MISSILE DEFENSE

Mixed Progress

in Achieving 

Acquisition Goals

and Improving 

Accountability

Report to Congressional Committees

April 2014

GAO-14-351

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-351, a report to 

congressional committees

April 2014

MISSILE DEFENSE

Mixed Progress in Achieving Acquisition Goals and 

Improving Accountability

Why GAO Did This Study

Since 2002, MDA has spent 

approximately $98 billion and has 

requested $38 billion more through 

fiscal year 2018 to develop, test, and 

field a system to defend against enemy 

ballistic missiles. The BMDS is 

comprised of a command and control

system, sensors that identify incoming 

threats, and intercepting missiles. GAO 

is mandated by law to assess the 

extent to which MDA has achieved its 

acquisition goals and objectives, as 

reported to Congress through its 

acquisition baselines, and to report on 

other issues as appropriate. This report 

examines the agency’s progress and 

any challenges in fiscal year 2013 

associated with (1) developing, flight 

testing, and producing individual 

systems, which MDA refers to as 

BMDS elements; and (2) reporting 

resource and schedule baselines that

support oversight. To support this 

effort, GAO examined MDA’s 

acquisition and test reports, analyzed 

two of MDA’s acquisition baselines—

resource and schedule—to discern 

progress, and interviewed a wide 

range of DOD and contractor officials.

What GAO Recommends

GAO recommends (1) any changes to

the SM-3 Block IB be flight tested 

before DOD approves full production;

(2) retest the fielded GMD interceptor 

to demonstrate performance; and (3) 

improve the content of its schedule 

baselines. DOD partially concurred 

with the first, non-concurred with the 

second, and concurred with the third, 

stating that the production and testing 

decisions will be made using the 

proper DOD processes. GAO believes 

both recommendations are valid as 

discussed in this report.

What GAO Found

In fiscal year 2013, the Missile Defense Agency (MDA) made mixed progress in 

achieving its acquisition goals to develop, test, and produce elements of the 

Ballistic Missile Defense System (BMDS). For the first time, MDA conducted an 

operational flight test that involved warfighters from several combatant 

commands using multiple BMDS elements simultaneously. The agency also 

successfully conducted several developmental flight tests that demonstrated key 

capabilities and modifications made to resolve prior production issues. However, 

the Aegis BMD and Ground-based Midcourse Defense (GMD) continued to 

experience testing and development challenges. 

• Aegis BMD—while the program successfully conducted three intercept flight 

tests with the Standard Missile (SM)-3 Block IB missile in support of a full 

production decision planned for fiscal year 2015, a missile failed during one 

of these tests. Although the cause of failure is not known, the program plans 

to move forward with missile production in 2014. The program is also 

determining whether a key component that is common with the already 

fielded SM-3 Block IA missile will need to be redesigned. 

• GMD—although the program successfully conducted a non-intercept flight 

test of its upgraded interceptor, the program is nearing a seven year delay in

completing its first successful intercept. Until this upgraded interceptor is 

demonstrated in an intercept test, expected to be conducted in the third

quarter of fiscal year 2014, manufacturing and deliveries remain on hold. In

July 2013, the GMD program also failed a flight test of its fielded interceptor. 

This flight test was designed to assess the fielded interceptor under more 

challenging conditions and to confirm design changes to resolve prior issues. 

MDA has not yet made a decision on how to proceed since the cause of 

failure has not been determined.

MDA has improved the clarity of its resource and schedule baselines since it first 

submitted them to Congress in 2010. However, issues with the content and 

presentation of these baselines continue to limit the usefulness of the information 

available to decision makers for oversight. First, as the agency is still in the 

process of improving the quality and comprehensiveness of the cost estimates 

that support its resource baselines, for the fourth year, GAO has found that 

MDA’s cost estimates are unreliable. For example, MDA’s 2013 cost estimates 

still do not include operations and support costs for military services which may 

significantly understate total costs. Congress has recently required MDA to 

include these costs in future acquisition baselines which may improve

transparency. Second, MDA’s schedule baselines are presented in a way that 

makes it difficult to assess progress. Specifically, MDA’s 2013 schedule 

baselines include numerous events but provide very little information about them, 

making it difficult to understand what the events are and why they are important. 

Additionally, the 2013 schedule baselines do not compare the current event 

dates with previously reported dates, so decision makers cannot easily assess 

how the program is performing over time. Until MDA improves the quality and 

comprehensiveness of its cost estimates and the content of its schedule 

information, its baselines will not be useful for decision makers to gauge 

progress.

View GAO-14-351. For more information, 

contact Cristina Chaplain at (202) 512-4841 or 

chaplainc@gao.gov.
Page i GAO-14-351 Missile Defense

Letter 1

Background 4

BMDS Flight Tests Successfully Executed, but Development 

Challenges Continue 13

MDA Made Its Resource and Schedule Baselines Clearer, but 

Further Actions Needed to Enhance Their Use for Oversight 22

Conclusions 26

Recommendations for Executive Action 27

Agency Comments and Our Evaluation 28

Appendix I Objectives, Scope, and Methodology 34

Appendix II Comments from the Department of Defense 38

Appendix III GAO Contact and Staff Acknowledgments 44

Tables

Table 1: Missile Defense Agency (MDA) Acquisition Baselines 8

Table 2: Missile Defense Agency (MDA) Acquisition Life Cycle 

Phases for the Ballistic Missile Defense System (BMDS) 9

Table 3: Description of Selected Ballistic Missile Defense System 

(BMDS) Elements and Programs 10

Table 4: Selected Ballistic Missile Defense System Acquisition 

Progress and Challenges 14

Table 5: Most Recent Flight Tests of Second Generation Aegis 

Ballistic Missile Defense (BMD) and Standard Missile 

(SM)-3 Block IB 17

Table 6: Critical Ground-based Midcourse Defense (GMD) Flight 

Tests 19

Figure

Figure 1: Typical Engagement Scenario of the Ballistic Missile 

Defense System Defending Against an Intercontinental

Ballistic Missile 5

Contents
Page ii GAO-14-351 Missile Defense

Abbreviations

Aegis BMD Aegis Ballistic Missile Defense

AN/TPY-2 Army Navy/Transportable Radar Surveillance 

and Control Model 2

BAR BMDS Accountability Report

BMDS Ballistic Missile Defense System

BMD Ballistic Missile Defense

C2BMC Command, Control, Battle Management, 

and Communications

CE-I Capability Enhancement-I

CE-II Capability Enhancement-II

CTV-01 Controlled Test Vehicle-01

DOD Department of Defense

eMRBM Extended Medium-Range Ballistic Missile

FTG Flight Test GMD

FTO Flight Test Operational

FTM Flight Test Standard Missile

GMD Ground-based Midcourse Defense

MDA Missile Defense Agency

SM-3 Standard Missile-3

THAAD Terminal High Altitude Area Defense

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Page 1 GAO-14-351 Missile Defense

441 G St. N.W.

Washington, DC 20548

April 1, 2014

Congressional Committees

For over half a century, the Department of Defense (DOD) has been 

funding efforts to develop a system to detect, track, and defeat enemy 

ballistic missiles. The current system—the Ballistic Missile Defense 

System (BMDS)—includes a diverse collection of land-, sea-, and spacebased assets located around the globe. Since 2002, the Missile Defense 

Agency (MDA)—the agency charged with developing an integrated 

BMDS—has spent over $98 billion to develop and deploy this highly 

complex group of systems and has requested an additional $38 billion for 

fiscal years 2014 through 2018 to continue its efforts. For over a decade, 

we have reported on MDA’s progress and challenges in developing and 

fielding BMDS capabilities as well as transparency, accountability, and 

oversight issues.1

 1

We delivered the following reports for fiscal years 2003 through 2013: GAO, Missile 

Defense: Actions Are Needed to Enhance Testing and Accountability, GAO-04-409

(Washington, D.C.: Apr. 23, 2004); Defense Acquisitions: Status of Ballistic Missile 

Defense Program in 2004, GAO-05-243 (Washington, D.C.: Mar. 31, 2005); Defense 

Acquisitions: Missile Defense Agency Fields Initial Capability but Falls Short of Original 

Goals, GAO-06-327 (Washington, D.C.: Mar. 15, 2006); Defense Acquisitions: Missile 

Defense Acquisitions Strategy Generates Results but Delivers Less at a Higher Cost, 

GAO-07-387 (Washington, D.C.: Mar. 15, 2007); Defense Acquisitions: Progress Made in 

Fielding Missile Defense, but Program Is Short of Meeting Goals, GAO-08-448

(Washington, D.C.: Mar. 14, 2008); 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); Defense Acquisitions: Missile Defense 

Transition Provides Opportunity to Strengthen Acquisition Approach, GAO-10-311

(Washington, D.C.: Feb. 25, 2010); Missile Defense: Actions Needed to Improve 

Transparency and Accountability, GAO-11-372 (Washington, D.C.: Mar. 24, 2011); Missile 

Defense: Opportunity Exists to Strengthen Acquisitions by Reducing Concurrency, 

GAO-12-486 (Washington, D.C.: Apr. 20, 2012); Missile Defense: Opportunity to Refocus 

on Strengthening Acquisition Management, GAO-13-432 (Washington, D.C.: Apr. 26, 

2013).
Page 2 GAO-14-351 Missile Defense

Since 2002, we have been mandated to prepare annual assessments of 

MDA’s progress toward its acquisition goals.2 To date, we have delivered 

reviews of MDA’s progress covering fiscal years 2003 through 2012 and 

are currently mandated to issue our final report in 2016. The National 

Defense Authorization Act for Fiscal Year 2012 mandated that we report 

our assessment of the extent to which MDA has achieved its stated 

acquisition goals and objectives, as reported through its acquisition 

baselines, and also to include any other findings and recommendations 

on MDA acquisition programs and accountability as appropriate.3

To assess MDA’s progress and any challenges with developing, testing, 

and producing the BMDS, we examined the acquisition accomplishments 

of several missile defense elements and MDA’s targets program.

This 

report provides our assessment of MDA’s acquisition progress in fiscal 

year 2013. Specifically, it highlights MDA’s progress and any challenges 

associated with (1) developing, flight testing, and producing individual 

systems, which MDA refers to as BMDS elements; and (2) reporting 

resource and schedule baselines that support oversight.

4

 2

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); National Defense Authorization Act for 

Fiscal Year 2008, Pub. L. No. 110-181, § 225; and National Defense Authorization Act for 

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

We 

reviewed key management documents including Program Execution 

Reviews and Baseline Execution Reviews, which detail program 

accomplishments and areas of concern, and interviewed program 

element officials. We also examined MDA’s master test plan and flight 

test reports, and discussed the BMDS testing and results with the BMDS 

3

Pub. L. No. 112-81, § 232 (2011).

4

Specifically, we reviewed the BMDS elements and targets program for which MDA had 

reported acquisition goals to Congress in its 2013 BMDS Accountability Report (BAR). 

Our report does not contain an assessment of programs that are not yet mature enough to 

establish acquisition baselines such as the Aegis Ballistic Missile Defense Standard 

Missile-3 Block IIA program. Additionally, we did not assess programs that were first 

introduced in the 2013 BAR including two Upgraded Early Warning Radars because we 

could not make comparisons to past years. We also did not assess programs that have 

been transferred to a military service for production, operation, or sustainment such as the 

Patriot Advanced Capability-3 program. MDA is also cooperatively developing other 

systems for the defense of Israel, which are not included in the 2013 BAR and therefore 

not covered in this report. 
Page 3 GAO-14-351 Missile Defense

Operational Test Agency; DOD’s Office of the Director, Operational Test 

and Evaluation; and DOD’s Office of Developmental Test and Evaluation. 

We also visited several contractor facilities that were working on 

programs covered in our review.

To assess the progress as well as any remaining challenges MDA faces 

in reporting resource and schedule baselines that support oversight, we 

examined the baselines presented in the BMDS Accountability Reports 

(BAR) for fiscal years 2010 through 2013. To be consistent with last year, 

we focused our assessment on the resource and schedule baselines as 

they continue to be the only reported baselines that separately explain 

when current estimates have deviated to a certain extent from the 

baselines set in prior BARs and have measurable goals, such as cost 

estimates and dates of program events. We interviewed officials in MDA’s 

Operations Directorate to discuss their progress in adopting best 

practices in cost estimating based on our Cost Guide.5 We also met with 

officials from MDA’s Acquisition Directorate to discuss significant internal 

and external events and decisions that occurred in fiscal year 2013, such 

as sequestration, that affected the agency’s overall acquisition of the 

BMDS, as well as how the agency establishes and manages its 

acquisition baselines.

6

In addition to this assessment, the National Defense Authorization Act for 

Fiscal Year 2013 mandated GAO to provide separate assessments on 

several other missile defense related issues. Specifically, GAO was 

required to provide briefings on our views and to submit reports as soon 

as practicable to the congressional defense committees our assessments 

We examined MDA’s statutory reporting 

requirements and interviewed officials within MDA’s general counsel’s 

office. In addition, we reviewed DOD policy and guidance to discern how 

other major defense acquisition programs are required to report baselines 

and measure program progress.

 5

We previously found that MDA’s reported cost estimates did not meet GAO’s best 

practices for high-quality estimates and recommended that MDA take steps to improve the 

quality of its estimates. DOD agreed with this recommendation and stated that MDA would 

follow GAO’s Cost Estimating and Assessment Guide for each program reported in the 

BAR. See GAO-11-372.

6

Sequestration is generally defined as the cancellation of previously enacted budgetary 

resources, making largely across-the-board reductions to non-exempt programs, activities, 

and accounts. In March 2013, because of the absence of legislation to reduce the federal 

budget deficit, the President ordered sequestration of approximately $80 billion in fiscal 

year 2013 budgetary resources across all non-exempt federal government accounts. 
Page 4 GAO-14-351 Missile Defense

of DOD reports on (1) a comprehensive evaluation of alternatives for the 

Precision Tracking Space System and its conformance with GAO best 

practices for analyses of alternatives; (2) the Ground-based Midcourse 

Defense system’s test plan; (3) the status and progress of regional 

missile defense programs, including the adequacy of MDA’s existing and 

planned efforts to deploy a U.S. missile defense in Europe; and (4) the 

status of efforts to improve the homeland defense capability of the United 

States.7

We conducted this performance audit from April 2013 to April 2014 in 

accordance with 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.

Because this additional mandated work covers the details on 

many BMDS elements, we do not include appendixes on each of the 

individual elements as we have done in prior reports under this mandate. 

For more details on our scope and methodology, see appendix I.

Ballistic missiles have different ranges—short, medium, intermediate, and 

intercontinental—as well as different speeds, sizes, and performance 

characteristics. Short-range ballistic missiles have a range of less than 

621 miles; medium-range ballistic missiles have a range from 621 to 

1,864 miles; intermediate-range ballistic missiles have a range from 1,864 

to 3,418 miles; and intercontinental ballistic missiles have a range greater 

than 3,418 miles. As a result, MDA is developing a variety of systems 

that, when integrated, provide multiple opportunities to destroy ballistic 

missiles in flight for the strategic defense of the United States and 

regional defense of its deployed forces and allies. The BMDS includes 

space-based sensors; ground- and sea-based radars; ground- and seabased interceptor missiles; and a command and control system that 

provides communication links to the sensors and interceptor missiles. 

 7

Pub. L. No. 112-239, § 224(e), 231(e), 229(c), and 228(c). For our assessments of 

DOD’s reports, see GAO, Missile Defense: Precision Tracking Space System Evaluation 

of Alternatives, GAO-13-747R (Washington, D.C.: July 25, 2013) and Regional Missile 

Defense: DOD’s Report Provided Limited Information; Assessment of Acquisition Risks is 

Optimistic, GAO-14-248R (Washington, D.C.: Mar. 14, 2014). At the time of publication of 

this report, our work on DOD’s reports on the Ground-based Midcourse Defense system’s 

test plan and homeland defense report is ongoing. 

Background
Page 5 GAO-14-351 Missile Defense

Once a ballistic missile has been launched, these sensors and 

interceptors track and engage the threat missile during its flight as shown 

in figure 1.

Figure 1: Typical Engagement Scenario of the Ballistic Missile Defense System Defending Against an Intercontinental 

Ballistic Missile
Page 6 GAO-14-351 Missile Defense

When MDA was established in 2002, the Secretary of Defense granted it 

exceptional flexibility to set requirements and manage the acquisition of 

the BMDS in order to meet a presidential directive to deliver an initial 

defensive capability against ballistic missiles in 2004. This flexibility 

allows MDA to develop BMDS elements outside of DOD’s standard 

acquisition process until they are mature enough to be handed over to a 

military service for production and deployment.8 Because the BMDS’s 

entrance into DOD’s acquisition process is deferred, certain laws and 

policies that generally require major defense acquisition programs to take 

certain steps at certain phases in the DOD acquisition process do not yet 

apply to MDA. For example, before a major defense acquisition program 

begins the product development phase, it must document key 

performance, cost, and schedule goals in an acquisition baseline that has 

been approved by a higher-level DOD official.9

 8

The BMDS program meets the definition of a major defense acquisition program, which is 

defined in 10 U.S.C. § 2430 and implemented by DOD in its acquisition policy. Currently, a 

major defense acquisition program is defined as an acquisition program that is not a highly 

sensitive classified program and is designated as a major defense acquisition program or 

the dollar value for all increments of the program is estimated to require an eventual total 

expenditure for research, development, test, and evaluation of more that $480 million in 

fiscal year 2014 constant dollars or, for procurement of more than $2.79 billion in fiscal 

year 2014 constant dollars. DOD develops its major defense acquisition programs through 

an acquisition process in which programs move through phases of their life cycle including 

a materiel solution analysis phase, a technology maturation and risk reduction phase, an 

engineering and manufacturing development phase, a production and deployment phase, 

and an operations and support phase. See Interim DOD Instruction, 5000.02, “Operation 

of the Defense Acquisition System” (Nov. 25, 2013).

This acquisition baseline 

is used to measure a program’s performance as it progresses. 

Specifically, as implemented by DOD, major defense acquisition 

programs’ baselines provide decision makers with key goals such as the 

program’s total cost for an increment of work, key dates associated with 

acquiring a capability, and the weapon’s intended performance. 

Additionally, once a baseline has been approved, DOD’s major defense 

acquisition programs are required to measure performance against their 

baseline and report certain changes to Congress. For instance, they are 

required to report certain increases in unit cost (cost divided by the 

9

10 U.S.C. § 2435 requires an approved program baseline description for major defense 

acquisition programs before the program enters system development and demonstration 

(now known as engineering and manufacturing development), production and deployment, 

and full-rate production. 

MDA’s Flexible

Acquisition Approach
Page 7 GAO-14-351 Missile Defense

quantity produced) measured from the original and the current program 

baseline.10

While this flexibility allows MDA latitude to manage the BMDS and enable 

it to rapidly develop and field new systems, we have previously reported 

that the agency has used this flexibility to employ acquisition strategies 

with high levels of concurrency (that is, overlapping activities such as 

testing and production), which increases the risk for performance 

shortfalls, costly retrofits, and test problems.11 We have also reported that 

this flexibility has hampered oversight and accountability.12

Congress has taken steps to improve the transparency and accountability 

of BMDS development efforts. For example, in the National Defense 

Authorization Act for Fiscal Year 2008, Congress required MDA to 

establish cost, schedule, and performance baselines for certain BMDS 

elements.

According to 

MDA officials, MDA has taken some steps to identify and track 

concurrency in their programs.

13 MDA first reported baselines for several BMDS elements to 

Congress in its June 2010 BAR and has continued to report baselines 

annually. Table 1 describes the six acquisition baselines MDA established 

and reports in its BAR for individual BMDS elements or major portions of 

such elements.14

 1010 U.S.C. § 2433, also known as “Nunn-McCurdy.” Because MDA is not required to 

prepare a baseline under 10 U.S.C. § 2435, there is no basis for determining unit costs 

under 10 U.S.C. § 2433. 

11GAO-12-486. 

12GAO-10-311.

13Pub. L. No. 110-181, § 223(g), repealed by Pub. L. No. 112-81, § 231(b) (2011). 

14MDA’s targets program does not have acquisition baselines because targets are 

developed to support other BMDS elements and are not operationally fielded. However, 

MDA does report some cost, schedule, and performance information for its targets 

program in the BAR. 
Page 8 GAO-14-351 Missile Defense

Table 1: Missile Defense Agency (MDA) Acquisition Baselines

Baseline Description

Resource Reports costs for all the major categories of a program’s life cycle including research and development, 

procurement, military construction, operations and support, and disposal costs. Also includes unit costs, 

which are usually reported in two ways: (1) average procurement unit cost—the average cost to produce

one unit, and (2) program acquisition unit cost—the average cost to develop and produce one unit.a

Schedule Reports a time line of key development milestones and tasks such as important acquisition decisions, 

significant increases in performance knowledge, and product deliveries.

Test Reports a schedule of major flight and ground tests, as well as key model and simulations events. 

Operational capacity Reports information on the fielding plans, capabilities and limitations, and supporting activities for 

delivering operational capabilities.

Technical Reports a list of capability needs derived from the warfighters’ prioritized capabilities, as well as current 

and future capabilities. The list describes the functionality of the program and identifies the knowledge a 

program must meet to proceed. 

Contract Reports a time line for a set of contracts designed to deliver integrated ballistic missile defense system 

capabilities from request for proposals through proposal receipt, completion of negotiations, contract 

award, and contract execution.

Source: GAO analysis of MDA’s 2013 Ballistic Missile Defense System Accountability Report.

a

10 U.S.C. § 2432 defines, with respect to a major defense acquisition program, procurement unit 

cost as the amount equal to (1) the total of all funds programmed to be available for obligation for 

procurement for the program divided by (2) the number of fully configured end items to be procured. 

Program acquisition unit cost is defined as the amount equal to (1) the total cost for development and 

procurement of, and system-specific military construction for, the acquisition program divided by (2) 

the number of fully configured end items to be produced for the acquisition program.

Most recently, the National Defense Authorization Act for Fiscal Year 

2012 amended MDA’s baseline reporting requirements.15

 15Pub. L. No. 112-81, § 231(a) (2011) (codified as amended at 10 U.S.C. § 225) requires 

MDA to establish and maintain baselines for certain elements or major portions of 

elements prior to the product development phase (or its equivalent) and prior to production 

and deployment, and report these to the congressional defense committees annually. The 

congressional defense committees are the Committee on Armed Services and the 

Committee on Appropriations of the Senate; and the Committee on Armed Services and 

the Committee on Appropriations of the House of Representatives. 10 U.S.C. § 

101(a)(16).

Specifically, the 

law currently requires MDA to report to the congressional defense 

committees certain changes or variances in the current baselines from 

the baselines presented in the prior year’s report and from when the 

baselines were initially established. Additionally, the act allows MDA to 

revise an initial baseline, which the agency refers to as a “revised initial 

baseline.”
Page 9 GAO-14-351 Missile Defense

In 2010, MDA also established an acquisition process that continues to 

guide the development of the BMDS. Table 2 identifies the five life cycle 

phases of MDA’s acquisition process.

Table 2: Missile Defense Agency (MDA) Acquisition Life Cycle Phases for the Ballistic Missile Defense System (BMDS)

Materiel solutions 

analysis

Technology 

development Product development Initial production Production

An analysis period to 

develop potential 

alternative solutions.

a

For developing and 

maturing technology 

solutions for a capability 

shortfall.

To further develop the

potential BMDS component 

to refine and mature the 

design and manufacturing 

issues.

Used primarily to 

provide an initial base 

for production and 

provide articles for 

continued testing.

For producing final 

operational end items to 

satisfy Warfightercapability requirements.

Source: MDA Instruction 5013.02-INS (data); GAO (presentation).

a

According to MDA policy, transition to fielding and therefore, sustainment and support, occurs during 

the production phase.

The agency has documented the key knowledge that is needed prior to 

the technology development, product development, initial production, and 

production phases. For example, prior to entering initial production, an 

element must demonstrate that its design and manufacturing processes 

are stable, planned quantities are affordable, and developmental and 

operational test results show that the user’s needs will be met. In general, 

developmental testing is aimed at determining whether the system design 

will satisfy the desired capabilities, while operational testing is aimed at 

determining whether the system is effective, survivable, and suitable in 

the hands of the user under realistic conditions. Additionally, according to 

DOD policy, programs entering initial production or production require 

approval from DOD’s Under Secretary of Defense for Acquisition, 

Technology, and Logistics.

Table 3 describes the BMDS elements and programs assessed in this 

report and their current MDA acquisition phase.

Description of

BMDS Elements
Page 10 GAO-14-351 Missile Defense

Table 3: Description of Selected Ballistic Missile Defense System (BMDS) Elements and Programs

BMDS element/ program Description and key components

MDA acquisition phase and 

operational status

Aegis Ballistic Missile 

Defense (BMD) with Standard 

Missile-3 (SM-3) Block IB and 

Aegis BMD second 

generation weapon system 

software

Aegis BMD is a sea-based system developed to defend against 

short-, medium-, and intermediate-range ballistic missiles in the 

middle part of their flight. MDA is developing several versions of 

missiles and associated ship-based software and processors.a

Initial production.

The SM-3 Block IB features additional capabilities over the 

previous SM-3 version to identify, discriminate, and track 

objects during flight. The Aegis BMD second generation 

software also provides increased capabilities with its ability to 

more accurately locate, discriminate, and track more 

sophisticated threat objects as well as uplink that data to the 

SM-3 Block IB interceptor faster than the previous software 

version. All sea-based Aegis BMD systems also include a 

shipboard radar and command and control systems.

Plans to be operational in 2014 and 

available for regional defense in 

Europe and other regions in 2015.

Aegis Modernized Weapon 

System Software

Developed jointly with the Navy, the Aegis modernized weapon 

system software provides increased capability over the Aegis 

BMD second generation weapon system software. MDA is 

currently developing two versions: the first version integrates 

the Aegis BMD second generation weapon system software 

with Aegis ship anti-air defense capabilities, while the second 

version contains a capability upgrade to improve on the types 

and the numbers of ballistic missiles the system can engage.

Product development.

MDA plans to install the software on 

a total of 13 ships to support 

regional defenses in Europe and 

other regions by fiscal year 2018.

Aegis Ashore A land-based, or ashore, version of Aegis BMD initially using 

SM-3 Block IB missiles and the capability upgrade version of 

the Aegis modernized weapon system software, with plans to 

use various versions of SM-3 missiles and Aegis BMD weapon 

system software as they become available. Key components 

include SM-3 missiles, a vertical launch system, an enclosure 

that houses a radar and command and control system, and 

Aegis BMD weapon system software. MDA is currently planning 

to construct three Aegis Ashore sites: one test site in Hawaii 

and two for the defense of Europe.

Product development.

MDA completed the installation at

the Hawaii test site and plans to 

begin flight testing the system in the 

middle of calendar year 2014 

through the middle of 2015. MDA 

plans to deliver the first operational 

site in Romania in the end of 2015 

and the second site in Poland in the 

end of 2018 to support the defense 

of Europe. 

Army

Navy/Transportable Radar 

Surveillance and Control 

Model 2 (AN/TPY-2)

The AN/TPY-2 is a transportable X-band high resolution radar 

that is capable of tracking ballistic missiles of all ranges. 

AN/TPY-2 can be used in two modes: in the forward-based 

mode it is used to support Aegis BMD and Ground-based 

Midcourse Defense or in the terminal mode used with Terminal 

High Altitude Area Defense. 

b

Production.

MDA has delivered nine AN/TPY-2 

radars—five for use in forwardbased mode and four for use in 

terminal mode—worldwide to 

support regional defenses. Forwardbased radars were conditionally 

accepted by the Army with full 

acceptance expected by June 2016. 

MDA plans to procure and deliver 

three additional radars for use in 

terminal mode.
Page 11 GAO-14-351 Missile Defense

BMDS element/ program Description and key components

MDA acquisition phase and 

operational status

Command, Control, Battle 

Management, and 

Communications (C2BMC)

C2BMC is a globally deployed system that links and integrates 

individual missile defense elements. It also allows users to plan 

ballistic missile defense operations, see the battle develop, and 

manage networked sensors. MDA has released several 

versions of the software, known as spirals, which continue to 

improve on the C2BMC’s ability to manage information among 

the BMDS elements. The system also includes hardware such 

as workstations, servers, and network equipment. 

Product development.

The latest spiral, known as Spiral 

6.4, has been operational since 

2011. The next spiral, known as 

Spiral 8.2, is in product development 

with plans to be installed in fiscal 

year 2017.

Ground-based Midcourse 

Defense (GMD) System 

The GMD program is a ground-based defense system designed 

to defend the United States against a limited intermediate and 

intercontinental ballistic missile attack in the middle part of their 

flight. Key components include a ground-based interceptor 

consisting of a booster with a kill vehicle on top, as well as a 

communication system and a fire control capability. The kill 

vehicle uses on-board sensors and divert capabilities to steer 

itself into the threat missile to destroy it. There are currently two 

versions of the kill vehicle: the initial design known as the 

Capability Enhancement-I (CE-I) and the upgraded design 

known as the Capability Enhancement-II (CE-II). 

Product development.

CE-I interceptors are fielded for the 

defense of the United States and are 

located at Fort Greely, Alaska and 

Vandenberg Air Force Base, 

California.

CE-II interceptors are in 

development and have not yet been 

demonstrated to work as intended 

through flight testing although 13 

have been delivered.

Targets and 

Countermeasures

MDA develops and manufactures highly complex targets that 

represent realistic threat scenarios during BMDS flight tests to 

aid other BMDS elements’ developmental efforts. MDA 

develops and manufactures a variety of targets including short-, 

medium-, intermediate-, and eventually intercontinental ranges. 

Product development.

Because targets are developed to 

support other BMDS elements, they 

are not operationally fielded. 

Terminal High Altitude Area 

Defense (THAAD)

THAAD is a mobile, ground-based missile defense system 

designed to defend against short- and medium-range ballistic 

missiles in the late-middle and end of their flight. THAAD is 

organized as a battery, which includes interceptors, launchers, 

an AN/TPY-2 radar, a fire control and communications system, 

and other support equipment. MDA is also developing a system 

upgrade, known as THAAD 2.0, to provide an expanded 

defense against short-to-medium range threats and increase 

integration with other BMDS elements.

Production.

First two THAAD batteries were 

conditionally accepted by the Army 

with full acceptance expected by the 

end of fiscal year 2017. MDA plans 

to deliver the ground equipment for a 

total of six batteries by the end of 

fiscal year 2017 and an inventory of 

interceptors to fully load six batteries 

by fiscal year 2020.

THAAD 2.0 is in product 

development with plans to be 

operational in fiscal year 2019.

Source: GAO analysis of MDA data.

a

Other Aegis BMD SM-3 interceptor versions include the SM-3 Block IA, SM-3 Block IIA, and SM-3 

Block IIB. We did not assess the SM-3 Block IA because it has been in production since 2005 and is 

currently operational for regional defense in Europe as well as other regions. We also did not assess 

the SM-3 Block IIA because it is in the technology development phase and therefore does not have 

cost, schedule, or performance baselines. Lastly, we did not assess the SM-3 Block IIB program 

because DOD canceled the program in March 2013.

b

Details on the acquisition progress of MDA’s other sensors such as the Sea-based X-band and 

Cobra Dane radars are not included in this report because they have transitioned to sustainment, and 

therefore, MDA did not report acquisition baselines for these elements in the 2013 BAR. We also did 

not assess the Upgraded Early Warning Radars because this was the first year that MDA reported 

acquisition baselines for this element in the BAR and therefore we could not make comparisons to 

past years.
Page 12 GAO-14-351 Missile Defense

In March 2013, in response to a growing threat from Iran and North 

Korea, the Secretary of Defense announced steps that affected the 

acquisition of the BMDS including

• deploying 14 additional ground-based interceptors in Fort Greely, 

Alaska by 2017;

• deploying a second AN/TPY-2 radar to Japan; and

• shifting the resources from development of the Aegis BMD SM-3 

Block IIB interceptor, which was planned to be deployed after 2020 to 

defend against intercontinental ballistic missiles, to fund the additional 

ground-based interceptors, as well as develop advanced technology 

to improve the performance of current and future versions of BMDS 

interceptors.

In 2013, DOD canceled the Aegis BMD SM-3 Block IIB and the Precision 

Tracking Space System citing concerns with the programs’ high-risk 

acquisition strategies and technical challenges that GAO has previously 

raised. We have previously reported that MDA did not consider a broad 

range of alternatives or fully assess program or technical risks before 

committing to either program.16

In addition, MDA altered its fiscal year 2013 acquisition plan to offset a 

funding reduction of $568 million (6.8 percent) in its total available budget 

for fiscal year 2013. For example, in consultation with key stakeholders 

such as the Operational Test Agency and DOD’s Office of the Director,

Operational Test and Evaluation, MDA revised its test plan by combining, 

delaying, and deleting tests to cut costs. MDA also delayed some 

development activities for various elements into fiscal year 2014 and 

beyond.

 16The Precision Tracking Space System was to be a satellite system equipped with 

infrared sensors to track ballistic missiles through their emitted heat. See GAO-13-747R; 

Standard Missile-3 Block IIB Analysis of Alternatives, GAO-13-382R (Washington, D.C.: 

Feb. 11, 2013); and GAO-13-432.

Missile Defense 

Acquisition Changes in 

Fiscal Year 2013
Page 13 GAO-14-351 Missile Defense

In fiscal year 2013, MDA successfully executed several flight tests that 

demonstrated key BMDS capabilities and modifications made to resolve 

prior development issues, but continued to experience failures and delays 

resulting in less testing and production than planned. For the first time in 

September 2013, the Aegis BMD and Terminal High Altitude Area 

Defense (THAAD) programs participated in an operational flight test that 

resulted in a near simultaneous engagement. Additionally, the Aegis BMD 

program also successfully conducted flight tests with the SM-3 Block IB 

missile. However, according to officials from the DOD’s Office of the 

Director, Operational Testing and Evaluation, Aegis BMD experienced a 

SM-3 Block IB missile failure that is currently being investigated and could 

result in a modification to a component that is common between the Aegis 

BMD SM-3 Block IA and IB. Lastly, GMD also successfully conducted a 

non-intercept test of its upgraded interceptor that is currently in 

development, but experienced an intercept test failure of the fielded 

interceptor, the cause of which is still unknown. Further details on the 

operational test are provided after table 4. In addition, because ongoing 

testing and development challenges increase the potential to affect the 

production of the SM-3 Block IB missile as well as delaying understanding 

of the capabilities and limitations of GMD’s fielded interceptor, we also 

provide additional details for these programs after the table.

Table 4 presents a summary of key accomplishments and challenges for 

BMDS elements and programs that are in the BAR.

BMDS Flight Tests 

Successfully 

Executed, but 

Development 

Challenges Continue
Page 14 GAO-14-351 Missile Defense

Table 4: Selected Ballistic Missile Defense System Acquisition Progress and Challenges

BMDS element/ program Progress Challenges

Aegis Ballistic Missile 

Defense (BMD) with Standard 

Missile-3 (SM-3) Block IB and 

Aegis BMD second 

generation weapon system 

software

• Conducted three flight tests, all of which achieved 

target intercept, in support of a full production 

decision in fiscal year 2015.

• Awarded contracts for 33 SM-3 Block IB missiles.

• Began installation of Aegis BMD second 

generation weapons system on two additional 

ships. After they are completed there will be six

ships in that configuration.

• Delivered 10 SM-3 Block IB research, 

development, test and evaluation missiles.

• SM-3 Block IB interceptor failed in flight 

during one of the three flight tests. The 

failure occurred during a salvo test, where 

two interceptors were launched against a 

single target. A failure review is ongoing 

to determine the root cause of the failure 

and may result in design changes to a 

component common to the SM-3 Block 

IA. Effects on production remain unclear.

Aegis Modernized Weapon 

System Software

• Completed installation on the first ship and 

initiated installation on two additional ships.

• Completed a review of the capability upgrade 

design to assess its readiness to proceed with 

demonstration and testing.

• Seventeen-month delay in associated 

development efforts by the Navy 

increased MDA program cost. To offset 

this increase, MDA reduced its 

engineering support which could affect its 

ability to resolve development challenges 

if significant issues arise prior to delivery.

• Discovery of software defects continues 

to outpace the program’s ability to fix 

them; fixes may have to be implemented 

after software is delivered. 

Aegis Ashore • Finished assembly of the first operational Aegis 

Ashore facility at the construction site in New 

Jersey, fully powered on the combat system for 

the first time, and validated the Aegis Ashore 

facility design.

• Completed installation at the Hawaii test site.

• Initiated construction of the facility in Romania.

• MDA plans to complete development of 

the first operational facility and award a 

contract to begin the second before flight 

testing demonstrates that the facility 

works with the Aegis modernized weapon 

system software and interceptors as 

intended.

• Flight test delays and cancellations, as 

well as challenges with development of 

the Aegis modernized weapon system 

software increase the risk of discovering 

performance issues that may require fixes 

after operational deployment. 

Army

Navy/Transportable Radar 

Surveillance and Control 

Model 2 (AN/TPY-2)

• Participated in the first operational system-level 

flight test of the BMDS in both forward-based and 

terminal modes in September 2013.

• Delivered two terminal mode radars.

• Initiated the deployment of a second forwardbased radar to Japan as directed by the 

Secretary of Defense in March 2013.

• Achieved agreement with the Army for operation 

and sustainment cost sharing responsibilities.

• Increased the total number of radars procured 

from 11 to 12 and awarded a contract for the 

additional radar in December 2013. 

• No significant challenges with the 

production and delivery schedule of 

radars 8-11 to support THAAD.

• According to DOD’s Director, Operational 

Testing and Evaluation assessment, 

during the conduct of a BMDS operational 

test, the power unit for the radar 

experienced anomalous behavior.
Page 15 GAO-14-351 Missile Defense

BMDS element/ program Progress Challenges

Command, Control, Battle 

Management, and 

Communications (C2BMC)

• Initiated delivery of two sets of software 

modifications and fixes to the fielded Spiral 6.4.

• Demonstrated some capability of Spiral 8.2.

• Participated in the first operational flight test of 

the BMDS controlling the forward-based AN/TPY2 and cueing Aegis BMD and THAAD. 

• Delays in development of Spiral 8.2 

require a retrofit to Spiral 6.4 to maintain 

an early warning capability for GMD.

• MDA identified additional software 

modifications for Spiral 6.4 that are 

needed by fiscal year 2015. However, 

MDA has yet to define some of them, 

increasing the risk that it will not meet this 

date.

Ground-based Midcourse 

Defense (GMD) System 

• Successfully achieved all planned objectives for a 

Capability Enhancement (CE)-II non-intercept 

flight test, Control Test Vehicle (CTV)-01, in 

January 2013, in support of Flight Test Ground 

(FTG)-06b.

• Began refurbishment of Missile Field 1 and 

continued emplacing interceptors in Missile Field 

2 at Fort Greely, Alaska.

• Completed the Fort Greely, Alaska Power Plant, 

the back-up power source for the Missile Defense 

Complex mission essential equipment.

• GMD failed to achieve an intercept using 

the CE-I kill vehicle during FTG-07 in July 

2013. A failure investigation is ongoing 

and, according to program officials, is 

expected to be completed in the second 

quarter of fiscal year 2014.

• MDA faces significant management, 

development, and production challenges 

as it must concurrently: (1) determine the 

root cause of the FTG-07 failure; (2) 

successfully execute the demonstration of 

the CE-II redesign; (3) restart CE-II 

production to meet fielding obligations; 

and (4) potentially retrofit already 

delivered CE-II interceptors.

• GMD’s ongoing testing issues in 

conjunction with the program’s concurrent 

acquisition practices increase the risk that 

any new development or production 

issues will cause major disruptions to the 

program.

Targets and 

Countermeasures

• Launched 10 targets, including the first flight for 

its extended medium-range ballistic missile 

(eMRBM) during the first operational system-level 

flight test in September 2013.

• According to independent testing officials, 

the expected number of targets to support 

the first operational test campaign were 

not available resulting in less data 

gathered.

• MDA adjusted its annual flight test plan by 

deleting two tests, delaying six tests, and 

modifying the targets used in two tests to 

reduce target costs.

Terminal High Altitude Area 

Defense (THAAD)

• Successfully conducted two complex intercept 

tests against medium-range targets.

• First battery deployed to Guam in April 2013.

• Began training of the third battery in June 2013.

• Received approval for production of the sixth 

battery in October 2012. 

• According to DOD’s Director, Operational 

Test and Evaluation, some THAAD 

components did not meet reliability 

requirements. Their average time 

between failures and needed repairs is 

inconsistent and/or inadequate. 

Source: GAO analysis of DOD documents and interviews with DOD officials
Page 16 GAO-14-351 Missile Defense

After more than 11 years of development of the BMDS, MDA conducted 

the first system-level operational missile defense flight test called Flight 

Test Operational-01 (FTO-01) in September 2013. During the test, 

warfighters from several combatant commands employed multiple missile 

defense systems including Aegis BMD and THAAD to demonstrate the 

regional capabilities of U.S. missile defense. This is a significant 

achievement because it is the first operational test that involved multiple 

elements working simultaneously. To conduct this test, MDA invested in 

range assets and conducted other activities to ensure it could test 

multiple elements at once. For example, MDA conducted its first 

integrated system-level flight test, known as Flight Test Integrated-01, in 

October 2012 as a risk-reduction exercise for the operational test.17

During FTO-01, MDA launched two nearly simultaneous threatrepresentative medium-range ballistic missile targets including its airlaunched extended-medium range ballistic missile (eMRBM) target for the 

first time.18

The BMDS elements successfully engaged the targets during the test, but 

according to independent testing officials, full system integration was not 

achieved. Specifically, according to the DOD’s Director, Operational Test 

and Evaluation, the Aegis ship successfully intercepted one of the targets 

with a SM-3 Block IA and THAAD successfully intercepted a mediumrange target for the second time. In addition, as a planned demonstration 

of its layered defense, THAAD launched a second interceptor at the 

target intercepted by the Aegis ship as a contingency in event the SM-3 

Block IA did not achieve an intercept. However, DOD’s Director,

Operational Test and Evaluation, also found that the test failed to achieve 

This test was delayed for approximately one year in part 

because of development problems associated with the eMRBM target. 

MDA also had to make some adjustments to the FTO-01 test plan 

because of fiscal year 2013 sequestration. Although MDA preserved its 

primary objective to demonstrate the interoperability of BMDS elements, it 

reduced the number of targets included in the test from five to two and 

removed participation of more mature elements such as the Patriot 

Advance Capability-3.

 17As we found in April 2013, MDA coordinated multiple combatant commands and missile 

defense elements to intercept four of five targets launched during the integrated test. See 

GAO-13-432.

18MDA originally planned to use two of its new eMRBM targets for the first time during the 

operational flight test. According to an agency official, MDA only used one of its eMRBM 

targets and the second medium-range ballistic missile used in the test was provided from 

an alternate source. 

First System-level 

Operational Test of 

the BMDS
Page 17 GAO-14-351 Missile Defense

full integration between all systems due to challenges with system 

networks, limitations in elements’ ability to work together and component 

failures. For example, the test uncovered several issues with 

communication networks that are needed for interoperability between all 

elements. Interoperability is important because it can improve the missile 

defense effectiveness and enhance individual systems performance 

beyond operating alone.

The Aegis BMD SM-3 Block IB program largely overcame previous 

development challenges and successfully intercepted all targets in its last 

three flight tests as shown in table 5. These tests are required for a full 

production decision—the last key production authorization by the Under

Secretary of Defense, Acquisition, Technology, and Logistics that would 

allow MDA to produce the remaining 415 interceptors. However, a missile 

failure of the second interceptor launched during the September 2013 test 

could increase production risk if design changes are needed.

Table 5: Most Recent Flight Tests of Second Generation Aegis Ballistic Missile Defense (BMD) and Standard Missile (SM)-3 

Block IB 

Test 

name Test date Test overview Outcome

Flight Test 

Standard 

Missile 

(FTM)-19

May 2013 • Demonstrated the discrimination capabilities of the ship’s weapons 

system and the interceptor against a complex short-range ballistic 

missile target.

• Also demonstrated modifications made to the Aegis BMD second 

generation weapon system in response to the failure of a SM-3 Block IB 

flight test in September 2011.

• Conducted following more than a 15-month delay.

• SM-3 Block IB 

successfully 

intercepted the 

target.

FTM-21 September 2013 • First salvo test of SM-3 Block IB where two interceptors were launched 

against a single short-range ballistic missile target.

• Further assessed the discrimination capabilities of the Aegis BMD 

second generation weapon system and the SM-3 Block IB.

• MDA considers this test a success because the first missile intercepted 

the target, but according to officials from DOD’s Office of the Director, 

Operational Test and Evaluation, the second interceptor failed in flight.

• Conducted following more than 6-month delay. 

• First SM-3 Block IB 

successfully 

intercepted the 

target.

• Second SM-3 Block 

IB failed in flight.

FTM-22 October 2013 • Demonstrated the capability of the Aegis BMD second generation 

weapon system to engage medium-range targets with the SM-3 Block 

IB interceptor.

• Marked the end of initial operational flight testing and evaluation of the 

system.

• Conducted following more than a 12-month delay.

• SM-3 Block IB 

successfully 

intercepted the 

target.

Source: GAO analysis of Missile Defense Agency and Director, Operational Test and Evaluation data.

Aegis BMD SM-3 Block IB
Page 18 GAO-14-351 Missile Defense

As we found in April 2013, the SM-3 Block IB production line has been 

repeatedly disrupted since 2011 due to flight test anomalies caused by 

malfunctions in two separate sections of the third-stage rocket motor, and 

development challenges with the throttleable divert and attitude control 

system—components that maneuver the interceptor in its later stages of 

flight.19

Despite the three successful intercepts, the effect of the missile failure in 

September 2013 on the upcoming full production decision remains 

unclear. Before the program enters into full production, MDA’s acquisition 

management instruction requires it to demonstrate to the Under Secretary 

of Defense, Acquisition, Technology, and Logistics that there are no 

significant risks to production and that the planned production quantities 

are affordable and fully funded. The permission to enter full production is 

also based on independent assessments of the weapon’s effectiveness 

and suitability by the DOD’s Director, Operational Test and Evaluation 

and the Navy’s Commander Operational Test & Evaluation Force. 

Although the failure investigation is ongoing, preliminary results indicate 

that the failure occurred in the third-stage rocket motor, a component 

common to the SM-3 Block IA, which is nearing the end of its production. 

Different issues with that same component have contributed to previous 

SM-3 Block IB schedule delays and production disruptions. While the 

precise cause of the September 2013 failure is under review, MDA 

documentation indicates that it could potentially result in design changes 

to the third-stage rocket motor and changes to manufacturing processes. 

Additionally, retrofits may be required for SM-3 Block IB and SM-3 Block 

IA interceptors that were already produced. If design changes are 

necessary, program documentation indicates that they will not be flight 

tested until the fourth quarter of fiscal year 2015, just prior to the planned 

These challenges delayed the SM-3 Block IB full production 

authorization by more than two years to fiscal year 2015. Largely 

resolving these previous challenges, in fiscal year 2013 the program 

received permission to procure 33 additional initial production missiles. 

Although MDA initially planned to award a contract for 29 SM-3 Block IB 

missiles in fiscal year 2013, it bought four additional missiles in August 

2013 to recover an earlier reduction. That reduction occurred to provide 

funds to resolve technical and production issues. Based on successful 

intercepts of the last three flight tests, the program also received 

permission to buy 52 more interceptors in fiscal year 2014.

 19GAO-13-432.
Page 19 GAO-14-351 Missile Defense

deployment of the SM-3 Block IB to support the regional defense of 

Europe and 6 months after its planned full production decision. 

Consequently, until the program thoroughly understands the extent of 

needed modifications, if any, and their effects on performance as 

demonstrated though testing, its production strategy is at risk of cost 

growth and schedule delays. MDA has experienced these consequences 

in other elements when it pursued design changes concurrently with 

production.

Although the GMD program made progress in resolving a prior CE-II 

intercept failure, test failures and development challenges continue to 

disrupt the program and increase the cost to demonstrate the new CE-II. 

The GMD program first attempted to demonstrate the CE-II interceptor in 

January 2010 but subsequently experienced a number of setbacks in 

both the CE-II and the fielded CE-I, as seen in table 6 below.

Table 6: Critical Ground-based Midcourse Defense (GMD) Flight Tests

Test name Test date Test overview

Flight Test 

Ground 

(FTG)-06

January 2010 • First intercept attempt with Capability Enhancement (CE)-II to prove the interceptor 

design works as intended.

• Intended to demonstrate an intercept of a longer range target in more challenging 

conditions.

• Was first planned to occur in first quarter fiscal year 2008 but was delayed to January 

2010 due to developmental challenges and target availability.

• Failed to intercept because of a quality control issue and consequently the CE-II’s 

design and performance capabilities were not demonstrated as planned. However, 

the quality control issue has since been resolved.

FTG-06a December 2010 • Re-test of FTG-06 using CE-II with similar objectives.

• Failed to intercept because of guidance system component failure and consequently 

the CE-II’s design and performance capabilities were not demonstrated as planned.

• The Missile Defense Agency (MDA) halted CE-II production until the failure cause 

was identified and corrected.

Controlled 

Test 

Vehicle 

(CTV)-01

a

January 2013 • Non-intercept, diagnostic flight test of the CE-II to demonstrate performance of a 

redesigned guidance system component.

• Successfully achieved all test objectives.

• Additional ground testing revealed further corrective actions were needed.

GMD
Page 20 GAO-14-351 Missile Defense

Test name Test date Test overview

FTG-07 July 2013 • First CE-I intercept attempt in almost 5 years.

• Similar test capability performance objectives as FTG-06 but with a CE-I.

• Also intended to demonstrate the efficacy of CE-I upgrades implemented over the last 

5 years, including software changes to enhance performance.

• Failed to intercept, although all of the other BMDS elements in the flight test 

performed as planned and the interceptor was launched.

• Failure review is ongoing with expected completion, according to program officials, by 

the second quarter of fiscal year 2014.

FTG-06b Projected third quarter fiscal 

year 2014

• Re-test of FTG-06/FTG-06a using a CE-II with similar objectives.

• Intended to demonstrate the successful mitigation to the FTG-06a failure cause.

• Experienced approximately 2 years of delays to conduct the test.

• Successful intercept needed to resume CE-II production.

• The program is pursuing another design effort to address performance concerns and 

serve as an alternative plan if the mitigation to be demonstrated in FTG-06b is 

unsuccessful.

Source: GAO analysis of MDA data.

Note: For more information, see GAO-14-350R.

a

MDA halted all assembly, integration, manufacture, and refurbishment of CE–II kill vehicles until the 

CE–II mitigation is successfully demonstrated in flight testing, including an intercept flight test.

Developing a mitigation to the FTG-06a failure has proven more difficult 

than initially expected. The program initially planned to conduct FTG-06b 

in the third quarter of fiscal year 2012 but the test has since been delayed 

to at least the third quarter of fiscal year 2014 because of challenges 

resolving test failures. For example, while initial results from CTV-01 

indicated the redesigned guidance system component could be used to 

resolve the problem that caused the FTG-06a failure, subsequent ground 

testing revealed that only one-third of those produced could be used in 

future interceptor production or flight tests because the component’s 

performance was uncertain. The program mitigated the issue by 

implementing software and hardware modifications and delivered the 

redesigned component for kill vehicle integration in October 2013. 

However, according to MDA, the program experienced further delays in 

the FTG-06b test while it implemented changes based on assessments 

from the ongoing FTG-07 failure review. Consequently, confirmation that 

the CE-II design works as intended has been delayed by nearly seven 

years and costs have increased by over $1 billion because of the CE-II 

development challenges and test failures.

In July 2013, MDA conducted the FTG-07 developmental test to 

understand the performance of the fielded CE-I against a longer range 

target in more challenging conditions and assess the performance of 
Page 21 GAO-14-351 Missile Defense

upgrades. This interceptor was fielded before completing developmental 

testing, leading MDA to undertake retrofit efforts and upgrades to fix 

issues identified during testing. According to acquisition best practices, 

developmental testing should be complete before beginning production 

and fielding in order to, among other reasons, avoid the need for retrofits 

and upgrades to fix issues discovered during testing. The test failed, 

delaying understanding of the capabilities and limitations of upgrades to 

the fielded CE-I. Shortly after the test failure, the Director, MDA stated a 

failure review was initiated to not only identify the root cause of the failure, 

but also provide a comprehensive review of potential CE-I failures and 

identify any correlations with the CE-II. Since then, according to program 

officials, MDA has identified a kill vehicle component common to both 

interceptors that could be associated with the FTG-07 failure. However, it 

remains unclear what, if any, design changes, retrofits, or other corrective 

actions to the CE-I or CE-II are necessary since the failure review is not 

complete. According to MDA officials, they have not determined if they 

will re-conduct the flight test. If the CE-I is not flight tested again, the 

warfighter will not have a full understanding of the capabilities and 

limitations of the upgrades to the CE-I interceptor, the original purpose of 

the FTG-07 test.

Overall, GMD’s ongoing testing issues in conjunction with concurrent 

acquisition practices have caused—and will likely continue to cause—

major disruptions to the program. We previously found that, in 2004, MDA 

committed to a highly concurrent development, production, and fielding 

strategy for the CE-II interceptor and began delivering interceptors in 

2008.20 Because MDA moved forward with CE-I and CE-II interceptor 

production before completing its flight testing program, test failures have 

exacerbated disruptions to the program. For example, because the 

program has delivered approximately three-fourths of the interceptors for 

fielding, the program faces difficult and costly decisions on how it will 

implement corrections from prior test failures. Also, the program has had 

to add tests that were previously not planned and delay tests that are 

necessary to understand the system’s capabilities and limitations. As a 

result of these development challenges, the GMD program will likely 

continue to experience delays, disruptions, and cost growth.

 20GAO-12-486.
Page 22 GAO-14-351 Missile Defense

MDA has taken some steps to improve the clarity of its resource and 

schedule baselines, but issues with the content and presentation of these 

baselines continue to limit the usefulness of the information available to 

decision makers for oversight of BMDS development efforts. Since 2011, 

we have found deficiencies in the quality of the cost estimates that 

underpin MDA’s resource baselines and reported on the efforts MDA has 

undertaken to improve those estimates. In 2013, we found the agency 

made little progress addressing the underlying quality issues with those 

cost estimates that we raised. As a result, this is the fourth year we have 

found that the cost estimates that support MDA’s resource baselines are 

not sufficiently reliable to support oversight. However, according to MDA 

officials, the agency is taking steps to improve the quality of its cost 

estimates to support the resource baselines it plans to report in its 2014 

BAR. Assessing MDA’s progress in achieving its schedule goals is also 

difficult because MDA’s schedule baselines are not presented in a way 

that allows decision makers to understand or easily monitor progress. 

Until MDA improves the quality and comprehensiveness of its cost 

estimates and the clarity of its schedule information, its baselines may not 

be useful for decision makers.

In its 2013 BAR, MDA continued to make useful changes to its reported 

resource and schedule baselines. We found in March 2011 that MDA’s 

schedule and resource baselines had several shortcomings that limited 

their usefulness for oversight, such as not explaining variances or 

significant changes in the baselines.21 Additionally, we found in April 2013 

that, in its 2012 BAR, MDA only reported annual progress by comparing 

its current estimates for unit cost and scheduled activities against the 

prior year’s estimate and adjusted the content of the baselines from year 

to year in such a way that they were no longer comparable.22

MDA took some action to improve the completeness and clarity of the 

BAR baselines by:

As a result, 

MDA’s baselines were not useful for tracking longer term progress or for 

holding the agency accountable.

 21GAO-11-372.

22GAO-13-432.

MDA Made Its 

Resource and 

Schedule Baselines 

Clearer, but Further 

Actions Needed to 

Enhance Their Use 

for Oversight

MDA Made Limited 

Improvements to Its 

Resource and 

Schedule Baselines
Page 23 GAO-14-351 Missile Defense

• identifying the date of the initial baseline and, if applicable, the date 

when the initial baseline was most recently revised for each element 

or major portion of an element reported in the BAR;

• explaining most of the significant cost and schedule changes from the 

current baseline estimates against both the estimates reported in the 

prior year’s BAR and the latest initial baseline; and

• making the baselines easier to read by removing cluttered formatting 

such as strikethroughs and highlights that made some of the events 

listed in past BARs unreadable.23

Since MDA first reported baselines in June 2010, we have found that the 

underlying information supporting its resource baselines does not meet 

the GAO best practice standards for high-quality cost estimates.24

 23The 2013 BAR also incorporated changes MDA had previously made to improve the 

completeness and clarity of its resource and schedule baselines. For example, we found

in April 2013 that, in its 2012 BAR, MDA began reporting the full range of life cycle costs

borne by MDA; defining more clearly what costs are presented in the resource baselines 

and noting when costs were excluded from the estimate; and adding a separate delivery 

table that provides more detailed information on deliveries and inventories. See 

MDA’s 

resource baselines reported in its 2013 BAR remain unreliable because 

the agency is still in the process of improving the quality of the cost 

estimates that support its baselines. We asked to review the cost 

estimates that support the resource baselines reported in the 2013 BAR, 

but MDA officials stated that the agency had not fully implemented its cost 

estimating handbook and that the cost estimates were not ready for our 

review. According to officials, MDA is still performing reviews of past cost 

estimates to bring them up to the agency’s new standards and plans to 

complete these efforts to support the cost estimates reported in its 2014 

BAR. In addition, according to officials from DOD’s Office of the Director 

for Cost Assessment and Program Evaluation, they did not perform an 

independent cost estimate for any of the cost estimates supporting the 

GAO-13-432.

24GAO, GAO Cost Estimating and Assessment Guide, GAO-09-3SP (Washington, D.C.: 

March 2009). 

MDA’s 2013 Resource 

Baselines Remain 

Unreliable
Page 24 GAO-14-351 Missile Defense

resource baselines reported in the 2013 BAR.25 We have found that 

completing these steps could further improve the quality of MDA’s cost 

estimates.26

Additionally, MDA has made little progress improving the 

comprehensiveness of the cost estimates that support its resource 

baselines. Similar to past years, the cost estimates reported in the 2013 

BAR also do not include the operation and support costs funded by the 

individual military services, which we concluded in April 2013 may result 

in significantly understated life cycle costs for some BMDS elements. In 

response to our April 2013 recommendation, DOD agreed that decision

makers should have insight into the full life cycle costs of DOD programs, 

but the department stated that the BAR should only include content for 

which MDA is responsible. Because MDA already reports the estimated 

acquisition costs and some of the operation and support costs for the 

acquisitions in the annual BAR, we concluded that annual document to be 

the most appropriate way to report the full costs to Congress. Additionally, 

we concluded that good budgeting requires that the full costs of a project 

be considered when making decisions to provide resources and, 

therefore, both DOD and Congress would benefit from a comprehensive 

understanding of the full costs of MDA’s acquisition programs. Until 

MDA’s resource baselines are based on reliable information and are 

comprehensive, they will not be useful for decision makers to understand 

progress or make well-informed investment decisions.

In the National Defense Authorization Act for Fiscal Year 2014, Congress 

took steps to address concerns over MDA’s cost estimates by requiring 

MDA to report to the congressional defense committees on its efforts to 

improve the quality of the cost estimates included in its acquisition 

 25DOD’s Office of the Director of Cost Assessment and Program Evaluation provides 

independent analytic advice to the Secretary of Defense on all aspects of the Defense 

program including the cost-effectiveness of defense systems by ensuring that the costs of 

DOD programs are accurate and complete. According to officials from DOD’s Office of

Cost Assessment and Program Evaluation, the last independent cost estimate they 

conducted for an active BMDS program was for THAAD procurement costs in 2010 but 

they have continued to support MDA with other independent cost assessments since that 

time. For example, they examined some costs for several BMDS elements as a part of 

their fiscal year 2012 review of the costs associated with deploying a U.S. missile defense 

in Europe. Additionally, the officials said they started but never completed an independent 

cost estimate for Aegis BMD in support of the SM-3 Block IB full production decision 

because MDA delayed the decision from fiscal year 2012 to 2015.

26GAO-13-432, GAO-11-372, and GAO-10-311. 

GAO-11-372

In March 2011, we assessed MDA’s life-cycle 

cost estimates using the GAO Cost Estimating 

and Assessment Guide, which is based on 

best practices in cost estimating and identifies 

key criteria for establishing high-quality cost 

estimates. Our review found that the 

estimates we assessed were not 

comprehensive, lacked documentation, were 

not completely accurate, or were not 

sufficiently credible. We recommended that 

MDA (1) take steps to ensure its cost 

estimates are high quality, reliable cost 

estimates that are documented to facilitate 

external review and (2) obtain independent 

cost estimates for each baseline.

GAO-13-432

In April 2013, we recommended that the 

Secretary of Defense direct the MDA Director 

to include in its resource baseline cost 

estimates all life cycle costs, specifically the 

operations and support costs, from the military 

services in order to provide decision makers 

with the full costs of ballistic missile defense 

systems.
Page 25 GAO-14-351 Missile Defense

baselines.27 For example, the act requires MDA to report on a description 

of and schedule for planned actions to improve its cost estimates, as well 

as an assessment of how the planned improvements align with GAO’s 

cost estimating best practices. We are also required to provide our views 

on the content of MDA’s report. Additionally, the act requires that the life 

cycle cost estimate included in the agency’s acquisition baselines include 

a description of the operations and support functions and costs for which 

the military services are responsible, in addition to the costs borne by 

MDA.

MDA’s schedule baselines are presented in a way that makes it difficult 

for decision makers to understand a program’s planned activities and 

therefore hold programs accountable for their performance. According to 

GAO’s Schedule Assessment Guide, a reliable program schedule 

includes all activities required to complete a project, but the schedule 

should not be too detailed to interfere with its use.28

In addition, MDA does not present any comparisons of event dates with 

previously reported dates. In contrast, DOD’s major defense acquisition 

programs report a comparison of current schedule estimates against their 

original and current schedule goals. According to GAO’s Schedule 

Assessment Guide, comparing the current schedule to the baseline 

schedule to track deviations from the plan provides decision makers 

valuable insight into program risk and can help identify where corrective 

For example, 

presenting decision makers with a high-level summary of the schedule is 

a best practice because schedules that include too many milestones or 

have too much detail make it difficult to manage progress. Additionally, 

the activities included on the schedule should have descriptive names 

that clearly communicate the work required. MDA’s 2013 BAR schedule 

baselines include numerous events but provide very little information 

about them, making it difficult to understand what the events are and why 

they are important. For example, the milestones identifying significant 

increases in performance for C2BMC Spiral 8.2 are numbered with no 

description of the capabilities they represent. Additionally, several of the 

events reported for Aegis modernized weapon system software are titled 

with abbreviations that are not explained in the BAR.

 27Pub. L. No. 113-66, § 231. 

28GAO, GAO Schedule Assessment Guide, GAO-12-120G (Washington, D.C.: May 2012). 

MDA’s Schedule 

Baseline Reporting 

Makes Assessing 

Progress Difficult
Page 26 GAO-14-351 Missile Defense

action may be needed.29 While removing the formatting that identified 

changes in prior BARs made the schedule baselines easier to read, doing 

so removed the ability for decision makers to see if the planned dates for 

events had changed. As a result, decision makers must consult past 

versions of the BAR to identify any changes in the planned schedule for a 

specific event, which can be difficult or impossible in some cases. For 

example, we found in April 2013 that we were unable to compare the 

current estimated dates for the activities presented in the Aegis Ashore 

schedule baseline to the dates baselined in the 2010 BAR because 

activities were split into multiple events, renamed, eliminated, or moved to 

several other Aegis BMD schedule baselines.

30 During the course of our 

audit we raised this issue with MDA and, according to agency officials, 

MDA is open to considering alternative formats for presenting the 

schedule baseline in future version of the BARs. Until MDA improves the 

content of its schedule baselines, decision makers will not be able to 

assess how a program is performing over time.

During fiscal year 2013, MDA was able to make some significant 

acquisition progress, including the first operational system-level flight test 

involving multiple BMDS elements, but it continued to experience 

difficulties achieving its goals for testing. This has resulted in delaying 

progress on individual elements, delaying understanding of the overall 

performance of the BMDS, and fielding assets before all testing is 

complete. The most significant acquisition effects have been experienced 

on the Aegis BMD SM-3 Block IB and GMD program where testing and 

development challenges have led to failure investigations and increased 

the risk of continued cost growth and schedule delays. Both programs 

conducted flight tests and made progress in resolving design flaws in 

2013, but still have further development, testing, and production issues to 

address. For Aegis BMD SM-3 Block IB, the failure of its interceptor in a 

September 2013 flight test means that a key component may need to be 

redesigned and that change confirmed to work in additional flight testing. 

For GMD, the failure of the deployed CE-I interceptor in a July 2013 flight 

test compounds its challenge because the program did not gain the 

expected understanding of the effectiveness of software upgrades 

planned for the operational fleet and now must determine the cause of the 

 29GAO-12-120G.

30GAO-13-432. 

Conclusions
Page 27 GAO-14-351 Missile Defense

failure. As a result, for both programs, to the extent that software or 

hardware changes are necessary to resolve the cause of these failures, 

new flight tests will likely be needed to demonstrate both the 

effectiveness of any resolutions and, for GMD, understand the 

performance of the software upgrades that were the original purpose of 

the test.

Additionally, for over a decade, we have reported that MDA provides 

Congress with only limited insight into the acquisition progress for 

individual programs. While MDA has taken steps to improve the clarity of 

the baselines it reports to Congress, the agency’s cost and schedule 

reporting still lacks the quality, completeness, and clarity necessary to 

track actual cost or schedule growth over time. Specifically, the agency 

has not addressed all of the critical gaps in the quality of its underlying 

cost estimates used to develop its resource baselines that we have 

identified over the years. Until corrective actions are implemented and 

substantial improvements are made to MDA’s cost estimates, its reported 

resource baselines will not be useful for decision makers to hold MDA 

accountable for its performance or make informed decisions on how best 

to allocate limited resources. Congress recently amended the 

requirements for the cost estimates MDA must report in its baselines, 

which may enhance the transparency into MDA’s cost estimating 

processes. As a result, we do not make any new recommendations 

regarding cost at this time. However, additional actions can be taken in 

the schedule baselines to improve the ability of decision makers to 

understand what program events are most critical and identify whether 

the dates for those critical events have changed. Until improvements are 

made, the schedule baselines will not be a useful tool for providing 

oversight of the BMDS.

We recommend that the Secretary of Defense take the following three 

actions to strengthen MDA’s acquisitions and help support oversight.

1. To the extent that MDA determines hardware or software 

modifications are required to address the September 2013 Aegis BMD 

SM-3 Block IB failure, we recommend that the Secretary of Defense 

direct,

a) the Director of the MDA to verify the changes work as intended 

through subsequent flight testing, and

b) the Under Secretary of Defense, Acquisitions, Technology, and

Logistics to delay the decision to approve the program’s full 

Recommendations for 

Executive Action
Page 28 GAO-14-351 Missile Defense

production until such testing demonstrates that the redesigned 

missile is effective and suitable.

2. To demonstrate the CE-I’s effectiveness against a longer range target 

in more challenging conditions and to confirm the design changes 

implemented to improve performance, as well as any changes needed 

to resolve the July 2013 CE-I flight test failure work as intended, we 

recommend that the Secretary of Defense direct MDA’s Director to 

conduct a flight test of the CE-I interceptor once the cause of the 

failure has been determined and any mitigations have been 

developed.

3. To improve the content of the schedule baselines it reports to 

Congress for monitoring program performance, we recommend that 

the Secretary of Defense direct MDA’s Director to take the following 

actions as MDA implements other improvements required by the 

Congress:

a) Focus the information included in the schedule baselines to 

highlight critical events.

b) For each event included in the schedule baseline, provide a 

description of the event explaining what it entails and why it is 

important.

c) Present the schedule baseline in a format that allows decision 

makers to identify any changes made from the current estimated 

date to the date reported in not only the prior year’s BAR but also 

to the date established in the initial baseline.

DOD provided written comments on a draft of this report. These 

comments are reprinted in appendix II. DOD also provided technical 

comments, which were incorporated as appropriate.

DOD partially concurred with our first recommendation, non-concurred 

with our second recommendation and concurred with our third 

recommendation. The department partially concurred with our first 

recommendation to flight test any modifications that may be required to 

the Aegis BMD SM-3 Block IB as a result of September 2013 failure, 

before the Under Secretary of Defense, Acquisitions, Technology, and 

Logistics approves full production. In its comments, DOD acknowledged 

that if modifications are required they will be tested, but added that the 

type of testing—flight or ground testing—will depend on the magnitude of 

such modifications. The department also believes that the component 

currently tied to the failure, has a successful testing history and thus 

expects to meet the reliability requirement needed for the full production 

Agency Comments 

and Our Evaluation
Page 29 GAO-14-351 Missile Defense

decision in fiscal year 2015. However, there have now been three flight 

test anomalies associated with this component over the last three years. 

According to Aegis BMD officials, they are considering design changes 

for this component. Since the fiscal year 2015 full production decision is 

the commitment by the Under Secretary of Defense, Acquisitions, 

Technology, and Logistics to produce several hundred missiles, this 

decision should be supported by an assessment of the final product under 

operational mission conditions to ensure that it is effective and suitable. 

As such, we maintain our recommendation that before the program is 

approved for full production, flight testing should demonstrate that any 

modifications work as intended. 

DOD did not concur with our second recommendation to complete the 

original purpose of the July 2013 CE-I flight test once the cause of that 

failure has been determined and any mitigations have been developed. In 

its response, DOD stated that the decision to flight test a CE-I interceptor 

will be made by the Director, MDA, based on the judgment of 

stakeholders from the Office of the Secretary of Defense and combatant 

commands on the need to perform a test. The DOD response focused 

almost exclusively on the steps it is taking to identify the cause of the July 

2013 failure and mitigate it and did not address the main part of our 

recommendation—determining the effectiveness of the CE-I under more 

challenging conditions and confirming that design changes previously 

made improve performance. These were the objectives of FTG-07. In our 

view, resolving these performance questions remains important. Since 

the FTG-07 failure review is still ongoing, we cannot assess whether DOD 

should conduct a CE-I test for the sole purpose of demonstrating 

corrective actions, to the extent any are needed, to address the cause of 

the failure. While we acknowledge that DOD must balance several 

competing GMD priorities, including which flight tests to conduct, and 

conducting another CE-I flight test may not be feasible in the immediate 

future, we also maintain that demonstrating CE-I intercept capabilities 

should continue to be a priority for DOD since the CE-I interceptor 

constitutes a multi-billion dollar investment by DOD and serves as the 

primary defense of the United States homeland against enemy ballistic 

missile attacks.

In addition to responding to our recommendations, the department’s letter 

raised additional concerns about our draft report. First, DOD disagreed 

with our statement that because the BMDS entrance into DOD’s 

acquisition process is deferred, it is exempt from certain acquisition laws 

and policies that generally provide oversight of major defense acquisition 

programs. DOD stated that MDA is not exempt from acquisition-related 
Page 30 GAO-14-351 Missile Defense

laws because, while it is not captured by several statutes, Congress has 

provided legislation specific to MDA to ensure oversight and 

accountability. We clarified the language in our report to remove the term 

exempt. However, because of the acquisition flexibility it has been 

granted, MDA is not yet required to apply certain laws and policies to the 

BMDS. We have found that while the flexibility allows MDA latitude to 

manage the BMDS and to rapidly develop and field new systems, we 

have also found that this flexibility has hampered oversight and 

accountability. Our report recognizes the actions Congress has taken to 

improve the transparency and accountability of the BMDS development 

efforts through legislation specific to MDA, particularly to require MDA to 

report baselines to Congress. However, there are a number of 

requirements that are triggered by phases of the DOD acquisition process 

that are important to sound acquisition management. For example, we 

have previously found that MDA is not yet required to conduct an analysis 

of alternatives to compare potential solutions and determine the most cost 

effective weapon system to acquire nor is MDA yet required to obtain an 

independent cost estimate prior to beginning product development.

Second, DOD stated that it disagreed with our assessment that MDA’s 

cost estimates are not sufficiently reliable to support oversight, suggesting 

that the report be revised to include more of MDA’s efforts to improve the 

quality of its cost estimates. Since 2011, we have found that there are 

issues with the cost estimates and baseline reporting, including 

incomplete cost estimates due to the exclusion of military service 

operation and support costs as well as instability in the content of the 

baselines, which makes assessing progress difficult or impossible. While 

the draft report was being reviewed by DOD, we met with MDA officials 

who discussed more of their efforts to improve their cost estimates; 

however, we were not provided sufficient information to change our 

determination. We did clarify the report to better reflect the efforts they 

have undertaken. DOD stated in its response that MDA has included 

previously unreported costs in the baselines it provides to Congress, 

which we have previously found is an improvement to the amount of 

information reported to Congress, but which does not demonstrate that 

the quality of the cost estimates themselves have improved. DOD stated 

in its response that it has provided joint operation and support costs 

documentation for two programs reported in the 2013 BAR. However, we 

did not assess the joint operation and support costs because they were 

not included in the 2013 resource baselines reported to Congress. DOD 

also stated in its response that it received an assessment from us on cost 

estimate documentation for a third program. We did not perform a formal

assessment of the third program because it was cancelled and not 
Page 31 GAO-14-351 Missile Defense

included in the 2013 BAR. In order to assist MDA in improving its cost 

estimates, we did informally assess the third program’s cost estimate, but 

reached no conclusion as to its quality. However, we noted several issues 

in that informal review. For example, we concluded that because MDA did 

not provide a cost model to support the estimate we were unable to check 

the cost estimate for accuracy. Finally, DOD stated in its response that 

MDA has published and implemented a cost estimating handbook. We 

have previously found that fully implementing that handbook could 

improve the quality of MDA’s cost estimates. However, during this 

review, we specifically asked to review the cost estimate documentation 

supporting MDA’s fiscal year 2013 BAR baselines in order to assess its 

progress in implementing that handbook. An MDA senior cost official told 

us that the agency was working to fill in documentation gaps on existing 

cost estimates and that the estimates were not ready for us to review. In 

the course of our work, we concluded and informed MDA that the cost 

estimating process defined in that handbook has not been applied to any 

systems that are currently baselined or part of the BMDS. Until MDA is 

able to provide us with documentation that supports the actual baselines 

reported to Congress so we can independently assess the quality of the 

cost estimates, we have no basis to change our assessment.

Third, DOD disputed that MDA has not obtained independent cost 

estimates from DOD’s Office of the Director of Cost Assessment and 

Program Evaluation for any of the elements GAO reviewed since 2010. In 

response, we clarified the language in the report so that it specifically 

refers to the lack of independent cost estimates completed for any of the 

resource baselines reported to Congress in the 2013 BAR. We also 

clarified in the report that DOD’s Office of the Director of Cost 

Assessment and Program Evaluation has assessed other BMDS costs. 

DOD was unable to provide us with documentation of independent cost 

estimates completed for MDA’s BAR baselines, therefore, we have no 

basis to change our determination. 

Lastly, DOD identified 35 “technical and factual errors” in its technical 

comments. However, upon review we found that 29 were not technical or 

factual errors, but rather different conclusions, errors in DOD’s comments, 

or required additional substantiation that was not provided. We 

determined that 6 were actual technical or factual errors and therefore 

made the appropriate changes in those circumstances.
Page 32 GAO-14-351 Missile Defense

We are sending copies of this report to the Secretary of Defense and to 

the Director, MDA. In addition, the report is available at no charge on the 

GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, 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 report. GAO staff who made key contributions to this 

report are listed in appendix III.

Cristina Chaplain 

Director, Acquisition and Sourcing Management
Page 33 GAO-14-351 Missile Defense

List of Committees

The Honorable Carl Levin

Chairman

The Honorable James Inhofe

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Richard Durbin

Chairman

The Honorable Thad Cochran

Ranking Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Howard McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable Rodney Frelinghuysen

Chairman

The Honorable Pete Visclosky

Ranking Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 34 GAO-14-351 Missile Defense

To assess the Missile Defense Agency’s (MDA) progress and any 

challenges associated with developing, testing, and producing the ballistic 

missile defense system (BMDS) during fiscal year 2013, we examined the 

acquisition accomplishments of several missile defense elements and 

MDA’s targets program. Specifically, we reviewed the Aegis Ballistic 

Missile Defense (Aegis BMD) with Standard Missile-3 (SM-3) Block IB; 

Aegis Ashore; Aegis Modernized Weapon System Software; Army/Navy 

Transportable Radar Surveillance and Control Model 2 (AN/TPY-2); 

Command, Control, Battle Management, and Communications (C2BMC); 

Ground-based Midcourse Defense (GMD) System; Targets and 

Countermeasures; and Terminal High Altitude Area Defense (THAAD) 

elements because, as reported in the 2013 BMDS Accountability Report 

(BAR), these elements or programs have entered MDA’s product 

development, initial production, or production acquisition phase, but are 

not yet mature enough to be transferred to a military service and enter the 

formal DOD acquisition cycle for full-rate production and deployment.1

To assess the progress made as well as any remaining challenges MDA 

faces in reporting resource and schedule baselines that support 

oversight, we examined MDA’s reported baselines in the 2010, 2011, 

We 

reviewed key management documents for fiscal year 2013 including 

Program and Baseline Execution Reviews, which detailed program 

accomplishments and areas of concerns, and interviewed program 

element officials. We also examined MDA’s master test plan and flight 

test reports, and discussed the element- and BMDS-level test programs 

and test results with the BMDS Operational Test Agency and the 

Department of Defense’s (DOD) Office of the Director, Operational Test 

and Evaluation and office of Developmental Test and Evaluation. In 

addition, we also met with officials from MDA’s functional directorates 

including the Engineering Directorate to discuss the agency’s process for 

delivering and integrating BMDS capabilities as well as the Directorates 

for Acquisition and Operations to discuss significant internal and external 

events and decisions that occurred in fiscal year 2013, such as 

sequestration, that affected the agency’s overall acquisition of the BMDS.

 1

The 2013 BAR also includes acquisition information for modernizing and integrating the 

Upgraded Early Warning Radars in Clear, Alaska and Cape Cod, Massachusetts into the 

BMDS. We did not include these elements in our review because this was the first year 

MDA reported these baselines in the BAR and therefore we could not make comparisons 

to past years.

Appendix I: Objectives, Scope, and

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 35 GAO-14-351 Missile Defense

2012, and 2013 BARs.2 To be consistent with last year, we focused our 

assessment on the resource and schedule baselines as they continue to 

be the only reported baselines that have measurable goals, such as cost 

estimates and dates of program events, and separately explain when 

current estimates have deviated to a certain extent from the baselines set 

in prior BARs. We also examined the National Defense Authorization Act 

for Fiscal Year 2012, which required MDA to establish and maintain 

baselines for program elements or major portions of such program 

elements and outlined the information to be included in MDA’s baselines, 

as well as interviewed officials within MDA’s general counsel’s office.3 We 

also interviewed officials in MDA’s Acquisitions Directorate about how the 

agency establishes and manages its acquisition baselines and met with 

MDA officials in the Operations Directorate to discuss their progress in 

adopting best practices in cost estimating based on our Cost Guide.4 We 

also reviewed findings and recommendations from several of our past 

reports to see if MDA had made progress in improving the completeness, 

clarity, and stability of its reported resource and schedule baselines.5 In 

addition, we examined DOD acquisition policy such as the Interim DOD 

Instruction 5000.02 issued in November 2013 and the Defense 

Acquisition University’s Defense Acquisition Guidebook to discern how 

other major defense acquisition programs are required to report baselines 

and measure program progress. We also reviewed GAO’s cost and 

schedule guides, which outline best practices for establishing and 

managing program cost and schedule estimates.6

 2

MDA’s acquisition baselines include a resource, schedule, test, operational capacity, 

technical, and contract baselines.

3

Pub. L. No. 112-81, § 231(a) (2011), codified at 10 U.S.C. § 225.

4

In March 2011, we found that MDA’s reported cost estimates did not meet GAO’s best 

practices for high-quality estimates and recommended that MDA take steps to improve the 

quality of its estimates. DOD agreed with this recommendation and stated that MDA would 

follow the GAO Cost Estimating and Assessment Guide for each program reported in the 

BAR. See GAO, Missile Defense: Actions Needed to Improve Transparency and 

Accountability, GAO-11-372, (Washington, D.C.: Mar. 24, 2011). 

5

GAO, Missile Defense: Opportunity to Refocus on Strengthening Acquisition 

Management, GAO-13-432, (Washington, D.C.: Apr. 26, 2013); Schedule Best Practices 

Provide Opportunity to Enhance Missile Defense Agency Accountability and Program 

Execution, GAO-12-720R (Washington, D.C.: July 19, 2012); and GAO-11-372. 

6

GAO, GAO Cost Estimating and Assessment Guide, GAO-09-3SP (Washington, D.C.: 

March 2009) and Schedule Assessment Guide: Best Practices for Project Schedules, 

GAO-12-120G (Washington, D.C.: May 2012).
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-14-351 Missile Defense

To gauge the extent to which MDA reported changes or variances in the 

current baselines from the baselines presented in the prior year’s BAR 

and from when the baselines were initially established, we compared the 

2013 BAR resource and schedule baselines for each BMDS element in 

our review to the baselines presented in the 2012 and 2010 BARs. In 

order to compare unit costs calculated in different years, there were 

instances where it was necessary to convert prior cost estimates to match 

the base year of the estimates presented in the 2013 BAR.7

The National Defense Authorization Act for Fiscal Year 2013 directed 

GAO to provide separate assessments on several other missile defense 

related issues. Specifically, GAO was required to provide briefings on our 

views and to submit reports as soon as practicable to the congressional 

defense committees our assessments of DOD reports on (1) a 

comprehensive evaluation of alternatives for the Precision Tracking 

Space System and its conformance with GAO best practices for analyses 

of alternatives; (2) the Ground-based Midcourse Defense system’s test 

plan; (3) the status and progress of regional missile defense programs, 

including the adequacy of MDA’s existing and planned efforts to deploy a 

U.S. missile defense in Europe; and (4) the status of efforts to improve 

the homeland defense capability of the United States.

We 

performed these conversions using indexes published by the Office of the 

Secretary of Defense (Comptroller) in the National Defense Budget 

Estimates, commonly referred to as the “Green Book.”

8

Our work was performed at MDA locations including its headquarters in 

Fort Belvoir, Virginia and various program offices in Dahlgren, Virginia 

and Huntsville, Alabama. In Fort Belvoir, we met with officials from MDA’s 

Acquisition and Operations Directorates. In Dahlgren, we spoke with 

Because this 

additional mandated work covers the details on many BMDS elements, 

we do not include appendixes on each of the individual elements as we 

have done in prior reports under this mandate.

 7

By comparing costs presented in the same base year, we were able to ensure that cost 

changes in these dollar amounts were not due to inflation.

8

Pub. L. No. 112-239, § 224 (e), § 231 (e), § 229 (c), and § 228 (c). For our assessments 

of DOD’s reports, see GAO, Missile Defense: Precision Tracking Space System 

Evaluation of Alternatives, GAO-13-747R (Washington, D.C.: July 25, 2013) and Regional 

Missile Defense: DOD’s Report Provided Limited Information; Assessment of Acquisition 

Risks is Optimistic, GAO-14-248R (Washington, D.C.: Mar. 14, 2014). At the time of 

publication of this report, our work on DOD’s reports on the Ground-based Midcourse 

Defense system’s test plan and homeland defense is ongoing. 
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-14-351 Missile Defense

officials from the Aegis BMD SM-3 Block IB, Aegis Ashore, and Aegis 

Modernized Weapon System Software program offices. In Huntsville, we 

interviewed program officials for BMDS Sensors, C2BMC, GMD, and 

THAAD as well as officials in MDA’s Acquisition and Cost Directorates.

We also visited several contractor facilities that were working on 

programs covered in our review. These facilities were located in 

Huntsville and Courtland, Alabama as well as Tucson and Chandler, 

Arizona. In Huntsville, we discussed the manufacturing of the Aegis BMD 

SM-3 Block IB interceptor with Raytheon officials and met with GMD’s 

prime contractor, Boeing, to discuss progress in resolving development 

challenges and their plans to deliver additional interceptors. In Courtland, 

we met with officials from Lockheed Martin to discuss the production of 

the extended medium-range ballistic missile target, which was used in 

flight test operational 01 on September 10, 2013. In Tucson and 

Chandler, Arizona, we met with GMD’s subcontractors Raytheon and 

Orbital to discuss their progress in resolving development challenges with 

the interceptor, flight testing, and future development efforts. We also 

interviewed officials from various testing agencies located in Arlington, 

Virginia and Huntsville, Alabama. In Arlington, we met with officials from 

DOD’s Director, Operational Test and Evaluation, as well as DOD’s 

Director of Developmental Test and Evaluation, to discuss MDA’s test 

plans and results from recent tests. Lastly, in Huntsville, we spoke with 

officials from the BMDS Operational Test Agency to discuss MDA’s 

performance assessment.

We conducted this performance audit from April 2013 to April 2014 in 

accordance with 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.
Appendix II: Comments from the

Department of Defense

Page 38 GAO-14-351 Missile Defense

Appendix II: Comments from the

Department of Defense
Appendix II: Comments from the

Department of Defense

Page 39 GAO-14-351 Missile Defense
Appendix II: Comments from the

Department of Defense

Page 40 GAO-14-351 Missile Defense
Appendix II: Comments from the

Department of Defense

Page 41 GAO-14-351 Missile Defense
Appendix II: Comments from the

Department of Defense

Page 42 GAO-14-351 Missile Defense
Appendix II: Comments from the

Department of Defense

Page 43 GAO-14-351 Missile Defense
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 44 GAO-14-351 Missile Defense

Cristina Chaplain (202) 512-4841 or chaplainc@gao.gov

In addition to the contact named above, David Best, Assistant Director; 

Aryn Ehlow; Meredith Allen Kimmett; Wiktor Niewiadomski; Kenneth E. 

Patton; John H. Pendleton; Karen Richey; Steven Stern; Roxanna Sun, 

Robert Swierczek; Brian Tittle; Hai V. Tran; and Alyssa Weir made key 

contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Acknowledgments

(121138)
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