United States General Accounting Office

GAO Report to Congressional Requesters

June 1998 NATIONAL MISSILE

DEFENSE

Even With Increased

Funding Technical and

Schedule Risks Are

High

GAO/NSIAD-98-153

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-279053 

June 23, 1998

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

The Honorable Jeff Bingaman

Ranking Minority Member

Subcommittee on Strategic Forces

Committee on Armed Services

United States Senate

This report responds to your request that we review the National Missile

Defense (NMD) program funding requirements and schedule and technical

risks. Specifically, you asked us to determine (1) why the Department of

Defense (DOD) significantly increased the program’s near-term funding in

its May 1997 Quadrennial Defense Review,1

 (2) how funding increases

authorized and appropriated by Congress for the program in fiscal

years 1996 through 1998 have been used or are planned to be used, and

(3) DOD’s planned level of future funding for the NMD program and planned

uses for those funds. You also asked for an assessment of the program’s

current schedule and technical risks. We provided an initial assessment of

the schedule and technical risks in our December 12, 1997, report2

 to you.

This report updates that assessment.

You also asked us to review a report covering some of these same issues

that DOD was to provide to the Committee on Armed Services by

February 15, 1998. We were unable to review that report because DOD had

not released it, as of May 21, 1998.

Background The primary mission of NMD is to defend the United States against an

intercontinental ballistic missile attack consisting of several missiles

launched from a rogue nation. It would also have some capability against

an accidental launch from nuclear powers such as Russia or China. The

United States has been developing technologies for use in an NMD system

for a number of years. In April 1996, DOD changed the purpose of the NMD

program from a technology readiness program to a deployment readiness

program and designated NMD as a major defense acquisition program.

1

The Quadrennial Defense Review was commissioned to provide a comprehensive examination of the

defense strategy, force structure, force modernization plans, infrastructure, budget plan, and other

elements of the defense program and policies.

2

National Missile Defense: Schedule and Technical Risks Represent Significant Development

Challenges (GAO/NSIAD-98-28, Dec. 12, 1997).

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Under the technology readiness program, the Ballistic Missile Defense

Organization (BMDO) developed and matured technologies for possible use

in an NMD system. Under the current deployment readiness program, BMDO

plans to integrate the technologies into a system that can be made

operational. The deployment readiness program is commonly known as

the “3+3” program.

The goal of the NMD 3+3 program is to develop and demonstrate, by fiscal

year 2000, an initial, limited capability that could be deployed by fiscal

year 2003. The deployment decision is to be based on ongoing assessments

of the threat and will not be made until fiscal year 2000 at the earliest. If

DOD concludes at that time that the threat does not warrant deployment by

fiscal year 2003, development will continue.

While BMDO is still determining the specific design of the initial NMD system,

its features will include (1) space- and ground-based sensors to provide

early warning of attacking missiles; (2) ground-based radars to identify

and track the threatening warheads; (3) ground-based interceptors to

collide with and destroy incoming warheads; and (4) a battle management,

command, control, and communications system (see fig. 1).

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Figure 1: Representative NMD System

Ground Based Radar

Ground Based Early

Warning Sensor

Space Based Tracking Sensor

(To be added later)

Space Based Early

Warning Sensor

Ground Based

Interceptor

Battle Management/Command

Control and Communications

Source: DOD.

The NMD system architecture will evolve over time through incorporation

of advanced technologies to defend against more sophisticated threats.

For example, the Space Based Infrared System—Low Earth Orbit—a

group of satellites that will track incoming warheads and help discriminate

between the warheads and other objects such as decoys or debris—will be

added to the system at a later time. BMDO also has not determined where

any NMD system would be located. NMD development is to be conducted

within the terms of the Anti-Ballistic Missile Treaty,3

 but a deployed

3

The Anti-Ballistic Missile Treaty between the United States and the former Soviet Union governs the

conditions under which anti-ballistic missile systems and components can be developed and deployed.

The treaty as currently formulated would limit deployment to a single site near Grand Forks, North

Dakota.

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system either could be compliant with the treaty as written or might

require amendment of the treaty’s provisions, according to DOD officials.

When the 3+3 program was established in April 1996, DOD estimated that

research and development costs for the period fiscal year 1998 through

fiscal year 2003 would total $2.3 billion. In May 1997, DOD released the

results of its Quadrennial Defense Review, which estimated research and

development costs for fiscal years 1998 through 2003 would total about

$4.6 billion—almost twice as much as the April 1996 estimate.

Results in Brief DOD significantly increased its NMD funding requirements in May 1997

because more rigorous cost estimates, based on more detailed program

requirements and plans, showed that the program could not be

accomplished within previously projected funding levels. The 3+3 NMD

program was not sufficiently defined for detailed cost estimating when it

initially changed from a technology readiness program to a deployment

readiness program and was designated a major defense acquisition

program in April 1996. The May 1997 Quadrennial Defense Review

included the first program estimate based on detailed system descriptions,

requirements, and plans.

Funding increases provided by Congress in fiscal years 1996 through 1998

were used for risk reduction activities, such as retaining competition in

development of the exoatmospheric kill vehicle,4

 considered one of the

most technically challenging components of the system; increasing the

number of planned tests; and purchasing additional spare hardware.

Congress increased funding for NMD because of concerns about the

adequacy of funding to support the program. The BMDO Director

acknowledged in April 1996 testimony that an additional $350 million a

year could be used to reduce program risks.

Future NMD funding requirements will depend in large part on the system

design and architecture and when and where it is deployed. Details on the

specific system and location are not expected for some time. To identify

possible future funding needs, BMDO has estimated four different scenarios.

Program life-cycle costs5

 associated with these scenarios ranged from

4

The exoatmospheric kill vehicle is the front end of the ground-based interceptor that will see the

target and destroy it by colliding with it, outside the atmosphere.

5

Life-cycle costs include costs to develop and produce system components, construct facilities, deploy

the system, and operate it for 20 years.

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$18.4 billion for a deployment at Grand Forks, North Dakota, by fiscal

year 2003 to $28.3 billion for a deployment by fiscal year 2006.

Since our December 1997 report, DOD has increased funding and revised

NMD program plans to mitigate schedule and technical risks. However,

program officials told us that even with the mitigation actions resulting

from the increased funding, schedule and technical risks associated with a

2003 deployment remain high. According to a February 1998 report of a

panel of former senior military, government, and industry officials,

successful execution of the 3+3 program on the planned schedule is highly

unlikely. This panel concluded that the program would benefit from the

earliest possible restructuring to contain the risk.

NMD Program Not

Sufficiently Defined

for Reliable Cost

Estimate at the Time

3+3 Program Was

Established

The NMD cost estimate has evolved as the system requirements and

program plans have become better defined. When the NMD program was

changed to a deployment readiness program in April 1996, plans and

requirements were not sufficiently defined to allow the development of a

reliable cost estimate. Fiscal year 1996 and 1997 budget requests were

submitted to Congress before the program was changed to a deployment

readiness program.6

In late 1995 and early 1996, DOD conducted a “Program Update Review” to

determine how to proceed with the NMD program. The review considered a

number of options for NMD. The option selected included an integrated test

in fiscal year 1999 and a possible deployment decision in fiscal year 2000.

DOD estimated that research, development, and test and evaluation costs

for this option would total about $2.3 billion for fiscal years 1998 through

2003. According to program office officials, the update review was based

on a “rough order of magnitude” cost estimate derived from engineering

judgment and field estimates. Detailed system requirements had not been

established from which to make a formal, documented cost estimate.

Once NMD became a deployment readiness program in 1996, the focus

changed from technology and component development to development

and testing of a system that could be quickly deployed. One of the first

steps was to define operational requirements for the system. U.S. Space

Command defined broad requirements for an NMD system in August 1996.

This was followed by NMD’s first system requirements review held in

November 1996. Once these requirements were known, they had to be

6

The fiscal year 1996 budget was submitted in February 1995 and the fiscal year 1997 budget request

was submitted in March 1996.

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defined in sufficient detail so that the contribution of each system

component to the requirement could be determined. According to DOD

officials, it was only after these detailed requirements were established

that detailed cost estimates could be produced.

The NMD program office used the requirements data to prepare a new,

more rigorous cost estimate. DOD’s Office of Program Analysis and

Evaluation also prepared an independent cost assessment. These

estimates were not completed in time to affect the fiscal year 1998

President’s budget request. The program office estimated that about

$4.6 billion would be required for research, development, test, and

evaluation—about $2.3 billion higher than previous projections. The

independent assessment confirmed the program office’s projection of

research, development, test, and evaluation costs. As a result of these

estimates, it was apparent to DOD officials that the NMD program was

significantly underfunded. According to DOD officials, these were the first

disciplined, system-level cost estimates based on requirements necessary

to field an NMD system.

The Quadrennial Defense Review, which was underway at the time the

estimates were prepared, examined three options for the NMD program:

• The first option was to keep NMD within its current budget, which would

mean that system deployment would be delayed by at least 3 years or that

the program would once again become a technology readiness program.

• The second option was to increase program funding to the levels indicated

by the new estimates—an increase of about $2 billion in fiscal years 1998

through 2003—in order to maintain the 3+3 program schedule. Even with

the additional funding, however, schedule risks were predicted to remain

high.

• The third option was to increase program funding by up to $1.5 billion but

also extending the schedule by about 3 years.

The review recommended the second option—increased funding to

maintain the option to make a deployment decision in 2000. The Secretary

of Defense asked Congress to increase the fiscal year 1998 budget request

for NMD by $474 million. Congress appropriated the requested additional

funds. DOD estimated that an additional $1.8 billion would be needed for

fiscal years 1999 through 2003, bringing the total increase to about

$2.3 billion. The amount of increased funding was based on the Office of

Program Analysis and Evaluation’s independent cost assessment.

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Figure 2 shows the chronology of events leading to the cost estimate used

in the Quadrennial Defense Review.

Figure 2: Chronology Leading Up to Cost Estimate Used in Quadrennial Defense Review

February 1997 Independent cost

assessment completed

February 1997 FY 98 President's

budget submitted

Program cost 

estimate completed January 1997

November 1996 First system 

requirements review held

August 1996 Capstone requirements

document issued

April 1996 NMD 3+3 program started

March 1996 FY 97 President's

budget submitted

January 1996 Program update

review concluded

February 1998 FY 99 President's

 budget submitted

Independent cost

estimate completed January 1998

May 1997 Quadrennial Defense

review completed

March 1997

Operational requirements

document approved

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Congressional

Funding Increases

Used for Risk

Reduction Activities

Congress authorized and appropriated significantly more funds in fiscal

years 1996 through 1998 than were requested in the President’s budgets for

those years because of its concerns that the budget requests were not

adequate. DOD officials acknowledged in testimony that additional funds

were needed to reduce program risks. Funding increases have been used

primarily for risk reduction activities, such as extending the

exoatmospheric kill vehicle design competition until after competing

designs are more fully tested.

Congressional Funding

Increases

Because of concerns about the adequacy of funding to support the

deployment readiness program and based on testimony by senior defense

officials, Congress appropriated significantly more funds for the NMD

program in fiscal years 1996 through 1998 than were requested in the

President’s budgets for those years. Figure 3 shows the President’s initial

budget requests for research, development, test, and evaluation funds for

fiscal years 1996 through 1998 and the amounts actually appropriated.

Figure 3: Funding Requested and

Appropriated for NMD Program in

Fiscal Years 1996 Through 1998

(research, development, test, and

evaluation funds only)

1996 1997 1998

0

200

400

600

800

1,000

1,200

370.6

508.4 504.1

745.6

833.4

978.1

Fiscal year

Dollars in millions

Requested Appropriated

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Even though no detailed estimate of NMD costs had yet been performed,

senior DOD officials testified that funding in excess of the President’s

budget requests would be needed to plan a program with acceptable risks.

For example, in April 1996, the BMDO Director said that an additional

$350 million above the President’s budget requests in fiscal years 1997

through 1999 could be used to achieve a lower risk 3+3 program. He

proposed using the additional funding to increase testing, accelerate

development of a booster for the ground-based interceptor, buy spare

hardware to eliminate single point failures, continue competition between

the two kill vehicle contractors until after at least one additional flight test

per contractor, and increase deployment planning and preparations.

DOD Use of Congressional

Funding Increases

In fiscal years 1996 through 1998, Congress authorized and appropriated a

total of $1,174 million more than the President’s budget requests for those

years. Over 80 percent of additional funding has been allocated to six

program areas—the ground-based interceptor; ground-based radar;

systems integration; battle management, command, control, and

communications system; systems engineering; and test and evaluation.

According to NMD officials, these funding increases have been or are being

used for risk reduction activities and to execute the 3+3 program. Table 1

shows how the funding increases for the 3-year period, fiscal years 1996 to

1998, have been allocated. Appendix I shows, in detail, the amounts

budgeted and actual or planned program allocations for projects in fiscal

years 1996 through 1998.

Table 1: Allocations of Congressional

Funding Increases for Fiscal

Years 1996 Through 1998

Dollars in millions

Program area Funding increase Percent of total

Ground-based interceptor $434 37

Systems integration 159 14

System test and evaluation 149 13

Ground-based radar 107 9

Battle management, command,

control, and communications 72 6

Systems engineering 57 5

Other 196 17

Total $1,174 100

Note: Totals may not add due to rounding.

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The largest increase—$434 million or over one-third of the 3-year

total—has been allocated to the ground-based interceptor. Most of these

funds have been used to maintain competition in the design and

development of the interceptor’s kill vehicle. Original plans were to select

a single kill vehicle design and contractor at the end of 1995 before either

of the two competing designs had been fully tested—even though the kill

vehicle is considered one of the most complex parts of the NMD system.

The additional funding has allowed the program to preserve the kill

vehicle competition through actual intercept tests in fiscal year 1999.

Some of the increased funding was also needed to cover the costs of a

schedule slippage due to the failure of a flight test in January 1997,

purchase a spare kill vehicle from one of the contractors, and upgrade

launch capabilities at the test range. Because of subsequent funding

reductions7

 and a decision to incorporate the ground-based interceptor

into a lead system integration contract, program officials decided not to

begin development of a booster for the interceptor.

Increases totaling $159 million allocated to systems integration have been

used to obtain a prime contractor for the system. According to program

officials, BMDO decided in the summer of 1996 that a prime contractor

would be needed to manage the remaining design and development effort

and to integrate and test the complete NMD system. Two competitive

concept development phase contracts were awarded in fiscal year 1997.

One of two concept development phase contractors, Boeing North

American Company, was selected as the prime contractor on April 30,

1998.

An increase of $149 million in the system test and evaluation effort has

been used in part for additional test targets. Some of the increased funding

has also been used to develop an integrated system test capability needed

for ground tests of the various elements of the NMD system. The added

funding also permitted increased testing such as using targets of

opportunity to test ground-based system elements and a Midcourse Space

Experiment designed to obtain information on viewing targets against

earth and space backgrounds—a critical capability in identifying and

tracking threatening warheads.

Funding increases amounting to $107 million allocated to the

ground-based radar have been used to enhance realism in and to

accelerate development of the radar that will be used in testing. Original

7

Because of changes in inflation assumptions and other cuts mandated by DOD and Congress in fiscal

years 1996 through 1998, NMD funding was reduced by a total of about $80 million below the amounts

appropriated for the program in those years.

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plans were to conduct the tests with a radar technology demonstrator.

However, with the increased funding, BMDO decided to construct a

ground-based radar prototype to be used in the testing program. The

prototype has a larger face than the demonstrator and more closely

resembles the radar to be deployed. Additionally, the radar development

was accelerated.

After NMD became a deployment readiness program, officials said that it

became apparent that a more extensive battle management, command,

control, and communications effort was needed to support an NMD system.

This effort is supposed to provide engagement planning and execution,

allow human-in-control of the NMD system, and interface with external

command, control, and communications systems. With $72 million in

additional funding allocated to this element, officials have been able to

begin development of five capability increments of a prototype battle

management, command, control, and communications system. The first

two increments have been completed and the third was expected to be

completed in April 1998. Also added was the NMD communication network

and a system that will be used to communicate with the NMD interceptor

in-flight.

Originally planned funding levels for systems engineering were sufficient

only to support a technology readiness program, according to program

officials. Funding for this effort was increased by $57 million, mostly in

order to prepare and update documents required for a system deployment.

The officials said that without the additional funding, they would not have

been able to baseline the NMD system architecture, and, thus, there would

not be an NMD system.

The remaining $196 million of the increases was allocated in smaller

increments to a number of areas. The largest of these was an increase of

about $50 million for program management support. The increase paid for

personnel and contractor support for the joint program office as well as

for systems analyses and small business innovative research. Personnel

costs previously spread through all the projects were rolled up into one

project management line item.

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Future Funding

Requirements Depend

on Variables Yet to Be

Chosen

Future NMD funding requirements depend in large part on how the system

is designed and when and where it will be deployed. These factors may not

be known for some time. For example, the government and prime

contractor have not yet agreed on a final system design. The deployment

schedule and location will not be known until at least the fiscal year 2000

deployment review. To provide a basis for estimating near-term funding

requirements and to help determine how these differences will impact

future funding needs, the program office prepared four different life-cycle

cost estimates, based on two locations—one at Grand Forks, North

Dakota, and the other in Alaska—and two capability levels—one available

in fiscal year 2003 and the other in fiscal year 2006.8

 The life-cycle cost

estimates show the total costs to develop and produce system

components, construct facilities, deploy the system, and operate it for 

20 years.

Figure 4 shows the life-cycle costs estimated for each deployment

alternative.9

8

An initial operating capability would be established in fiscal year 2006, but the full operating

capability would not be achieved until fiscal year 2009.

9

Estimates include an allowance for inflation and are intended to reflect the purchasing power in the

year that funds are expended.

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Figure 4: NMD Program Life-Cycle

Cost Estimates

Grand Forks 2003 Alaska 2003 Grand Forks 2006 Alaska 2006

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

18,372

21,470

28,339 28,314

Dollars in millions

Develop Produce Construct Operate

None of the estimates include costs incurred prior to fiscal year 1998.10

Because specific designs have not yet been determined for system

components, the estimates are based on assumptions about which designs

will be chosen. The cost estimates could change based on decisions made

by the prime contractor, or evolution of the threat.

The higher cost for a deployment in Alaska by 2003 is due, in large part, to

the fact that less infrastructure currently exists there, transportation costs

are higher, the construction season is shorter, and the environment is

harsher. Procurement and operation and support costs are primarily

dependent on the type and amount of hardware included in the

deployment. Research and development costs would be slightly higher for

an Alaska deployment primarily because of the need for additional site

survey studies.

The 3+3 program is designed to enable a system to be deployed as early as

fiscal year 2003, but a more capable system could be operational in fiscal

10Congress appropriated about $1.6 billion in fiscal years 1996 and 1997 for the NMD program.

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year 2006, according to BMDO. The primary differences between the two

capability levels used in the cost estimates are in the type and amount of

hardware included. For example, the more capable system would have

significantly more interceptors, fewer ground-based radars, but would also

include a space-based sensor system. After the space-based sensor system

is deployed, fewer ground-based radars will be needed for an Alaskan

deployment because of Alaska’s location relative to potential threats. The

requirement for fewer radars is the primary reason an Alaskan deployment

by fiscal year 2006 is estimated to have a life-cycle cost slightly less than a

deployment at Grand Forks in that same time frame. With fewer radars,

operating costs would also be lower in Alaska.

The Office of Program Analysis and Evaluation also prepared independent

estimates of NMD program costs in January 1998. According to officials

responsible for the estimate, costs in the independent estimates were

about 10 percent higher than the estimates prepared by the program office,

due primarily to the fact that the independent estimates included

“pre-planned product improvements” not included in the program office

estimates. DOD did not provide us access to the January 1998 independent

estimates. Therefore, we could not confirm what officials told us about

them.

DOD included funding in its future years defense plan to complete the

research and development phase of the initial capability NMD program

based on the cost estimate used in the Quadrennial Defense Review. No

funding has been identified for production and deployment of the system.

According to BMDO, funds for system production and deployment will not

be included until after the fiscal year 2000 deployment decision review.

Figure 5 compares the President’s budget submissions for fiscal

years 1998 and 1999.

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Figure 5: NMD Funding Estimates

Associated With President’s Budgets

for Fiscal Years 1998 and 1999

1996 1997 1998 1999 2000 2001 2002 2003

200

400

600

800

1,000

1,200

Fiscal year

Dollars in millions

1998 submission 1999 submission

Note: Amount shown for fiscal year 1996 is the amount actually appropriated.

Even the fiscal year 1999 funding estimate does not include amounts that

will be needed beginning in fiscal year 2001 to develop system

improvements to keep up with changes in the threat. According to one

estimate, about $765 million above the President’s fiscal year 1999 budget

estimate will be needed in fiscal years 2001 through 2003 to develop the

upgrades.

Schedule and

Technical Risk

Remain High

In December 1997, we reported that DOD faces significant challenges in the

NMD program because of high schedule and technical risk. We pointed out

that schedule risk was high because the schedule requires a large number

of activities to be completed in a relatively short amount of time. Some

development activities are not able to proceed in earnest until the

government and prime contractor agree on a final system design.

Furthermore, developing and deploying an NMD system in the 6 years

allotted under the 3+3 program will be a significant challenge for DOD

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given its past history with other weapon systems. For example, NMD’s

acquisition schedule is about one-half as long as that of the Safeguard

system, the only U.S.-based ballistic missile defense system developed so

far. The program’s technical risk is high because the compressed

development schedule only allows limited testing. The NMD acquisition

strategy called for conducting (1) one system test prior to the initial

deployment decision—a test that would not include all system elements or

involve stressing conditions such as multiple targets—and (2) one test of

the integrated ground-based interceptor before production of the

interceptor’s booster element must begin. If subsequent tests reveal

problems, costly redesign or modification of already produced hardware

may be required.

Since our December report, DOD has revised program plans to mitigate

schedule and technical risk to some extent. Changes include procuring

additional spare hardware to protect against further schedule slips and

increasing the amount of planned testing. DOD officials told us, however,

that overall schedule and technical risk associated with a 2003 deployment

will remain high, despite these actions.

Schedule Risk Even with the additional funding, the program’s schedule risk will remain

high, according to DOD officials. Accomplishing all of the required

contracting, development, integration, and testing planned before the

initial decision point in fiscal year 2000 is, and will continue to be, high

risk. According to the program manager, additional funding cannot be

used to reduce schedule risk because “we simply cannot buy back time.”

However, the additional funds can help mitigate further slips in the

program schedule, according to the program manager. For example,

additional funds have been identified to purchase back-up hardware to

prevent unnecessarily long delays in test programs if something goes

wrong, as it did in January 1997 when a test had to be aborted after the

target was launched. That test could not be repeated for about 6 months

due to the lack of a back-up target.

In February 1998, a panel of former senior military, civilian, and industry

leaders confirmed our assessment that the 3+3 program contained high

schedule risk.11 According to the study panel, which was established by

BMDO, the Director of Operational Test and Evaluation, and the Director of

Test, Systems Engineering and Evaluation, schedule pressures on NMD

11Institute for Defense Analyses, Report of the Panel on Reducing Risk in Ballistic Missile Defense

Flight Test Programs, February 27, 1998.

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have created a planning environment at least as optimistic as that which

led to test failures and delays in other missile defense programs. In the

judgment of the study panel, successful execution of the 3+3 program on

the planned schedule is highly unlikely. The panel recommended

restructuring the program to contain the risk and eliminate unrealistic

expectations.

Technical Risk Technical risks remain high for a fiscal year 2003 deployment even though

the program has made some technical progress and has revised plans to

increase the amount of testing prior to deployment. The amount of flight

testing is still limited compared to other programs. Other outside

reviewers have also commented on the limited amount of flight testing

planned for the program.

Since our December 1997 report, the program has made some technical

progress. In January 1998, BMDO conducted its second kill vehicle sensor

test. An earlier test in June 1997 included a sensor built by a competing

company. The purpose of both tests was to analyze the ability of the

respective sensors to identify and track objects in space. According to DOD,

both sensor tests were successful. The sensors successfully tracked and

obtained data needed to identify simulated threat targets and decoys. The

two competing contractors are scheduled to test the ability of their kill

vehicle designs to actually intercept targets in space during fiscal

year 1999. This data will be used to select a single kill vehicle design and

contractor.

As a result of added funding, BMDO has also increased the number of tests

planned. For example, BMDO almost doubled the number of planned

integrated ground tests,12 added one integrated flight test prior to the fiscal

year 2000 deployment readiness review, and increased the number of flight

tests planned between the readiness review and the system’s initial

operational capability date. The number of flight tests to be conducted

after the readiness review depends on whether or not a decision is made

to deploy. Without a deployment decision, there will be two integrated

flight tests per year. If a deployment decision is made in fiscal year 2000,

with a target deployment of fiscal year 2003, there would be three flight

tests in fiscal year 2000, and four a year in fiscal years 2001 through 2003.

12Integrated ground tests will be conducted with certain hardware and software components

integrated into simulations. Although they are used to evaluate system performance, they do not

include actual targets or interceptor firings.

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Overall technical risk associated with a fiscal year 2003 deployment

remains high because the amount of testing, although increased, is still

limited compared to other programs. Even after the increase in the

number of tests, the program manager told us that in his view, the planned

flight test program is anemic. The program plans a maximum of 16 system

level flight tests through the end of fiscal year 2003, the earliest planned

deployment date. By contrast, the Safeguard13 program included 111 flight

tests before the system became operational. Of these 111 tests, 70 were

intercept tests, 58 of which were successful. The panel on reducing risk in

ballistic missile defense programs also concluded that plans for the 3+3

program are based on inadequate test assets and testing. The panel

recommended increasing the number of tests (both ground and flight

tests) and that the flight test program be restructured to allow more time

between tests to ensure that problems are corrected and the corrections

are tested.

Technical risk in the NMD program is also of concern to DOD’s testing

organization. According to the Director of Operational Test and

Evaluation’s Annual Report for fiscal year 1997, the planned NMD test

program will provide only a limited basis for evaluating system

performance. The limitations cited in the report include (1) the limited

amount of testing planned prior to the deployment readiness review;

(2) the fact that the booster to be used in the ground-based interceptor will

not be tested prior to the readiness review; (3) the interface between the

system’s battle management, command, communications, and control

element and the national command authority will not be tested before the

decision review; (4) the system’s performance against multiple targets will

not be tested; and (5) models and simulations used to support the review

will have minimal validation by real flight data.

NMD program officials told us that they are in the process of redefining the

program’s risk. The new risk assessment is scheduled to be completed and

documented in June 1998. They also pointed out that the prime

contractor’s system design and program plans may impact risk. According

to the program’s test and evaluation master plan, the amount of testing is

unlikely to change as a result of prime contractor selection.

13Safeguard, the only other U.S.-based missile defense system, became operational in 1975. The

program was terminated in 1976.

Page 18 GAO/NSIAD-98-153 National Missile Defense Funding and Risks
B-279053 

Conclusions The May 1997 Quadrennial Defense Review recommended significant

increases in NMD funding. The increases resulted in large part from a better

definition of system requirements and program plans. As requirements and

plans evolved, estimated development costs almost doubled. Increased

funds provided by Congress in fiscal years 1996 through 1998 have enabled

BMDO to conduct risk reduction activities, such as purchasing back-up

hardware and preserving competition for the development of the

exoatmospheric kill vehicle. However, despite the additional activities, the

risk of the program being completed on its current schedule is still high.

Also, any decision in fiscal year 2000 to deploy an NMD system by 2003

would involve high technical risk because the associated compressed

schedule will permit only limited testing of the system.

Agency Comments In commenting on a draft of this report, DOD concurred that the NMD

program “faces significant challenges because of high schedule and

technical risks.” DOD also provided technical comments, which we

incorporated as appropriate. DOD’s comments are reprinted in appendix II.

Scope and

Methodology

To identify changes that led the May 1997 Quadrennial Defense Review to

recommend significant increases in near-term funding for the NMD

program, we compared documentation available to support the review

estimate to documentation available to support earlier estimates such as

the 1996 Program Update Review. We discussed differences and reasons

for them with NMD, BMDO, and DOD officials responsible for estimating NMD

program costs.

To determine how funding increases authorized and appropriated by

Congress for fiscal years 1996 through 1998 were or are planned to be

used, we compared original budget documents to current funding

allocation documents and discussed reasons for differences with officials

responsible for managing various elements of the NMD program, such as

the ground-based interceptor and test and evaluation managers.

To determine the level of future funding and how those funds are to be

spent, we reviewed NMD’s cost estimates and assessments of those

estimates. We discussed the estimates and assessments with NMD and BMDO

officials responsible for preparing them and with DOD officials responsible

for preparing an independent cost estimate. We did not review the

independent cost estimate because DOD officials did not provide us with

access to it.

Page 19 GAO/NSIAD-98-153 National Missile Defense Funding and Risks
B-279053 

To assess the program’s schedule and technical risk, we analyzed the

program’s status, strategy for accomplishing the remaining development

work and meeting fielding requirements, and approaches to demonstrating

the system’s capabilities and military suitability. We also reviewed

independent studies of the system’s risk and discussed risk levels and

approaches to mitigating risk with NMD program officials and the

program’s systems engineering contractor. We prepared an initial risk

assessment in December 1997 and updated that assessment for this report.

We conducted our work from October 1997 through April 1998 in

accordance with generally accepted government auditing standards.

As agreed with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 15 days from its

issue date. At that time, we will send copies of this report to other

interested congressional committees, the Secretary of Defense, and the

Directors of the Ballistic Missile Defense Organization and the Office of

Management and Budget. Copies will also be made available to others on

request.

If you or your staff have questions concerning this report, please contact

me at (202) 512-4841. The major contributors to this report were 

Lee Edwards, David Hand, Bobby Hall, and Judy Lasley.

Allen Li

Associate Director

Defense Acquisitions Issues

Page 20 GAO/NSIAD-98-153 National Missile Defense Funding and Risks
Page 21 GAO/NSIAD-98-153 National Missile Defense Funding and Risks
Appendix I 

Research, Development, Test, and

Evaluation Funds Budgeted and Allocated

for NMD in Fiscal Years 1996 Through 1998

Fiscal year 1996 Fiscal year 1997 Fiscal year 1998

Dollars in millions

Program element Budget Allocation Change Budget Allocation Change Budget Allocation Change

Total

increase

Systems integration 0 0 0 0 $24.10 $24.10 $7.09 $141.73 $134.64 $158.74

Ground-based

interceptor $115.22 $255.30 $140.08 $147.85 272.00 124.15 127.55 297.46 169.91 434.14

Battle management,

command, control,

and communications 33.54 70.02 36.48 32.76 50.65 17.89 43.73 61.67 17.94 72.31

Ground-based radar 37.78 83.50 45.72 41.50 66.13 24.63 19.54 55.73 36.19 106.54

Upgraded early

warning radars 0 8.49 8.49 9.35 12.12 2.77 16.75 15.41 –1.34 9.92

Systems engineering 20.80 60.16 39.36 30.83 47.12 16.29 41.94 42.97 1.03 56.68

Deployment planning 8.25 9.60 1.35 11.91 12.23 0.32 16.61 17.88 1.27 2.94

Program

management/

support 7.56 29.65 22.09 26.89 28.43 1.54 33.47 60.05 26.58 50.21

System test and

evaluation 29.33 69.73 40.40 50.76 102.87 52.11 83.71 140.51 56.81 149.31

Sensor technology 64.89 87.64 22.74 53.93 53.57 –0.36 30.28 18.38 –11.90 10.48

Other initiatives 0 0 0 0 17.40 17.40 0 0 0 17.40

Special interest 0 0 0 0 18.00 18.00 0 0 0 18.00

Mission common 53.24 56.64 3.39 69.18 74.99 5.81 51.22 54.52 3.30 12.50

BMDO Management 0 0 0 33.48 31.81 –1.68 32.22 28.58 –3.64 –5.32

Rescissions and

reductions 0 14.90 14.90 0 22.02 22.02 0 43.21 43.21 80.14

Total $370.62 $745.62 $375.00 $508.44 $833.44 $325.00 $504.09 $978.09 $474.00 $1,174.00

Note: Totals may not add due to rounding.

Page 22 GAO/NSIAD-98-153 National Missile Defense Funding and Risks
Appendix II 

Comments From the Department of Defense

(707300) Page 23 GAO/NSIAD-98-153 National Missile Defense Funding and Risks
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