GAO

United States General Accounting Office

Report to Congressional Requesters

May 2000 MISSILE DEFENSE

Schedule for Navy 

Theater Wide Program 

Should Be Revised to 

Reduce Risk

GAO/NSIAD-00-121

Page 1 GAO/NSIAD-00-121 Missile Defense

Contents

Letter 3

Apendixes Appendix I: Description of Block II Technologies for Navy Theater

Wide Program 24

Appendix II: Research, Development, Test, and Evaluation Funds 

Budgeted and Allocated for Navy Theater Wide in 

Fiscal Years 1997-1999 26

Appendix III: Comments From the Department of Defense 28

Related GAO Products 30

Table Table 1: Allocations of Congressional Funding Increases for Fiscal 

Years 1997 Through 1999 11

Figures Figure 1: Depiction of the Navy Theater Wide System 8

Figure 2: Proposed Navy Theater Wide Block I Schedule 18

Abbreviations

DOD Department of Defense

NTW Navy Theater Wide
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United States General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-282711 Letr

May 31, 2000

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Mary Landrieu

Ranking Member

Strategic Forces Subcommittee

Committee on Armed Services

United States Senate

The Navy Theater Wide system is being developed to defend military and 

civilian assets, including U.S. and allied military forces in the field, against 

attacks by medium- and long-range ballistic missiles while they are still 

outside the atmosphere. The Navy is developing the system in two 

segments. The first segment, or Block I, is intended to provide an initial 

capability by 2010 involving the deployment of 80 interceptor missiles 

aboard 4 ships. The Block II segment is expected to provide an enhanced 

capability at a yet-to-be-defined date. Total Block I costs are estimated at 

about $6.4 billion; Block II costs have not yet been estimated.

For fiscal years 1997 through 1999, the Congress increased funding for the 

program by 150 percent—about $663 million—over the $444 million 

requested in the President’s budgets for those years. The purpose of the 

increase was to enable the Navy to reduce technical risks and develop 

system technologies earlier than planned.
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You expressed concern that, despite the funding increases, the program 

was viewed in 1998 by a high ranking Department of Defense official and an 

independent panel of experts as “high risk” because of technical 

challenges, such as improving the system’s capability to track and destroy 

enemy ballistic missiles.1

 As a result, you asked us to determine (1) how the 

additional funding provided by the Congress for the program in fiscal years 

1997 through 1999 was used and (2) whether significant risks to the 

program remain. Within the next month, we also plan to issue reports on 

the status of two other missile defense systems under development—the 

Patriot Advanced Capability-3 and National Missile Defense.2

 (A list of 

related products is included at the end of our report.)

Results in Brief The Navy used the $663 million in increased funding as intended to reduce 

technical risks and develop system technologies earlier than originally 

planned. About 41 percent, or $270 million, was used for system design and 

analysis efforts, such as reducing the technical risks associated with 

improving the system’s ability to differentiate intended targets from other 

objects, such as debris. About 20 percent of the funding was used for 

procuring hardware items, such as rocket motors and test interceptor 

missiles, earlier than planned. According to program officials, the 

additional funding also allowed the program to shift from a demonstration 

effort to determine whether a target in outer space could be hit to an 

acquisition program in which a weapon system will be fully developed and 

produced. 

Although the Navy used this additional funding to reduce technical risk and 

develop the system sooner, significant technical and schedule risks still 

exist. Specifically, the following technical risks remain.

• Technological advancement is required to differentiate the target from 

other objects. Such discrimination requires, for example, that the 

1 Report of the Panel on Reducing Risk in Ballistic Missile Defense Flight Test Programs, 

Institute for Defense Analyses (Alexandria, Va.: Feb. 1998). The report evaluated the test 

programs of several missile defense programs.

2

 The ground-based Patriot Advanced Capability-3 system is designed to protect ground 

troops and assets such as airfields against enemy ballistic missiles while they are within the 

atmosphere. The space- and ground-based National Missile Defense system is designed to 

protect the entire United States against long-range enemy missiles while they are outside the 

atmosphere.
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system’s computer network can process an enormous amount of data in 

real time. This network has not been built, and its software must be 

integrated with the computer code that is already installed on each 

ship’s computer system. Current activities include writing software, 

examining several computer architectures for the network, and building 

the capability to test the network. 

• Technological advancement is also required in developing the capability 

of the interceptor missile to seek and destroy the target. We are 

concerned that the program office has proposed a schedule calling for 

initial operational testing of the missile in 2010 even though 50 percent 

of the required 80 missiles would be produced and delivered by 2008 and 

100 percent by 2010. Operational testing3

 is designed to provide an 

independent evaluation of whether a system meets required 

performance levels prior to beginning production. We have frequently 

found that cost overruns and the deployment of substandard systems 

occur when the Department of Defense proceeds into production before 

systems are tested under operational conditions. 

The following schedule risks exist.

• The Navy has scheduled up to seven initial flight tests between July 2000 

and September 2001—about one every 2.5 months. This rapid test 

schedule raises concerns because, according to testing officials, test 

programs typically separate flight tests by about 6 months. A longer 

interval between tests gives program officials better opportunities to 

evaluate test results, understand problems, and incorporate solutions 

into the next test.

• The Department’s approved level of funding does not match the Navy 

program office’s estimate of how much it needs to implement the 

program on schedule. According to the office, funding levels set by the 

Department average $282 million per year for fiscal years 2002 through 

2005, whereas it estimates a need for an average of $567 million per year 

to keep to its proposed schedule.

This report contains a recommendation that the Navy revise the proposed 

funding profile and test schedule for the Navy Theater Wide program to 

3

 Operational testing means the field test, under realistic combat conditions, of any item of 

(or key component of) weapons, equipment, or munitions for the purpose of determining 

the effectiveness and suitability of the weapons, equipment, or munitions for use in combat 

by typical military users.
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ensure that the Navy can undertake initial operational testing before 

producing most of its missiles. The Department partially concurred with 

our recommendation. It agreed to review the funding and schedule. 

However, the Department did not commit to revising its plans as we 

recommended.

Background The Navy Theater Wide (NTW) system is being developed by the Navy and 

the Department of Defense’s (DOD) Ballistic Missile Defense Organization4

to intercept enemy missiles while they are still above the Earth’s 

atmosphere in a region known as the exoatmosphere. The Army’s Theater 

High Altitude Area Defense system is a land-based counterpart to the 

Navy’s system; it is intended to intercept warheads in the exoatmosphere 

and as they reenter the atmosphere.5

 The Navy and the Army systems are 

considered “upper-tier” systems in that they are expected to act as a first 

line of defense against theater ballistic missiles, which have shorter ranges 

than intercontinental ballistic missiles. “Lower-tier” systems, such as the 

Navy Area Defense and Army Patriot Advanced Capability-3 systems, will 

complement the upper-tier systems, attacking remaining enemy warheads 

only after they have reentered the atmosphere. In addition, the National 

Missile Defense system is being developed to defend all 50 states against a 

limited intercontinental ballistic missile attack.

4

 The Ballistic Missile Defense Organization is responsible for managing, directing, and 

executing DOD’s ballistic missile defense program. In the case of NTW, the Organization 

funds and oversees the Navy’s development and implementation of the system.

5 Missile Defense: THAAD Restructure Addresses Problems but Limits Early Capability

(GAO/NSIAD-99-142, June 30, 1999).
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The Navy Theater Wide system consists of modifications to the Navy’s 

Aegis weapon system and Standard missile. The Aegis weapon system, 

which is used by certain classes of Navy cruisers and destroyers, is a 

multimission combat system capable of simultaneous operations against 

air, surface, and submarine threats. The NTW system, as depicted in 

figure 1, employs radar (called the AN/SPY-1) to detect and track targets. 

The NTW system is designed to employ a version of the Navy’s Standard 

missile known as the Standard Missile-3, which is a four-stage guided 

missile.6

 The missile would be launched from a vertical launching system, 

which would stow and launch various missiles from Aegis cruisers. NTWequipped cruisers are expected to use their radar to track enemy missiles 

and guide the modified Standard missiles to them. The Standard missile 

features a solid-fueled third stage designed to be fired in two pulses in 

order to allow the warhead to close on its target. Once in close proximity to 

its target, the intercepting missile is expected to use an onboard infrared 

detection system, or “seeker,” to discern the heat signature of the incoming 

warhead. The Standard missile’s warhead would then ram the target with 

enough speed, and in precisely the right location, to significantly damage or 

destroy it. This “kinetic warhead” is being designed to contain no 

explosives, it will rely on the force of impact to obliterate its target. This 

concept is known as “hit-to-kill.”

6

 Multiple stages increase the missile’s range. The first and second stages are designed to 

boost the missile into the atmosphere. The purpose of the third stage is to boost the missile 

further into the exoatmosphere and then guide the missile to the target after separation 

from the first two stages. The fourth stage, or kinetic warhead, is designed to impact the 

target.
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Figure 1: Depiction of the Navy Theater Wide System

Source: U.S. Navy.

In December 1999, DOD restructured its upper-tier ballistic missile defense 

programs—NTW and the Army’s Theater High Altitude Area Defense—to 

make possible the funding of both programs in future years. Prior to the 

restructuring, NTW Block I was scheduled for deployment in 2007. Block I 

is now scheduled to be deployed in three stages:

Missile uses GPS

for 3rd

stage guidance

Warhead separation

2nd/3rd stage

separation

Booster separation

Modified

standard

missile

Aegis

Cruiser

Enemy balistic

missile

GPS
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• By 2006, Block IA is expected to consist of an Aegis test ship armed with 

up to six test missiles for use against nonseparating and simple 

separating enemy missiles.7

• By 2008, Block IB is expected to use two Aegis cruisers armed with 50 

missiles. The ships would have the capability to change from the missile 

defense to anti-air warfare mission. They would not, however, be able to 

operate in both missile and anti-air defense modes simultaneously and 

would likely require another ship for their own defense against airborne 

and seaborne threats while conducting the missile defense mission. 

Block IB is designed to counter all of the Block I threats, including 

warheads that separate from their missiles.

• By 2010, Block IC is expected to deploy 80 missiles aboard four Aegis 

cruisers.8

 These ships are intended to perform all of their defense 

missions simultaneously against all of the Block I threats.

The Navy plans to conduct five series of flight tests in developing the NTW 

system between 2000 and 2010. The first of these tests, known as the Aegis 

Lightweight Exoatmospheric Projectile Intercept tests, are designed to test 

the system’s ability to intercept simple targets. If these initial tests are 

successful, program officials plan to conduct the more challenging Threat 

Representative Testing against nonseparating targets, followed by the 

Threat Representative Separating Testing against separating targets. If 

these tests are successful, the Navy plans to conduct the final two series of 

tests—the Developmental Test/Operational Assessment and the 

Developmental Test/Operational Test. The series of operational tests is to 

be conducted by an independent Navy testing organization in conditions 

that simulate actual operational conditions.

The Navy also plans to develop a Block II version of the NTW system with 

increased capability. Block II is expected to intercept more types of theater 

ballistic missiles at greater ranges than Block I is capable of reaching. 

Although the Navy is not due to define the Block II architecture and 

prepare preliminary cost and schedule estimates until November 2000, 

DOD has begun exploring some of the advanced technologies likely to be 

7

 A nonseparating target is one in which the warhead has not separated from the missile. A 

separating target is one in which the warhead and missile have separated. To destroy a 

separating target, the system would have to differentiate among the warhead, its missile, 

and the debris created when the warhead is separated from the missile. A simple separating 

target is one that, for example, lacks an attitude control module to guide the warhead.

8

 The 80 missiles would include the 50 Block IB missiles as well as 30 additional missiles.
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required by the system. A description of these technologies is provided in 

appendix I. Some DOD officials have stated that the Navy should proceed 

directly to the development of the Block II system. According to these 

officials, development resources should be concentrated on the more 

capable Block II system since Block I will provide only a limited capability 

and may not be “on the path” to the development of Block II. Other DOD 

officials have stated that Block I is needed because it would provide a 

theater missile defense capability that does not currently exist. DOD has 

required the Navy to report by June 2000 on whether the program should 

proceed directly to developing the Block II system.

As directed by the conferees for the National Defense Authorization Act for 

Fiscal Year 1998,9

 DOD has also been exploring what would be involved in 

adding a sea-based national missile defense capability to the NTW 

architecture. In response to the conferees, DOD submitted a report in 1999 

describing whether and how NTW could be upgraded in the future to 

provide a limited national missile defense capability.10 DOD concluded that 

the Block II system, without upgrades, would have “no useful capability” 

against longer-range ballistic missiles, but may be useful against shorterrange missiles. Developing a capability against longer-range missiles would 

involve several improvements, including greater target identification and 

tracking accuracy, better target discrimination, and a faster and more lethal 

warhead. In its report, DOD also stated that the yet-to-be-defined Block II 

system could include a sea-based national missile defense capability and, if 

fully funded, could be deployed within 4 years of NTW’s Block I 

deployment date (currently estimated to be 2010).

Increased Funding 

Used to Reduce 

Technical Risks and 

Develop Technologies 

Earlier

The Navy used the increased funding provided by the Congress for the 

Navy Theater Wide program to reduce risks and develop system 

technologies earlier than planned. From the NTW program office 

perspective, the additional funding also allowed the program to shift from a 

demonstration effort (designed to determine whether the Standard missile 

could be modified to hit a target in outer space) to an acquisition program 

(in which a weapon system will be fully developed and produced).

9

 H.R. Conf. Rep. No. 105-340, at 658 (1997).

10 Summary of Report to Congress on Utility of Sea-Based Assets to National Missile 

Defense. Ballistic Missile Defense Organization (Washington, D.C.: June 1999). 
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Recent annual reviews of the program issued by DOD’s office for 

operational testing and evaluation and a review in 1998 by an independent 

panel of experts found NTW to be “high risk” because of technical 

challenges such as improving the system’s capability to track and destroy 

enemy ballistic missiles. These reviewers noted that NTW needed to 

improve its test program in order to address these technical challenges. 

The additional funding provided by the Congress helped the program to 

address some of these challenges.

The Congress provided DOD with $663 million more than the $444 million 

requested for NTW in the President’s budgets for fiscal years 1997 through 

1999. Over 90 percent of the additional funding has been allocated to seven 

program areas—design and analysis, hardware fabrication and 

procurement, systems engineering, test and evaluation, ship system 

modifications, software development, and engineering support. Table 1 

shows how the funding increases for the 3-year period, fiscal years 1997 

through 1999, have been allocated. Appendix II shows, in detail, the 

amounts proposed in the President’s budget and allocated by DOD after 

congressional appropriations for fiscal years 1997 through 1999 for the 

various program areas.

Table 1: Allocations of Congressional Funding Increases for Fiscal Years 1997 

Through 1999

Note: Totals may not add due to rounding.

a

Funding for several other program areas, including program management, test equipment, and 

program support.

Source: Navy.

Dollars in millions

Program area Funding increase Percent of total

Design and analysis $270 41

Hardware fabrication and procurement 135 20

Systems engineering 67 10

Test and evaluation 47 7

Ship system modifications 32 5

Software development 30 4

Engineering support 24 4

Othera 57 9

Total $663 100
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Details on how the increased funds were used for the top seven program 

areas are provided below.

• Forty-one percent of the additional funding was used for design and 

analysis. This program area primarily consisted of design efforts for the 

Aegis weapon system, the Standard Missile-3, and the vertical launching 

system. For example, to improve the ability of the system’s radar to 

differentiate the target from other objects, such as debris, engineers 

developed the High Range Resolution concept for Aegis. High Range 

Resolution studies were done in 1997 to determine the effectiveness of 

the AN/SPY-1 radar system in conducting target length measurements, 

which are used to discriminate the target warhead from the other 

objects. The additional funding allowed the radar work to be done 

earlier and allowed a successful at-sea demonstration to be conducted 

in 1998. The additional funding also led to earlier than planned 

specification changes, studies, and missile design reviews that 

determined the Standard Missile-3 had only a minimal impact on the 

vertical launching system.

• Hardware fabrication and procurement accounted for 20 percent of the 

additional funding. These funds allowed the program to procure, earlier 

than planned, rocket motors and material for the fabrication of the 

initial Aegis Lightweight Exoatmospheric Projectile Intercept test 

missiles and the Threat Representative Test missiles. In addition, 

funding went to a laboratory effort that determined the program’s signal 

processing requirements could be met using commercial software. 

Signal processing requires a large computational capacity, which in the 

past has been met using computers specifically designed for DOD.

• Systems engineering, which works to match system design to system 

requirements, accounted for 10 percent of the additional funds. Several 

documents necessary to initially define requirements for the program 

were prepared in early 1999. Studies of alternative seekers and other 

technological options were also completed and provided input into 

system design decisions. Program officials said that without the 

additional funding, these efforts would not have been completed until 

later. 

• Test and evaluation accounted for 7 percent of the additional funding. 

Program officials said that the additional funding allowed them to plan 

more tests, which should help them to reduce technical risk. The revised 

test plan increases the number of Aegis Lightweight Exoatmospheric 

Projectile Intercept test flights from six to seven and starts the flight 

tests sooner. Furthermore, the revised plan adds the Threat 

Representative Testing and Threat Representative Separating Testing to 
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reduce risk. It also increases the number of developmental and 

operational tests in the last two series of tests from 6 to 20. Overall, the 

program office was able to triple the number of planned flight tests. The 

additional funding also allowed program officials to add more ground 

tests and to conduct them sooner. For example, wind tunnel tests were 

conducted for the interceptor nose cone and guidance system. In 

addition, the NTW program used a simulator to test hardware, computer 

programs, and the AN/SPY-1 radar. Program officials told us that the 

enhanced test plan should help the program to address the independent 

review panel’s concern that ballistic missile defense programs had not 

built sufficient developmental testing into their schedules.

• Ship system modifications accounted for 5 percent of the additional 

funding. To reduce technical risks, program managers used the 

additional funding to procure and install modifications to an Aegis 

weapon system development site and to the U.S.S. Paul Hamilton and 

other test ships. They also procured hardware modifications for vertical 

launching system test sites, including the purchase of prototype circuit 

cards for the launch sequencer, and procured and installed the High 

Range Resolution test bed in the simulator and the test ships.

• Funding for software development, about 4 percent of the additional 

funding, was used to develop software for the Standard Missile-3, the 

Aegis weapon system, and the vertical launching system earlier than 

planned. Much of the funding for Aegis has involved upgrading the Aegis 

software and ensuring computer software compatibility with 

commercial computer systems. To achieve the accuracy required for 

targeting the Standard Missile-3, system engineers had to write a new 

computer program for the launch control computer so that integration 

of the launch system with the Global Positioning System11 could be 

achieved.

• Engineering support accounted for 4 percent of the additional funding. 

Most of these funds were used to reduce technical risks by ground 

testing the NTW system’s ability to destroy enemy targets.

11 The Global Positioning System is a space-based radio navigation network designed to 

provide precise positioning and navigation capabilities to the military services.
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Significant Technical 

and Schedule Risks 

Exist

Although the additional funding provided by the Congress was used to 

reduce technical risk and develop the system sooner, some significant 

technical and schedule risks remain as the Navy Theater Wide program 

prepares for flight testing later this year. Technical risks remain, 

particularly in the areas of target discrimination and the Standard missile. 

In addition, the program office’s proposal to produce the Block I missiles 

before conducting the initial operational testing is risky because testing 

frequently reveals problems that require system redesign or modification. 

The schedule risks stem from (1) compression of the proposed testing 

schedule and (2) the uncertainty over future budget levels. 

Technical Risks Technical risks for the Block I system remain in the areas of differentiating 

the target from other objects and upgrading the Standard missile. NTW 

program documents assess the overall Block I technical risk as moderate to 

high pending demonstration that the NTW system can hit an 

exoatmospheric target. The demonstration of a hit-to-kill capability has 

generally proven to be a difficult technical challenge. Since 1982, even in 

controlled flight tests, various missile defense programs have successfully 

demonstrated the hit-to-kill capability above the atmosphere in only 4 of 14 

intercept attempts—some 29 percent of the tests. Navy officials 

acknowledged that developing a hit-to-kill technology has been a difficult 

technical challenge, but noted that recent intercept attempts have been 

successful. 
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Target discrimination Program managers have to determine whether the Block I system can 

effectively identify an enemy’s ballistic missile warhead above the 

atmosphere and then guide NTW’s Standard missiles to the target. One area 

of technical risk is the use of the Aegis system’s AN/SPY-1 radar. The radar 

must obtain sufficiently accurate length measurements of objects above 

the earth’s atmosphere to allow the NTW system to discriminate among the 

warhead, its missile body, and debris created by the release of the warhead 

from the missile. One DOD testing official described the radar as the “weak 

link in NTW,” and several DOD officials also expressed concerns about the 

radar’s abilities. The AN/SPY-1 is an S-band radar12 originally designed to 

deal with targets at lower altitudes, including airplanes and cruise missiles. 

The NTW program has already begun to test a potential enhancement to the 

radar’s discrimination capability.”13 An NTW program official noted that if 

the system can discriminate among the objects it will have to deal with, 

Block I should be able to counter expected threats.

Another risk area is “signal processing,” which helps to differentiate the 

target from other objects. NTW’s signal processing would be carried out by 

a computer network that breaks down large volumes of data in real time 

and parcels them out to multiple processors. This network has yet to be 

built, and the NTW computer software must be integrated with the 

computer code in the existing Aegis weapon system software. Current 

activities include writing system software, examining several computer 

architectures for the network, and building test beds to demonstrate the 

signal processing options. 

Standard missile The NTW system is designed to use a variant of the Navy’s Standard 

missile—the Standard Missile-3—to intercept enemy warheads in the 

exoatmosphere. Technical concerns about the Standard Missile-3 include: 

(1) whether it will be able to “see” the enemy warhead through debris 

created by its own kinetic warhead, (2) whether the kinetic warhead is 

lethal enough to destroy enemy warheads, and (3) whether all of the 

12 “S-band” and “X-band” refer to particular portions of the radio wave region of the 

electromagnetic spectrum. Radar employs radio waves to determine characteristics of 

distant objects, including their ranges. The X-band portion of the spectrum has a shorter 

wavelength than the S-band and is more useful in determining the length of objects.

13 Called the High Range Resolution waveform, this software modification pulses emissions 

from the AN/SPY-1 radar differently than normal and helps process the returning radar 

signal. It is not in itself a radar wave emitter.
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technical concerns have been tested and resolved before the Navy 

produces all of the Block I missiles.

NTW uses a kinetic, rather than exploding, warhead to ram and destroy 

enemy ballistic missiles by force of impact. In such a hit-to-kill system, the 

interceptor missile must be able to hit the target in the right place with 

enough speed to significantly damage or destroy the missile. The NTW’s 

Standard Missile-3 would be guided to its target by shipborne radar, but in 

the final moments of flight the missile would be guided by an onboard 

detection system, known as a seeker.14 The Block I seeker has already been 

flown aboard aircraft used to observe flight tests of other missile defense 

programs and has successfully tracked targets during tests of the Theater 

High Altitude Area Defense program. 

Program officials are generally confident that the seeker will be able to 

counter the expected threat, but Ballistic Missile Defense Organization 

officials and testing officials have raised concerns about whether the 

seeker will be able to “see” the target through the debris cloud created by 

the kinetic warhead’s own “solid divert and attitude control” system, which 

maneuvers the warhead toward the target. This control system would fire 

hot gases and solid fuel debris into space around the warhead, possibly 

creating “plume effects” that could reduce the sensitivity of the infrared 

seeker. Although ground tests are to be conducted using computers to 

simulate these effects, program officials have acknowledged that they do 

not yet know whether this debris cloud will be a problem. These officials 

said that upcoming initial flight tests are designed to determine the 

magnitude of the challenge posed by the plume effects. DOD testing 

officials are concerned, however, that if the number of flight tests is 

reduced because early intercept attempts are successful, the plume effects 

may not be sufficiently studied.

In addition to finding the target, NTW’s warhead must hit it with enough 

force to degrade its mission or destroy it outright. Some DOD officials are 

concerned about the ability of the lightweight kinetic warhead to destroy 

enemy ballistic missiles. Program engineers have conducted extensive 

ground tests of the warhead’s lethality against targets with chemical 

payloads, and they have run computer simulations to predict impact effects 

14 The seeker uses a portion of the infrared region of the electromagnetic spectrum to 

discern the heat signature of the target warhead. Block I is designed to employ a one-color 

seeker, utilizing only a single part of the spectrum.
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on all targets, including those carrying explosive or nuclear payloads. 

Based on test results to date, program officials have expressed confidence 

in the ability of the warhead to damage the target sufficiently to degrade its 

mission. However, they plan additional ground tests and acknowledge that 

flight testing is required to prove the viability of the hit-to-kill concept. 

Operational testing is designed to independently evaluate whether a system 

meets required performance levels prior to beginning production and that 

technical challenges have been resolved. The program office intends, if it 

gains DOD’s approval, to produce all of the Block I interceptor missiles 

before conducting the initial operational testing. As shown in figure 2, 

procurement of 20 Block I missiles per year would begin in 2005. After 

procurement funding is received, the program office estimates that at least 

24 months are needed to build a missile. The first delivery is scheduled for 

2007 and the last in 2010. However, 50 percent of the missiles are scheduled 

for delivery before completion of the fourth testing series in 2008 and

100 percent of the missiles before completion of the fifth series, which is 

operational testing, in 2010. 
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Figure 2: Proposed Navy Theater Wide Block I Schedule

Source: GAO.

Program officials told us that they structured the production schedule to 

achieve deployment of the Block IB system no later than 2008 and Block IC 

by 2010. They also told us that the risk is low of producing a missile that 

would require extensive changes based on the later tests. They stated that 

the design of the Standard Missile-3 is only an evolutionary change from 

designs of previous Standard missiles; the engineering effort for the missile 

was “front-loaded;” and successful completion of the earlier tests should 

enable DOD to fully evaluate the NTW’s missile. They said that the main 

purpose of operational testing will be to evaluate the missile’s integration 

ALI Aegis Lightweight Exoatmospheric Projectile Intercept test 

TRT Threat Representative Testing

TRST Threat Representative Separating Testing

DT/OA Developmental Test/Operational Assessment

DT/OT Developmental Test/Operational Test

2003

1234

2002

1234

2000

1234

2001

1234

2004

1234

2005

1234

2006

1234

2007

1234

2008

1234

2009

1234

2010

1234

Block

IA

Block

 IB

Block

 IC

ALI TRT TRST DT/OA DT/OT

Flight tests

Missile procurement and production

Deployment
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into the Aegis weapon system rather than the missile’s design. They also 

told us that funding constraints prevent them from conducting the 

operational test series any sooner.

As discussed above, however, some technological advances in the missile 

have yet to be proven, such as the ability of the missile’s seeker to “see” the 

target through a debris cloud. Even if program officials are correct in 

assessing the technical risk with the Standard missile upgrade as low, no 

guarantee exists that the missile would still not require extensive changes 

based on operational testing. In the case of the seeker, if testing shows that 

the seeker’s performance is degraded by the debris cloud created by the 

kinetic warhead’s solid divert and attitude control system, then redesign of 

the control system and the kinetic warhead may be necessary. If it becomes 

necessary to use a liquid-fueled control system, Navy officials have told us 

that a redesign of the ship’s vertical launching system would be necessary 

since liquid fuel is more explosive and corrosive than solid fuel. 

Our past work has frequently shown that cost overruns and the deployment 

of substandard systems occur when DOD proceeds into production before 

systems are tested under operational conditions.15 When operational 

testing reveals problems, some of these systems experience design changes 

and modifications or are never able to perform as required. Also, according 

to DOD’s Risk Management Guide, significant risks result when production 

begins before the development effort has sufficiently matured.16 In the case 

of NTW, DOD testing officials stated that they share our concern about 

operational testing and said they are currently discussing with the Navy 

how to revise the proposed schedule for testing and production.

Schedule Risks We have two concerns about the proposed NTW schedule. Our first 

concern is compression of the initial flight-test schedule. According to 

DOD’s Risk Management Guide, a program faces significant schedule risk if 

insufficient time is allotted for thorough testing. The first set of NTW flight 

tests (the Aegis Lightweight Exoatmospheric Projectile Intercept tests) is 

to consist of up to seven flight tests within the 15-month period between 

15 Major Management Challenges and Program Risks: Department of Defense

(GAO/OCG-99-4, Jan. 1999).

16 Risk Management Guide for DOD Acquisition, Department of Defense, Defense 

Acquisition University, Defense Systems Management College (Second Edition, May 1999), 

pp. 40-41.
B-282711

Page 20 GAO/NSIAD-00-121 Missile Defense

July 2000 and September 2001—about one every 2.5 months. Program 

officials told us that the maturity of the missile technology and their 

extensive ground-test program has mitigated the schedule risk. As a result, 

they believe that although the lack of test targets could cause delays, the 

gap between flight tests should be sufficient to set up a test and incorporate 

lessons learned from the previous missile shot. A Navy testing official told 

us that, in his view, the Navy has a 50-percent chance of maintaining its 

schedule. He said that programs typically separate flight tests by about 

6 months. The longer gap between flight tests helps program officials to 

better evaluate test results, understand problems, and incorporate 

solutions into the next test. 

We found that the Army’s Theater High Altitude Area Defense program took 

an average of about 3 months between its initial flight tests. However, after 

three successive test failures, an independent review panel17 reported that 

schedule compression may have contributed to problems discovered in one 

flight test not being fully understood before conducting the next test. 

Subsequent to this report, the Army’s program took over a year between 

some tests.

Our second concern about the proposed schedule is the mismatch between 

approved funding levels and the planned activities. According to DOD’s 

Risk Management Guide, significant schedule risks can occur if resources 

are not available to meet the schedule. In December 1999, DOD 

restructured NTW’s projected funding levels to be able to fund both it and 

the Army’s Theater High Altitude Area Defense programs. Proposed DOD 

funding for the NTW program averages $282 million per year for fiscal 

years 2002 through 2005, whereas Navy program officials estimate that they 

will need an average of $567 million per year to implement the program on 

its proposed schedule. According to NTW program officials, NTW’s 

proposed schedule is not currently executable because of the budget 

shortfalls. 

Conclusions The Navy is planning to produce the Block I missiles before it has 

demonstrated their effectiveness in operational testing. A more prudent, 

less risky strategy would be to revise the proposed NTW schedule so that 

the Navy conducts initial operational testing before it produces most of the 

17 Final Report, THAAD Independent Review Panel (July 29, 1996).
B-282711

Page 21 GAO/NSIAD-00-121 Missile Defense

interceptor missiles. Key technical advances have yet to be proven and 

conducting operational testing earlier would reduce the risk of incurring 

additional costs or deploying substandard missiles if testing shows that 

significant redesign or modification of the missiles is necessary. In our 

view, the Navy should not defer needed testing because of program 

officials’ concerns about the availability of funding for such testing. A 

mismatch already exists between approved funding levels and planned 

activities. It would make more sense to request the funds for operational 

testing when that testing is most needed—namely, before most of the 

missiles are produced. 

Recommendations To reduce the risk of producing unproven missiles, we recommend that the 

Secretary of Defense direct the Secretary of the Navy to revise the 

proposed funding profile and test schedule for the Navy Theater Wide 

program to ensure that the Navy conducts initial operational testing before 

producing most of the Block I missiles.

Agency Comments and 

Our Evaluation 

In written comments to a draft of this report, DOD stated that it partially 

concurs with our recommendation. It agreed that the NTW program’s 

funding and schedule require review and stated that DOD, the Ballistic 

Missile Defense Organization, and the Navy are currently reviewing 

proposed changes to the NTW program test schedule. In addition, DOD 

said it will review funding profiles for the NTW program in the fall of 2000. 

However, the Department did not commit to revising its plans to ensure 

that the Navy conducts initial operational testing before producing most of 

the Block I missiles, as we recommended. DOD’s comments are reprinted 

in appendix III. We have incorporated DOD’s suggested technical changes, 

as appropriate.

We are concerned about DOD’s position because it is only during 

operational testing that independent testing officials can test the complete 

weapon system under conditions that simulate actual operational 

conditions. As noted earlier, we have frequently found that cost overruns 

and the deployment of substandard systems occur when DOD proceeds 

into production before systems are operationally tested. 
B-282711

Page 22 GAO/NSIAD-00-121 Missile Defense

Scope and 

Methodology

To determine how DOD and the Navy have used the additional funding 

provided by the Congress for the program in fiscal years 1997 through 1999, 

we compared original budget documents to current funding allocation 

documents and discussed reasons for differences in funding levels with 

officials responsible for managing various elements of the NTW program, 

such as the ship design and test and evaluation managers. 

To identify the program’s current risks, we analyzed the program’s status, 

strategy for accomplishing the remaining development work and meeting 

Block I fielding requirements, and approaches to demonstrating the 

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

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

approaches to mitigating risk with DOD program and testing officials. We 

discussed possible Block II technologies with agency officials and 

reviewed program documentation.

We interviewed responsible agency officials at the Office of the Secretary 

of Defense, the Joint Staff, Ballistic Missile Defense Organization, and the 

Office of the Director for Operational Test and Evaluation, in Washington, 

D.C.; the Navy Program Executive Office for Theater Surface Combatants, 

Office of the Deputy Chief of Naval Operations, in Washington, D.C.; the 

Navy Operational Test and Evaluation Force, Norfolk, Virginia; and the 

Office of the Army Deputy Chief of Staff for Operations and Plans, in 

Washington, D.C.

We conducted our review from May 1999 through March 2000 in 

accordance with generally accepted government auditing standards.

As arranged with your staff, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 7 days from its 

issue date. At that time, we plan to provide copies of this report to the 

Honorable William Cohen, Secretary of Defense; the Honorable Richard 

Danzig, Secretary of the Navy; the Honorable Jacob Lew, Director, Office of 

Management and Budget; and key committees of the Congress. We will 

make copies available to others upon request. 
B-282711

Page 23 GAO/NSIAD-00-121 Missile Defense

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

contact me on (202) 512-4841. Major contributors to this report were 

Bob Levin, Lee Edwards, David Hand, and Richard Irving.

Allen Li

Associate Director

Defense Acquisitions Issues
Page 24 GAO/NSIAD-00-121 Missile Defense

Appendix I

Description of Block II Technologies for Navy 

Theater Wide Program ApendxiI

Although the Block II version of the Navy Theater Wide program has not 

yet been defined, program officials recognize that the Block II system 

depends on substantial advances in state-of-the-art technology.1

 A few of 

the Block II technologies that we have discussed with program officials are 

as follows.

• The Block II system is expected to differ from Block I in its need to 

counter a greater range of threats, some of which could employ 

countermeasures designed to foil missile defense efforts. As a result, 

Block II is likely to require more sensitive target discrimination systems 

that are able to differentiate among warheads and various types of 

countermeasures at greater distances. To improve Block II 

discrimination capability, the Navy plans to use improved hardware for 

the AN/SPY-1 radar. It is exploring a technology called the High Power 

Discriminator that would enable the radar to pick out smaller objects 

while searching for the incoming warhead. This capability is critical to 

the differentiation of the actual warhead from various countermeasures. 

The basic technology of the High Power Discriminator, which is an 

adjunct piece of hardware to be mounted in the ship’s antennae and 

integrated into the radar system, is not considered by program officials 

as high risk. An integration issue does, however, exist. The discriminator 

would need to be developed for use with Aegis equipment. Currently, 

two contractor teams are examining the use of X-band and other radar 

bands for inclusion in the Navy’s next-generation radar system, an effort 

expected to be completed in 2004. Also, a Navy study of future radar 

systems is ongoing. 

• The Navy also plans to develop the Cooperative Engagement Capability 

to leverage its detection and tracking technologies and enable 

“shooters” to take advantage of multiple sources of information during 

battle. Thus, the crew of an Aegis ship could potentially use aircraft or 

other surface vessels to direct missiles at a target well beyond the range 

of the ship’s radar. If NTW Block II and the Cooperative Engagement 

Capability could be integrated, battlefield commanders would have a 

substantial advantage in conducting the theater ballistic missile defense 

mission, since enemy missiles could be engaged well beyond the line-ofsight radar range of the defending cruisers. Currently, this integration 

has not occurred, and thus represents an unknown risk.

1

 DOD has entered into a cooperative program with the Government of Japan to jointly 

develop selected Block II technologies.
Appendix I

Description of Block II Technologies for Navy 

Theater Wide Program

Page 25 GAO/NSIAD-00-121 Missile Defense

• One of the technologies under consideration for Block II is the twocolor infrared seeker, which, unlike Block I, has to defeat various 

countermeasures during the final phase of the intercept; therefore, it 

requires greater sensitivity than its Block I counterpart. Officials told us 

that this two-color seeker would take advantage of the greater volume 

of information that can be gained by using two portions of the infrared 

region of the electromagnetic spectrum to discern the heat signature of 

the target warhead. The program is attempting to develop a small, 

lightweight seeker that could switch from one infrared band to the other 

rapidly enough to provide nearly simultaneous two-band measurements. 

The Navy is currently exploring this technology with experimental 

equipment in a laboratory, but it has not yet been flown. Officials plan to 

test an experimental version of the seeker during a Ballistic Missile 

Defense Organization test scheduled for 2001. Even so, one official 

emphasized that even a two-color seeker might not be able to defeat 

every type of countermeasure. Also, since the two-color seeker is larger 

than the one-color seeker, program officials have said that the Standard 

missile will have to be redesigned to accommodate it, resulting in 

extensive integration efforts. They said that the two-color seeker would 

represent a substantial improvement over the Block I seeker in terms of 

its ability to discriminate between actual warheads and intentional 

countermeasures. According to a program official, the two-color seeker 

is already in the early stages of development because it is the highest 

risk technology envisioned for Block II. 

• Program engineers are reviewing the level of lethality needed against 

high-velocity Block II targets and are considering using kinetic energy 

devices to enhance Block II’s lethality.

• For Block II to counter all of its expected threat, it would require a 

missile with a higher velocity than that used by Block I. Program 

officials told us that the simplest way to give the Standard missile 

greater speed would be to retain the existing first stage and use a largerdiameter second stage, which has yet to be developed. This approach 

would increase the missile’s propellant load and give it greater speed. 

NTW program officials have already examined this technological 

approach and consider it to be low risk. Integration into the ship’s 

vertical launch system is also not seen as a major problem. 
Page 26 GAO/NSIAD-00-121 Missile Defense

Appendix II

Research, Development, Test, and Evaluation 

Funds Budgeted and Allocated for Navy 

Theater Wide in Fiscal Years 1997-1999 ApendxiI

Dollars in millions

Fiscal year 1997

Program element Budget Allocation Difference

Design and analysis $31.00 $129.61 $98.61

Hardware fabrication and procurement 0.00 59.90 59.90

Systems engineering 11.49 23.47 11.98

Test and evaluation 3.50 19.61 16.11

Ship system modifications 0.00 12.68 12.68

Software development 4.00 20.62 16.62

Engineering support 2.00 9.75 7.75

Program management 3.66 9.02 5.36

Test equipment 0.00 10.55 10.55

Program support 2.23 5.36 3.14

Other 0.30 3.61 3.31

Total $58.17 $304.17 $246.00
Appendix II

Research, Development, Test, and Evaluation 

Funds Budgeted and Allocated for Navy 

Theater Wide in Fiscal Years 1997-1999

Page 27 GAO/NSIAD-00-121 Missile Defense

Fiscal year 1998 Fiscal year 1999

Budget Allocation Difference Budget Allocation Difference Total increase

$45.12 $149.47 $104.35 $43.46 $110.34 $66.88 $269.84

58.43 106.75 48.32 55.49 82.63 27.14 135.36

37.62 54.91 17.29 12.92 51.01 38.09 67.36

7.81 39.06 31.25 30.20 30.10 -0.10 47.26

3.88 16.45 12.57 7.16 14.21 7.05 32.31

18.80 20.85 2.05 10.03 21.05 11.02 29.69

6.98 14.82 7.85 5.75 14.64 8.88 24.48

5.82 11.93 6.11 5.69 12.88 7.19 18.66

3.30 10.48 7.18 16.05 15.82 -0.22 17.51

5.39 8.26 2.87 3.39 8.13 4.75 10.75

1.78 4.94 3.16 0.30 3.47 3.17 9.64

$194.90 $437.90 $243.00 $190.45 $364.28 $173.84 $662.84
Page 28 GAO/NSIAD-00-121 Missile Defense

Appendix III

Comments From the Department of Defense ApendxiI
Appendix III

Comments From the Department of Defense

Page 29 GAO/NSIAD-00-121 Missile Defense

See p. 21.
Page 30 GAO/NSIAD-00-121 Missile Defense

Related GAO Products

Ballistic Missile Defense: Prototype THAAD System (GAO/NSIAD-97-137R, 

Mar. 27, 1997).

Ballistic Missile Defense: Improvements Needed in THAAD Acquisition 

Planning (GAO/NSIAD-97-188, Sept. 12, 1997).

Theater Missile Defense: Significant Technical Challenges Face the 

Airborne Laser Program (GAO/NSIAD-98-37, Oct. 23, 1997).

Ballistic Missile Defense: Improvements Needed in Navy Area Acquisition

Planning (GAO/NSIAD-98-34, Nov. 14, 1997).

National Missile Defense: Schedule and Technical Risks Represent 

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

Defense Acquisition: Decision Nears on Medium Extended Air Defense 

System (GAO/NSIAD-98-145, June 9, 1998).

National Missile Defense: Even With Increased Funding Technical and 

Schedule Risks Are High (GAO/NSIAD-98-153, June 23, 1998).

Cruise Missile Defense: Progress Made but Significant Challenges Remain

(GAO/NSIAD-99-68, Mar. 31, 1999).

Defense Acquisitions: DOD Efforts to Develop Laser Weapons for Theater 

Defense (GAO/NSIAD-99-50, Mar. 31, 1999).

Ballistic Missile Defense: More Common Systems and Components Could 

Result in Cost Savings (GAO/NSIAD-99-101, May 21, 1999).

Missile Defense: THAAD Restructure Addresses Problems but Limits Early

Capability (GAO/NSIAD-99-142, June 30, 1999).

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