 2004 (GAO-04-341R):

"DHS NEEDS TO FULLY ADOPT A KNOWLEDGE-BASED APPROACH TO ITS COUNTER-
MANPADS DEVELOPMENT PROGRAM":

DHS COMMMENTS ON THE GAO RECOMMENATION:

RECOMMENDATION: GAO recommends that the Secretary of Homeland Security 
fully adopt the knowledge-based approach, including the use of exit 
criteria, to help ensure that key decisions in DHS' effort to develop 
and demonstrate a counter-MANPADS system are based on sufficient 
information. (p. 8/GAO draft report):

DHS RESPONSE: Concur. As indicated in subject report, the DHS Counter-
MANPADS Special Program Office (SPO) began to incorporate knowledge-
based exit criteria into Counter-MANPADS solicitation based on input 
received from GAO during the course of their review. DHS remains 
committed to the adoption of a knowledge-based approach throughout the 
program and has established knowledge-based entrance and exit criteria 
as an integral part of each milestone.

[End of section]

FOOTNOTES

[1] House Report 108-76, p. 84.

[2] The CRAF Program enlists the U.S. airline industry to help create 
an increased airlift capability for contingencies. Airlines sign 
contracts with the government entitling Air Mobility Command (AMC) to 
mobilize the aircraft and their aircrews when airlift needs exceed the 
capability of military aircraft.

[3] Examples are included on page 20 of the enclosed briefing.