MISSILE DEFENSE

Opportunities Exist to 

Strengthen Acquisitions by 

Reducing Concurrency and 

Improving Parts Quality

Statement of Cristina Chaplain, Director 

Acquisition and Sourcing Management

Testimony 

Before the Subcommittee on Strategic 

Forces, Committee on Armed Services, 

U.S. Senate

For Release on Delivery 

Expected at 2:30 p.m. EDT

Wednesday, April 25, 2012

GAO-12-600T

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-600T, a testimony

before the Subcommittee on Strategic Forces, 

Committee on Armed Services, U.S. Senate

April 25, 2012

MISSILE DEFENSE

Opportunities Exist to Strengthen Acquisitions by 

Reducing Concurrency and Improving Parts Quality

Why GAO Did This Study

In order to meet its mission, MDA is 

developing a highly complex system of 

systems—ground-, sea-, and spacebased sensors, interceptors, and battle 

management. Since its initiation in 

2002, MDA has been given a 

significant amount of flexibility in 

executing the development and fielding 

of the ballistic missile defense system. 

This statement addresses progress 

MDA made in the past year, the 

challenges it still faces with concurrent 

acquisitions and how it is addressing 

parts quality issues. It is based on 

GAO’s April 2012 report on missile 

defense and its June 2011 report on 

space and missile defense parts 

quality problems. 

What GAO Recommends

GAO makes no new recommendations 

in this statement. In the April 2012 

report, GAO made recommendations 

to strengthen MDA’s longer-term 

acquisition prospects including a 

review of MDA’s acquisitions for 

concurrency to determine whether the 

proper balance has been struck 

between planned deployment dates 

and concurrency risks to achieve those 

dates. The report includes additional

recommendations on how individual 

program elements can reduce 

concurrency. DOD agreed with six of 

the seven recommendations and 

partially agreed with one.

DOD generally concurred with the 

recommendations in the June 2011 

report for greater coordination between 

government organizations responsible 

for major space and missile defense 

programs on parts quality issues and 

periodic reporting to Congress.

What GAO Found

In fiscal year 2011, the Missile Defense Agency (MDA) experienced mixed 

results in executing its fiscal year 2011 development goals and tests. For the first 

time in 5 years, GAO was able to report that the agency delivered all of the 

targets used in fiscal year 2011 test events with the targets performing as 

expected. In addition, the Aegis Ballistic Missile Defense program’s Standard 

Missile-3 Block IA missile was able to intercept an intermediate-range target for 

the first time and the Terminal High Altitude Area Defense program successfully 

conducted its first operational flight test. However, none of the programs GAO 

assessed were able to fully accomplish their asset delivery and capability goals 

for the year. Flight test failures, a test anomaly, and delays disrupted MDA’s flight 

test plan and the acquisition strategies of several components. Flight test failures 

forced MDA to suspend or slow production of three out of four interceptors 

currently being manufactured. Some of the difficulties in MDA’s testing and 

production of assets can be attributed to its highly concurrent acquisition 

approach.

Concurrency is broadly defined as the overlap between technology development 

and product development or between product development and production. High 

levels of concurrency were present in MDA’s initial efforts and are present in 

current efforts. For example, MDA’s flight test failures of a new variant of the 

Ground-based Midcourse Defense program’s interceptors while production was 

underway delayed delivery to the warfighter, increased costs, and will require 

retrofit of fielded equipment. Flight test costs to confirm its capability has 

increased from $236 million to about $1 billion. MDA has taken positive steps to 

incorporate some acquisition best practices, such as increasing competition and 

partnering with laboratories to build prototypes. For example, MDA took actions 

in fiscal year 2011 to reduce acquisition risks and prevent future cost growth in its 

Aegis SM-3 Block IIA program. Nevertheless, as long as newer programs adopt 

acquisition approaches with elevated levels of concurrency, there is still

considerable risk of future performance shortfalls that will require retrofits, cost 

overruns, and schedule delays.

MDA is also taking the initiative to address parts quality issues through various 

means, including internal policies, collaborative initiatives with other agencies, 

and contracting strategies to hold its contractors more accountable. Quality 

issues have seriously impeded to the development of the missile defenses in 

recent years. For example, during a fiscal year 2010 Terminal High Altitude Area 

Defense flight test, the air-launched target failed to initiate after it was dropped 

from the aircraft and fell into the ocean. A failure review board identified 

shortcomings in internal processes at the contractor to be the cause of the 

failure. This failure led to a delay of the planned test, restructuring of other 

planned tests, and hundreds of millions of dollars being spent to develop and 

acquire new medium-range air-launched targets. Parts quality issues will require 

sustained attention from both the executive and legislative branches. MDA is 

exhibiting some leadership, but there are significant barriers to addressing quality 

problems, such as the increase in counterfeit electronic parts, a declining 

government share of the overall electronic parts market, and workforce gaps 

within the aerospace sector.

View GAO-12-600T. For more information, 

contact Cristina Chaplain at (202) 512-4841 or 

chaplainc@gao.gov.
Page 1 GAO-12-600T 

Chairman Nelson, Ranking Member Sessions, and Members of the

Subcommittee:

I am pleased to be here today to discuss the progress made by the 

Department of Defense’s (DOD) Missile Defense Agency (MDA). In 2002, 

MDA was charged with developing and fielding the Ballistic Missile 

Defense System (BMDS), expected to be capable of defending the United 

States, deployed troops, friends, and allies against ballistic missiles of all 

ranges in all phases of flight. To enable MDA to field and enhance a 

missile defense system quickly, the Secretary of Defense in 2002 delayed 

entry of the BMDS program into DOD’s traditional acquisition process 

until a mature capability was ready to be handed over to a military service 

for production and operation. To meet a presidential directive to deliver an 

initial capability by 2004 and to meet a presidential announcement in 

2009 to deploy missile defenses to Europe, the program concurrently 

developed and fielded assets and continues to utilize this approach. 

Since its inception, MDA has spent more than $80 billion and plans to 

spend an additional $44 billion through 2016 to develop a highly complex 

system of systems.

Since 2002, National Defense Authorization Acts have mandated that we 

prepare annual assessments of MDA’s ongoing cost, schedule, testing, 

and performance progress.1 We recently issued our report covering 

MDA’s progress during fiscal year 2011 as well as challenges related to 

MDA’s use of highly concurrent acquisition strategies.2

 

1 National Defense Authorization Act for Fiscal Year 2002, Pub. L. No. 107-107, § 232(g) 

(2001); Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005, Pub. 

L. No. 108-375, § 233 (2004); National Defense Authorization Act for Fiscal Year 2006, 

Pub. L. No. 109-163, § 232; John Warner National Defense Authorization Act for Fiscal 

Year 2007, Pub. L. No. 109-364, § 224 (2006); and National Defense Authorization Act for 

Fiscal Year 2008, Pub. L. No. 110-181, § 225. See also National Defense Authorization 

Act for Fiscal Year 2012, Pub. L. No. 112-81, § 232 (2011). 

My statement 

today will focus on the issues covered in that report as well our June 2011 

report on parts quality issues affecting space and missile defense 

2 GAO, Missile Defense: Opportunity Exists to Strengthen Acquisitions by Reducing 

Concurrency, GAO-12-486 (Washington, D.C.: Apr. 20, 2012). 
Page 2 GAO-12-600T 

systems.3

We conducted the work underlying this testimony according to generally 

accepted government auditing standards. Those standards require that 

we plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our 

audit objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based on our audit 

objectives. Additional information on our scope and methodology is 

available in each of the issued reports.

Our work highlighted a number of causal factors behind the 

parts quality problems being experienced at MDA and space agencies. 

MDA’s BMDS is being designed to counter ballistic missiles of all 

ranges—short, medium, intermediate, and intercontinental.4

Table 1 provides a brief description of 10 BMDS elements and supporting 

efforts currently under development by MDA.

Since 

ballistic missiles have different ranges, speeds, sizes, and performance 

characteristics, MDA is developing multiple systems that when integrated

provide multiple opportunities to destroy ballistic missiles before they can 

reach their targets. The BMDS architecture includes space-based and 

airborne sensors as well as ground- and sea-based radars; ground- and 

sea-based interceptor missiles; and a command and control, battle 

management, and communications system to provide the warfighter with 

the necessary communication links to the sensors and interceptor 

missiles.

 

3 GAO, Space and Missile Defense Acquisitions: Periodic Assessment Needed to Correct 

Parts Quality Problems in Major Programs, GAO-11-404 (Washington, D.C.: June 24, 

2011).

4 Ballistic missiles are classified by range: short-range ballistic missiles have a range of 

less than1,000 kilometers (621 miles), medium-range ballistic missiles have a range of 

from 1,000 to 3,000 kilometers (621-1,864 miles), intermediate-range ballistic missiles 

have a range of from 3,000 to 5,500 kilometers (1,864-3,418 miles), and intercontinental 

ballistic missiles have a range of greater than 5,500 kilometers (3,418 miles).

Background 
Page 3 GAO-12-600T 

Table 1: Description of MDA’s BMDS Elements and Supporting Efforts

BMDS element/supporting effort Description 

Aegis Ballistic Missile Defense (Aegis 

BMD) with Standard Missile-3 (SM-3) 

Block IA and Block IB

Aegis BMD is a sea-based missile defense system being developed in capability-based 

increments to defend against ballistic missiles of all ranges. Key components include the 

shipboard SPY-1 radar, SM-3 missiles, and command and control systems. It also is used 

as a forward-deployed sensor for surveillance and tracking of ballistic missiles. The SM-3 

missile has multiple versions in development or production. The first two variants are 

referred to as the SM-3 Block IA and SM-3 Block IB.a

Aegis Ashore 

 

Aegis Ashore is a future land-based variant of the ship-based Aegis BMD. It is expected to 

track and intercept ballistic missiles in their midcourse phase of flight using SM-3 

interceptor variants as they become available. Key components include a vertical launch 

system and a reconstitutable enclosure that houses the SPY-1 radar and command and 

control system known as the deckhouse. DOD plans to deploy the first Aegis Ashore with 

SM-3 Block IB in the 2015 time frame as part of the missile defense of Europe called the 

European Phased Adaptive Approach (PAA). 

Aegis BMD SM-3 Block IIA The SM-3 Block IIA is the third SM-3 variant to be developed for use with the sea-based 

and future land-based Aegis Ballistic BMD. This program began in 2006 as a joint 

development with Japan, and it was added to the European PAA when that approach was 

announced in 2009. As part of European PAA Phase III, the SM-3 Block IIA is planned to 

be fielded with Aegis Weapons System version 5.1 by the 2018 time frame.

Aegis BMD SM-3 Block IIB The SM-3 IIB is the fourth SM-3 variant planned. It is intended to defend against mediumand intermediate-range ballistic missiles and provide early intercept capabilities against 

some intercontinental ballistic missiles. The SM-3 Block IIB program began in June 2010 

and is planned to be fielded by the 2020 time frame as part of the European PAA Phase IV. 

Given its early stage of development, program management officials stated that the SM-3 

Block IIB is not managed within the Aegis BMD Program Office and has not been 

baselined. 

BMDS Sensors MDA is developing various sensors for fielding. These include forward-based sensors; 

mobile, sea-based, space-based, and airborne sensors; as well as upgrades to existing 

early warning radars. The BMDS uses these sensors to identify and continuously track 

ballistic missiles in all phases of flight.

Command, Control, Battle Management, 

and Communications (C2BMC)

C2BMC is the integrating element of the BMDS. Its role is to provide deliberate planning, 

situational awareness, sensor management, and battle management for the integrated 

BMDS.

Ground-based Midcourse Defense 

(GMD) 

GMD is a ground-based missile defense system designed to destroy intermediate and 

intercontinental ballistic missiles during the midcourse phase of their flight. Its mission is to 

protect the U.S. homeland against ballistic missile attacks from North Korea and the Middle 

East. GMD has two ground-based interceptor variants—the Capability Enhancement I (CEI) and the Capability Enhancement II (CE-II). MDA has emplaced its total planned inventory 

of 30 interceptors at two missile field sites—Fort Greely, Alaska, and Vandenberg, 

California.

Precision Tracking and Space System 

(PTSS) 

PTSS is being developed as an operational component of the BMDS designed to support 

intercept of regional medium- and intermediate-range ballistic missile threats to U.S. forces 

and allies and long-range threats to the United States. PTSS will track large missile raid 

sizes after booster burnout, which could enable earlier intercepts. 

Targets and Countermeasures MDA develops and manufactures highly complex targets for short, medium, intermediate, 

and eventually intercontinental ranges used in BMDS flight tests to present realistic threat 

scenarios. The targets are designed to encompass the full spectrum of threat missile 

ranges and capabilities. 
Page 4 GAO-12-600T 

BMDS element/supporting effort Description 

Terminal High Altitude Area Defense 

(THAAD) 

THAAD is a ground-based missile defense system designed to destroy short- and mediumrange ballistic missiles during the late-midcourse and terminal phases of flight. Its mission 

is to defend deployed U.S. forces and friendly foreign population centers. 

Source: MDA data.

Note: The European PAA is a policy announced by the President in 2009 that articulates a schedule 

for delivering four phases of capability to defend Europe and augment current protection of the U.S. 

homeland in the following timeframes: Phase 1 in 2011, Phase 2 in 2015, Phase 3 in 2018, and 

Phase 4 in 2020.

a

MDA is currently developing or producing four versions of the SM-3 interceptor—IA, IB, IIA, and IIB. 

The SM-3 Block IA and SM-3 Block IB are the earlier variants of the missile. The SM-3 Block IIA and 

SM-3 Block IIB are planned to provide successively greater range and velocity to intercept medium to 

long-range ballistic missiles.

MDA experienced mixed results in executing its fiscal year 2011 

development goals and BMDS tests. For the first time in 5 years, we are 

able to report that all of the targets used in fiscal year 2011 test events 

were delivered as planned and performed as expected. In addition, the 

Aegis BMD program’s SM-3 Block IA missile was able to intercept an 

intermediate-range target for the first time. Also, the THAAD program 

successfully conducted its first operational flight test in October 2011. 

However, none of the programs we assessed were able to fully 

accomplish their asset delivery and capability goals for the year.

See table 2 for how each of these programs met some of its goals during 

the fiscal year. Our report provides further detail on these selected 

accomplishments.5

 

5 GAO-12-486. 

MDA Experienced 

Mixed Progress in 

Development and 

Delivery Efforts
Page 5 GAO-12-600T 

Table 2: BMDS Fiscal Year 2011 Selected Accomplishments

Element Fully accomplished goals Partially or not accomplished goals

Aegis BMD SM-3 

Block IA

An April 2011 flight test demonstrated 

capability required for European Phased 

Adaptive Approach (PAA) Phase I. Deployed 

first ship in support of European PAA Phase 

I.

Delivered 6 out of 19 planned missiles by the end of fiscal year 

2011; delivery of 12 missiles is on hold pending the results of 

the failure investigation of the anomaly that occurred during an 

April 2011 flight test. Depending on the results, delivered 

missiles may have to be retrofitted.

Aegis BMD SM-3 

Block IB 

Delivered first SM-3 Block IB developmental 

interceptor and fired it in the first flight test in 

September 2011.

The SM-3 Block IB failed to intercept the target during its first 

flight test, resulting in a failure review board investigation of the 

cause of the failure. The flight test is scheduled to be 

reconducted in 2012, delaying the certification of the Aegis 

BMD 4.0.1 weapon system. 

Aegis BMD SM-3 

Block IIA

None Subsystem preliminary design review failures led to a program 

replan that adjusted the preliminary design review date to fiscal 

year 2012 and included new subsystem reviews for the failed 

components. The new subsystem reviews were completed in 

fiscal year 2011 and early fiscal year 2012. 

Aegis BMD SM-3 

Block IIB

Awarded three concept definition and 

program planning contracts in April 2011 

and approved to begin technology 

development in July 2011.

Demonstration of low-cost divert and attitude control system 

components was delayed until the first quarter of fiscal year 

2012.

Aegis Ashore Completed preliminary design review in 

August 2011.

A new deckhouse fabrication plan delayed the award of the 

deckhouse fabrication contract, procurement of deckhouse 

fabrication materials, and the start of construction.

GMD Completed three of the five limited 

interceptor upgrades, partially to resolve

component issues identified in 

developmental testing and manufacturing.

Flight test failure in the first quarter of fiscal year 2011 resulted 

in interceptor production suspension pending the completion of 

an investigation and a successful non-intercept flight test.

PTSS Completed system requirements and system 

design reviews in the second quarter of 

fiscal year 2011.

Approval to begin technology development was delayed to the 

fourth quarter of fiscal year 2012.

Targets Launched all 11 targets as planned. Delivered 11 out of 14 targets it had planned.

THAAD Successfully conducted first operational 

flight test in October 2011. Delivered 11

missiles.

Materiel release to Army delayed to the second quarter of fiscal 

year 2012. THAAD delayed plans to deliver first battery to fiscal 

year 2012 because of production issues with the interceptor.

Source: GAO analysis of MDA data.

Note: BMDS fiscal year 2011 asset and capability deliveries for Airborne Infrared; C2BMC; joint U.S.-

Israel BMDS; Sea-based X-band radar; and Space Tracking and Surveillance System elements were 

not reviewed.

Although some programs completed significant accomplishments during 

the fiscal year, there were also several critical test failures. These as well 

as a test anomaly and delays disrupted MDA’s flight test plan and the 

acquisition strategies of several components. Overall, flight test failures 

and an anomaly forced MDA to suspend or slow production of three out of 

four interceptors currently being manufactured.
Page 6 GAO-12-600T 

• The Aegis BMD SM-3 Block IA program conducted a successful 

intercept in April 2011, but there was an anomaly in a critical 

component of the interceptor during the test. This component is 

common with the Block IB missile. Program management officials 

stated that the SM-3 Block IA deliveries have been suspended while 

the failure reviews are being conducted.

• The Aegis BMD SM-3 Block IB program failed in its first intercept 

attempt in September 2011. The Aegis program has had to add an 

additional flight test and delay multiple other flight tests. Program 

management officials stated that the SM-3 Block IB production has 

been slowed while the failure reviews are being conducted.

• The GMD program has been disrupted by two recent test failures. As 

a result of a failed flight test in January 2010, MDA added a retest 

designated as Flight Test GMD-06a (FTG-06a).6 However, this retest 

also failed in December 2010 because of a failure in a key component 

of the kill vehicle. As a result of these failures, MDA has decided to 

halt flight testing and restructure its multiyear flight test program, halt 

production of the interceptors, and redirect resources to return-to-flight 

activities.

Production issues forced MDA to slow production of the THAAD 

interceptors, the fourth missile being manufactured.

To meet the 2002 presidential direction to initially rapidly field and update 

missile defense capabilities as well as a 2009 presidential announcement 

to deploy missile defenses in Europe, MDA has undertaken and 

continues to undertake highly concurrent acquisitions. While this 

approach enabled MDA to rapidly deploy an initial capability in 2005 by 

concurrently developing, manufacturing, and fielding BMDS assets, it also 

led to the initiation of large-scale acquisition efforts before critical 

technologies were fully understood and allowed programs to move 

forward into production without having tests completed to verify 

performance. After delivering its initial capability in 2005, MDA continued 

these high-risk practices that have resulted in problems requiring 

extensive retrofits, redesigns, delays, and cost increases. While MDA has 

incorporated some acquisition best practices in its newer programs, its 

 

6 The failed January 2010 flight test—FTG-06—was planned as the first test of GMD’s 

enhanced version of the kill vehicle—the CE-II.

Highly Concurrent 

Acquisition Strategies 

Often Lead to 

Performance, Cost, 

and Schedule 

Consequences 
Page 7 GAO-12-600T 

acquisition strategies still include high or elevated levels of concurrency 

that result in increased acquisition risk—including performance shortfalls, 

cost growth, and schedule delays—for these newer programs.

Concurrency is broadly defined as overlap between technology 

development and product development or between product development 

and production of a system. This overlap is intended to introduce systems 

rapidly, to fulfill an urgent need, to avoid technology obsolescence, and to 

maintain an efficient industrial development and production workforce. 

However, while some concurrency is understandable, committing to 

product development before requirements are understood and 

technologies mature as well as committing to production and fielding 

before development is complete is a high-risk strategy that often results in 

performance shortfalls, unexpected cost increases, schedule delays, and 

test problems.7

In contrast, our work has found that successful programs that deliver 

promised capabilities for the estimated cost and schedule follow a 

systematic and disciplined knowledge-based approach, in which high 

levels of product knowledge are demonstrated at critical points in 

development.

At the very least, a highly concurrent strategy forces 

decision makers to make key decisions without adequate information 

about the weapon’s demonstrated operational effectiveness, reliability, 

logistic supportability, and readiness for production. Also, starting 

production before critical tests have been successfully completed has 

resulted in the purchase of systems that do not perform as intended. 

These premature commitments mean that a substantial commitment to 

production has been made before the results of testing are available to 

decision makers. Accordingly, they create pressure to avoid production 

breaks even when problems are discovered in testing. These premature 

purchases have affected the operational readiness of our forces and quite 

often have led to expensive modifications.

8

 

7 GAO, Best Practices: Capturing Design and Manufacturing Knowledge Early Improves 

Acquisition Outcomes, 

This approach recognizes that development programs 

require an appropriate balance between schedule and risk and, in 

practice, programs can be executed successfully with some level of 

GAO-02-701 (Washington, D.C.: July 15, 2002), and Defense 

Acquisitions: Production and Fielding of Missile Defense Components Continue with Less 

Testing and Validation Than Planned, GAO-09-338 (Washington, D.C.: Mar. 13, 2009).

8 GAO, Defense Acquisitions: Assessments of Selected Major Weapon Programs, 

GAO-06-391 (Washington, D.C.: Mar. 31, 2006).
Page 8 GAO-12-600T 

concurrency. For example, it is appropriate to order long-lead production 

material in advance of the production decision, with the pre-requisite that 

developmental testing is substantially accomplished and the design 

confirmed to work as intended. This knowledge-based approach is not 

unduly concurrent. Rather, programs gather knowledge that 

demonstrates that their technologies are mature, designs are stable, and 

production processes are in control before transitioning between 

acquisition phases, which helps programs identify and resolve risks early. 

It is a process in which technology development and product 

development are treated differently and managed separately. Technology 

development must allow room for unexpected results and delays. 

Developing a product culminates in delivery and therefore gives great 

weight to design and production. If a program falls short in technology 

maturity, it is harder to achieve design stability and almost impossible to 

achieve production maturity. It is therefore key to separate technology 

from product development and product development from production—

and thus avoid concurrency. A knowledge-based approach delivers a 

product on time, within budget, and with the promised capabilities.

See figure 1 for depictions of a concurrent schedule and a schedule that 

uses a knowledge-based approach.

Figure 1: Concurrency Compared to the Knowledge-Based Approach
Page 9 GAO-12-600T 

To meet the 2002 presidential direction to initially rapidly field and update 

missile defense capabilities as well as the 2009 presidential 

announcement to deploy missile defenses in Europe, MDA has 

undertaken and continues to undertake highly concurrent acquisitions. 

Such practices enabled MDA to quickly ramp up efforts in order to meet 

tight presidential deadlines, but they were high risk and resulted in 

problems that required extensive retrofits, redesigns, delays, and cost 

increases.

Table 3 illustrates concurrency in past efforts and its associated effects. 

Among earlier MDA programs, concurrency was most pronounced in the 

GMD program, where the agency was pressed to deliver initial 

capabilities within a few years to meet the 2002 presidential directive. The 

consequences here have been significant, in terms of production delays 

and performance shortfalls, and are still affecting the agency.

Table 3: Examples of Concurrency in MDA Programs’ Acquisition Strategies and Associated Effects 

MDA program Acquisition concurrency Associated effects 

GMD’s initial capability 

including CE-I interceptors 

in 2004

To meet the presidential directive to deploy an initial 

set of missile defense capabilities by 2004, the 

program concurrently matured technology, designed 

the system, tested the design, and produced and 

deployed an initial set of missile defense 

capabilities.

a

CE-I interceptors were rapidly delivered to the 

warfighter requiring an extensive and expensive 

retrofit and refurbishment program that is still 

ongoing. 

GMD’s enhanced 

interceptor production

Prior to fully completing development and 

demonstrating the capability of the CE-I interceptor, 

MDA committed in 2004 to development of an 

enhanced version of the interceptor called the CE-II. 

MDA proceeded to concurrently develop, 

manufacture, and deliver 12 of these interceptors

The first and second flight tests of the enhanced 

interceptor failed.

a CE-II interceptors were delivered prematurely to 

the warfighter and will require an extensive and 

expensive retrofit. It will take several additional 

years to demonstrate full CE-II capabilities. 

Production has been halted and the flight test plan 

has been altered, increasing the cost to initially 

confirm the CE-II capability from $236 million to 

about $1 billion.

Aegis BMD SM-3 Block IB MDA approved production of the SM-3 Block IB 

missile before completing developmental testing to 

confirm that the technologies were fully mature and 

the design worked as intended. In addition, MDA 

decided to manufacture SM-3 Block IB missiles 

beyond those needed for developmental testing 

before some criteria were met, including a 

successful first flight test demonstrating that the 

system functioned as intended.

Production has been delayed, delivery of capability 

has been delayed, and development costs have 

grown. The program has had to add an additional 

flight test and delay multiple additional flight tests 

due to the failure of the program’s first attempted 

intercept in September 2011. Because of the 

failure, MDA was unable to validate initial SM-3 

Block IB capability. In addition, an anomaly 

occurred in an April 2011 flight test of the SM-3 

Block IA in a booster component that is common 

with the Block IB missile. Block IB production is 

being slowed while failure reviews are being 

conducted. 

MDA’s Concurrent 

Acquisition Strategies 

Allowed It to Deliver 

Assets Quickly but Also 

Led to Performance Issues 

with Cost and Schedule 

Consequences
Page 10 GAO-12-600T 

MDA program Acquisition concurrency Associated effects 

THAAD The agency awarded a contract for the production of

THAAD’s first two operational batteries before its 

design was stable and developmental testing of all 

critical components was complete.

Problems encountered while THAAD was 

concurrently designing and producing assets 

delayed fielding of the first two THAAD batteries by 

more than 2 years and increased costs by $40 

million.

Source: GAO analysis of MDA data.

a

High levels of concurrency will continue for the GMD program with developmental flight testing 

extending until at least 2022, well after production of the interceptor is scheduled to be completed. 

MDA is accepting the risk that these developmental flight tests may discover issues that require costly 

design changes and retrofit programs to resolve.

In recent years, MDA has taken positive steps to incorporate some 

acquisition best practices, such as increasing competition and partnering 

with laboratories to build prototypes. For example, MDA took actions in 

fiscal year 2011 to reduce acquisition risks and prevent future cost growth 

in its Aegis BMD SM-3 Block IIA program. The agency recognized that 

the program’s schedule included elevated acquisition risks, so it 

appropriately added more time to the program by revising the schedule to 

relieve schedule compression between its subsystem and system-level 

design reviews. In addition, it incorporated lessons learned from other 

SM-3 variants into its development to further mitigate production unit 

costs. Moreover, for its PTSS program, MDA has simplified the design 

and requirements.

However, table 4 shows that the agency’s current acquisition strategies 

still include high or elevated levels of concurrency that set many of its 

newer programs up for increased acquisition risk, including performance 

shortfalls, cost growth, and schedule delays. 
Page 11 GAO-12-600T 

Table 4: MDA’s Acquisition Concurrency and Associated Risks in Its Newer Programs

MDA program Acquisition concurrency Risks

Aegis BMD SM-3 Block 

IIB

Based on a tentative schedule, the program plans 

to commit to product development more than a 

year prior to holding a preliminary design review. 

By contrast, major defense acquisition programs 

outside MDA are generally required to complete 

this review before committing to product 

development.

Without holding key system engineering events 

culminating in a preliminary design review, programs 

cannot ensure that requirements are defined and 

feasible and that the proposed design can meet those 

requirements within cost, schedule, and other system 

constraints.

Aegis Ashore The program began product development for two 

Aegis Ashore systems—one designated for testing 

and the other operational— and set the acquisition 

baseline before completing the preliminary design 

review. High levels of concurrency can be seen in 

its construction and procurement plan, and the 

program has not aligned its flight testing schedule 

with construction and component procurement 

decisions.

There are increased technical risks and increased risk

of cost growth because the agency committed to 

product development for the two systems with less 

technical knowledge than recommended by acquisition 

best practices and without ensuring that requirements 

were defined, feasible, and achievable within cost and 

schedule constraints. 

Precision Tracking and 

Space System

An industry team will develop and produce two 

engineering and manufacturing development 

satellites while a laboratory-led contractor team is 

still in the development phase of building two lab 

development satellites. 

This strategy may not enable decision makers to fully 

benefit from the knowledge gained through on-orbit 

testing of the lab-built satellites and its design before 

making major commitments on the industry-built 

development satellites since those will be under 

contract and under construction before the on-orbit 

testing can take place.

Source: GAO analysis of MDA data.

In our April 2012 report, we made two recommendations to strengthen 

MDA’s longer-term acquisition prospects.

9

 

9

We recommended that the 

Secretary of Defense direct the Office of Acquisition Technology and 

Logistics to (1) review all of MDA’s acquisitions for concurrency and 

determine whether the proper balance has been struck between the 

planned deployment dates and the concurrency risks taken to achieve 

those dates and (2) review and report to the Secretary of Defense the 

extent to which the directed capability delivery dates announced by the 

President in 2009 are contributing to concurrency in missile defense 

acquisitions and recommend schedule adjustments where significant 

benefits can be obtained by reducing concurrency. DOD concurred with 

both of these recommendations.

GAO-12-486. 
Page 12 GAO-12-600T 

In addition, we recommended specific steps to reduce concurrency in 

several of MDA’s programs. DOD agreed with four of the five missile 

defense element-specific recommendations and partially agreed with our 

recommendation to report to the Office of the Secretary of Defense and to 

Congress the root cause of the SM-3 Block IB developmental flight test 

failure, path forward for future development, and the plans to bridge 

production from the SM-3 Block IA to the SM-3 Block IB before 

committing to additional purchases of the SM-3 Block IB. DOD 

commented that MDA will report this information to the Office of the 

Secretary of Defense and to Congress upon completion of the failure 

review in the third quarter of fiscal year 2012. However, DOD makes no 

reference to delaying additional purchases until the recommended actions 

are completed. We maintain our position that MDA should take the 

recommended actions before committing to additional purchases of the 

SM-3 Block IB.

MDA parts quality issues have seriously impeded the development of the 

BMDS in recent years. For example, during a THAAD flight test in fiscal 

year 2010, the air-launched target failed to initiate after it was dropped 

from the aircraft and fell into the ocean. The test was aborted and a 

subsequent failure review board investigation identified as the immediate 

cause of the failure the rigging of cables to the missile in the aircraft and 

shortcomings in internal processes at the contractor as the underlying 

cause. This failure led to a delay of the planned test, restructuring of other 

planned tests, and hundreds of millions of dollars being spent to develop 

and acquire new medium-range air-launched targets. In another widelyreported example, the GMD element’s first intercept test of its CE-II 

Ground-Based Interceptor failed and the ensuing investigation 

determined the root cause of the failure to be a quality control event. This 

failure also caused multiple flight tests to be rescheduled, delayed 

program milestones, and cost hundreds of millions of dollars for a retest.

In view of the cost and importance of space and missile defense 

acquisitions, we were asked to examine parts quality problems affecting 

satellites and missile defense systems across DOD and the National 

Aeronautical and Space Administration. In June 2011, we reported that 

parts problems discovered after assembly or integration of the instrument 

or spacecraft had more significant consequences as they required lengthy 

failure analysis, disassembly, rework, and reassembly—sometimes 

resulting in a launch delay. For example, the Space Tracking and 

Surveillance System program, a space-based infrared sensor program 

with two demonstration satellites that launched in September 2009, 

discovered problems with defective electronic parts in the Space-Ground 

Parts Quality Issues 

Have Also Had a 

Significant Effect on 

Performance, Cost, 

and Schedule
Page 13 GAO-12-600T 

Link Subsystem during system-level testing and integration of the 

satellite. By the time the problem was discovered, the manufacturer no 

longer produced the part and an alternate contractor had to be found to 

manufacture and test replacement parts. According to officials, the 

problem cost about $7 million and was one of the factors that contributed 

to a 17-month launch delay of two demonstration satellites and delayed 

participation in the BMDS testing we reported on in March 2009.10

Our work highlighted a number of causal factors behind the parts quality 

problems being experienced at MDA and space agencies.11

• Poor workmanship. For example, poor soldering workmanship caused 

a power distribution unit to experience problems during vehicle-level 

testing on MDA’s Targets and Countermeasures program. According 

to MDA officials, all units of the same design by the same 

manufacturer had to be X-ray inspected and reworked, involving 

extensive hardware disassembly. As a corrective action, soldering 

technicians were provided with training to improve their soldering 

operations and ability to perform better visual inspections after 

soldering.

While we 

present examples of the parts quality issues we found at MDA below, the 

June 2011 report also describes the parts quality issues we found with 

other space agencies.

• The use of undocumented and untested manufacturing processes. 

For example, MDA’s Aegis BMD program reported that the brackets 

used to accommodate communications and power cabling were 

improperly bonded to SM-3 Block IA rocket motors, potentially leading 

to mission failure. A failure review board determined that the 

subcontractor had changed the bonding process to reduce high scrap 

rates and that the new process was not tested and verified before it 

was implemented.

• Poor control of manufacturing materials and the failure to prevent 

contamination. The GMD program reported a problem with defective 

titanium tubing. The defective tubing was rejected in 2004 and was to 

be returned to the supplier; however, because of poor control of 

 

10 GAO, Defense Acquisitions: Assessments of Selected Weapon Programs, GAO-09-326SP

(Washington, D.C.: Mar. 30, 2009). 

11 GAO-11-404. 
Page 14 GAO-12-600T 

manufacturing materials, a portion of the material was not returned 

and was inadvertently used to fabricate manifolds for two complete 

CE-II Ground-Based Interceptors. The vehicles had already been 

processed and delivered to the prime contractor for integration when 

the problem was discovered.

• Prime contractor’s failure to ensure that its subcontractors and 

suppliers met program requirements. The GMD program experienced 

a failure with an electronics part purchased from an unauthorized 

supplier. According to program officials, the prime contractor required 

subcontractors to only purchase parts from authorized suppliers; 

however, the subcontractor failed to execute the requirement and the 

prime contractor did not verify compliance.

At the time of our June 2011 report, MDA had instituted policies to 

prevent and detect parts quality problems. The programs reviewed in the 

report—GMD, Aegis BMD, Space Tracking and Surveillance System, and 

Targets and Countermeasures—were initiated before these recent 

policies aimed at preventing and detecting parts quality problems took full 

effect. In addition to new policies focused on quality, MDA has developed 

a supplier road map database in an effort to gain greater visibility into the 

supply chain to more effectively manage supply chain risks. In addition, 

according to MDA officials, MDA has recently been auditing parts 

distributors in order to rank them for risk in terms of counterfeit parts.

MDA also participates in a variety of collaborative initiatives to address 

quality, in particular, parts quality. These range from informal groups 

focused on identifying and sharing news about emerging problems as 

quickly as possible, to partnerships that conduct supplier assessments, to 

formal groups focused on identifying ways industry and the government 

can work together to prevent and mitigate problems.

Moreover, since our report, MDA has added a new clause in one of its 

GMD contracts to provide contractor accountability for quality. We have 

not yet fully assessed the clause but it may allow the contracting officer to 

make an equitable reduction of performance incentive fee on two contract 

line items for certain types of quality problems. This new clause shows 

some leadership by MDA to hold contractors accountable for parts 

quality. But, we do not yet know what the impact of this clause will be on 

improving MDA’s problems with parts quality. 

Our June 2011 report recommended greater coordination between 

government organizations responsible for major space and missile 
Page 15 GAO-12-600T 

defense programs on parts quality issues and periodic reporting to 

Congress. DOD partially concurred with our recommendation for greater 

coordination but responded that it would work with the National 

Aeronautics and Space Administration to determine the optimal 

government-wide assessment and reporting implementation to include all 

quality issues, of which parts, materials, and processes would be one of 

the major focus areas. In addition, DOD proposed an annual reporting 

period to ensure planned, deliberate, and consistent assessments. We 

support DOD’s willingness to address all quality issues and to include 

parts, materials, and processes as an important focus area in an annual 

report. DOD further stated that it had no objection to providing a report to 

Congress, if Congress wanted one. We believe that DOD should 

proactively provide its proposed annual reports to Congress on a routine 

basis, rather than waiting for any requests from Congress, which could be 

inconsistent from year to year. 

The parts quality issues will require sustained attention from both the 

executive and legislative branches to improve the quality of the systems 

in development, particularly because there are significant barriers to 

addressing quality problems, such as an increase in counterfeit electronic 

parts, a declining government share of the overall electronic parts market, 

and workforce gaps within the aerospace sector.

In conclusion, as the MDA completes a decade of its work, it continues to 

make progress in delivering assets, completing intercept tests, and 

addressing some of the quality issues that have plagued it in the past. 

This year, there were significant accomplishments, such as the 

successful operational test for THAAD, but also setbacks, including failed 

tests and their aftermath. Such setbacks reflect inherent risks associated 

with the challenging nature of missile defense development, but they are 

also exacerbated by strategies that adopt high levels of concurrency that 

leave decision makers with less knowledge than needed to move 

programs forward. Given that initial capabilities are now in place and 

broader fiscal pressures require sound and more efficient management 

approaches, it is now time for DOD to reassess MDA's strategy of 

accelerating development and production to determine whether this 

approach needs to be rethought for current and future BMDS programs.

Chairman Nelson, Ranking Member Sessions, and Members of the 

Subcommittee, this concludes my statement. I am happy to answer any 

questions you have. 

Concluding 

Observations 
Page 16 GAO-12-600T 

For future questions about this statement, please contact me at (202) 

512-4841 or chaplainc@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this statement. Individuals making key contributions to this statement 

include David B. Best, Assistant Director; Meredith Allen Kimmett; Ivy 

Hubler; Steven Stern; Ann Rivlin; Kenneth E. Patton; Robert S. 

Swierczek; and Alyssa B. Weir. 

GAO Contact and 

Staff 

Acknowledgments 

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