Report to Congressional Committees

United States Government Accountability Office

GAO 

DEFENSE 

ACQUISITIONS 

Production and 

Fielding of Missile 

Defense Components 

Continue with Less 

Testing and Validation 

Than Planned 

March 2009 

GAO-09-338 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 2009

DEFENSE ACQUISITIONS

Production and Fielding of Missile Defense 

Components Continue with Less Testing and 

Highlights of GAO-09-338, a report to Validation Than Planned 

Congressional Committees 

The Missile Defense Agency (MDA) 

has spent about $56 billion and will 

spend about $50 billion more 

through 2013 to develop a Ballistic 

Missile Defense System (BMDS). 

GAO was directed to assess the 

annual progress MDA made in 

developing the BMDS as well as 

improvements in accountability 

and transparency in agency 

operations, management processes, 

and the new block strategy. To 

accomplish this, GAO reviewed 

contractor cost, schedule, and 

performance; tests completed; and 

the assets fielded during 2008. GAO 

also reviewed pertinent sections of 

the U.S. Code, acquisition policy, 

and the activities of the new Missile 

Defense Executive Board (MDEB). 

An appendix on the effect the 

cancellation of a Ground-based 

Midcourse Defense flight test 

(FTG-04) had on BMDS 

development is also included. 

What GAO Recommends

GAO recommends that the MDEB 

assess how the transparency and 

accountability of MDA acquisitions 

can be strengthened without losing 

the benefits of MDA’s existing 

flexibilities. Meanwhile, MDA 

should improve its cost and test 

baselines; tie modeling and 

simulation needs into test 

objectives; provide more time to 

analyze tests; better coordinate 

with independent testers; 

synchronize development, 

manufacturing, and fielding with 

testing and validation; complete a 

key developmental test; and 

strengthen the basis for capability 

declarations. DOD agreed with 10 

of the 11 recommendations and 

partially agreed with one. 

Cost 

MDA has not yet established baselines for total costs or unit costs, both 

fundamental markers most programs use to measure progress. Consequently, 

for the sixth year, GAO has not been able to assess MDA’s actual costs against 

a baseline of either total costs or unit costs. MDA planned to establish such 

baselines in 2008 in response to past GAO recommendations, but has delayed 

this until 2009. GAO was able to assess the cost performance on individual 

contracts, and project an overrun at completion of between $2 billion and $3 

billion. However, because in some cases the budgeted costs at completion—

the basis for our projection—has changed significantly over time as 

adjustments were made, this projection does not capture as cost growth the 

difference between the original and current budgeted costs at completion. In 

one case, these costs increased by approximately five times its original value. 

Performance and Testing

While MDA completed several key tests that demonstrated enhanced 

performance of the BMDS, all elements of the system had test delays and 

shortfalls. Overall, testing achieved less than planned. For example, none of 

the six Director’s test knowledge points established by MDA for 2008 were 

achieved. Poor performing target missiles have been a persistent problem. 

Testing shortfalls have slowed the validation of models and simulations, 

which are needed to assess the system’s overall performance. Consequently, 

the performance of the BMDS as a whole can not yet be determined. 

Schedule

Although fewer tests have been conducted than planned, the production and 

fielding of assets has proceeded closer to schedule. Except for no groundbased interceptors being delivered, all other radars, standard missiles, and 

software were delivered as planned. However, some deliveries, such as 

enhanced Exoatmospheric Kill Vehicles, will now precede test results. In 

most cases, MDA has also reduced the bases it planned to use to declare when 

capabilities are operational in the field. Thus, fielding decisions are being 

made with a reduced understanding of system effectiveness. 

Transparency, Accountability, and Oversight

Improvement in this area has been limited. The Missile Defense Executive 

Board (MDEB) has acted with increased authority in providing oversight of 

MDA and the BMDS. However, transparency and accountability into MDA’s 

work is limited by the management fluidity afforded through the lack of cost 

baselines, an unstable test baseline, continued use of development funds to 

produce assets for fielding, and renewed potential for transferring work from 

one predefined block to another. A better balance must still be struck 

between the information Congress and the Department of Defense need to 

conduct oversight of the BMDS and the flexibility MDA needs to manage 

across the portfolio of assets that collectively constitute the system’s 

capability. At this point, the balance does not provide sufficient information 

for effective oversight. 

To view the full product, including the scope 

and methodology, click on GAO-09-338.

For more information, contact Paul Francis at 

(202) 512-4841 or francisp@gao.gov. 
Contents 

Letter 1

Background 3

Cost Tracking Deficiencies Hinder Assessment of Cost 

Performance 9 

While Some Tests Succeeded, Others Were Deferred; Overall 

System Performance Cannot Yet Be Assessed 25 

Production, Fielding, and Declaration of Capabilities Proceed 

despite Delays in Testing and Assessments 40 

Production and Fielding of BMDS Systems Getting Ahead of 

Testing 42 

Limited Progress Made in Improving Transparency and 

Accountability 52 

Conclusions 59 

Recommendations for Executive Action 60 

Agency Comments and Our Evaluation 62 

Appendix I Comments from the Department of Defense 65 

Appendix II BMDS Prime Contractors Exceed Budgeted Cost and 

Schedule Performance during Fiscal Year 2008 69 

Aegis BMD Contractors Experienced Mixed Performance during 

the Fiscal Year 70 

ABL Contractor Overran Budgeted Fiscal Year Cost 73 

C2BMC Program Incurred Negative Cumulative and Fiscal Year 

Variances 74 

GMD Contractor Maintained Negative Cumulative Cost and 

Schedule Variances throughout the Fiscal Year 76 

KEI Cost and Schedule Performance Continued to Decline after 

Replan 78 

Limited Contractor Data Prevented Analysis of All MKV Task 

Orders 79 

Sensors’ Radar Experienced Fiscal Year Cost and Schedule Growth 83 

Technical Issues Drove STSS Cost Growth during the Fiscal Year 84 

Targets and Countermeasures Program’s Rebaseline Positively 

Affected Fiscal Year Schedule Variances 86 

THAAD Contractor Spent More Money and Time Than Budgeted 87 

Page i GAO-09-338 Defense Acquisitions 
Appendix III FTG-04 Flight Test Cancellation 90 

Faulty Telemetry Component Caused Delay and Subsequent 

Cancellation of FTG-04 90 

Most FTG-04 Test Objectives Will Be Allocated to Follow-on Tests 93 

Cancellation Eliminates One of Few Opportunities to Demonstrate 

GMD Capabilities 94 

Conclusions 96 

Appendix IV Reduced Basis for Capability Declarations 97 

Appendix V Scope and Methodology 101 

Appendix VI GAO Contact and Staff Acknowledgments 104 

Tables 

Table 1: MDA BMDS Elements 4 

Table 2: MDA Block Construct 6 

Table 3: Fiscal Year 2008 Capability Goals for Blocks 1.0, 2.0, and 

3.1/3.2 9 

Table 4: Analysis of Contractor Realignments from Contract Start 

through Fiscal Year 2008 18 

Table 5: Prime Contractor Fiscal Year 2008 and Cumulative Cost 

and Schedule Performance 22 

Table 6: Test and Targets Issues 26 

Table 7: Status of Fiscal Year 2008 Director’s Test Knowledge 

Points 33 

Table 8: BMDS Deliveries and Total Fielded Assets as of September 

30, 2008 41 

Table 9: MDA BMDS Test Baseline Revisions 58 

Table 10: Timeline of Events 91 

Table 11: Engagement Sequence Groups with Revised Basis for 

Fiscal Year 2008 Capability Declarations 97 

Table 12: Block 1.0 Engagement Sequence Groups with Revised 

Basis for Completion at End of Fiscal Year 2009 99 

Page ii GAO-09-338 Defense Acquisitions 
Figures 

Figure 1: Estimated Percentage of Total BMDS Block and 

Capability Development Funds through Fiscal Year 2013 

Expected to Be Baselined in 2009 12 

Figure 2: Difference in Traditional Unit Cost Reporting and MDA’s 

Unit Cost Reporting 14 

Figure 3: GMD Reduction in Flight Tests from January 2006 to 

March 2010 29 

Figure 4: GMD Flight Test and Fielding Plan for Interceptors 

Comparison—September 2006 versus January 2009 43 

Figure 5: Timeline Showing Declaration of Capabilities in Fiscal 

Year 2008 47 

Figure 6: Timeline Showing Deferred Declaration of Capabilities 

from Fiscal Year 2008 to 2009 50 

Figure 7: Aegis BMD Weapon System Fiscal Year 2008 Cost and 

Schedule Performance 71 

Figure 8: Aegis BMD SM-3 CLIN 1 Fiscal Year 2008 Cost and 

Schedule Performance 72 

Figure 9: ABL Fiscal Year 2008 Cost and Schedule Performance 73 

Figure 10: C2BMC Fiscal Year 2008 Cost and Schedule 

Performance 75 

Figure 11: GMD Fiscal Year 2008 Cost and Schedule Performance 77 

Figure 12: KEI Fiscal Year 2008 Cost and Schedule Performance 78 

Figure 13: MKV Task Order 6 Fiscal Year 2008 Cost and Schedule 

Performance 80 

Figure 14: MKV Task Order 7 Fiscal Year 2008 Cost and Schedule 

Performance 81 

Figure 15: MKV Task Order 8 Fiscal Year 2008 Cost and Schedule 

Performance 82 

Figure 16: Sensors Fiscal Year 2008 Cost and Schedule 

Performance 83 

Figure 17: STSS Fiscal Year 2008 Cost and Schedule Performance 85 

Figure 18: Targets and Countermeasures Fiscal Year 2008 Cost and 

Schedule Performance 87 

Figure 19: THAAD Fiscal Year 2008 Cost and Schedule 

Performance 88 

Page iii GAO-09-338 Defense Acquisitions 
Abbreviations 

ABL Airborne Laser 

Aegis BMD Aegis Ballistic Missile Defense 

BMDS Ballistic Missile Defense System 

C2BMC Command, Control, Battle Management, and 

 Communications 

CE Capability Enhancement 

CLIN Contract Line Item Number 

DOD Department of Defense 

DOT&E Director, Operational Test and Evaluation 

EKV Exoatmospheric Kill Vehicle 

FTF Flexible Target Family 

GBI Ground-based Interceptor 

GMD Ground-based Midcourse Defense 

KEI Kinetic Energy Interceptor 

MDA Missile Defense Agency 

MDEB Missile Defense Executive Board 

MKV Multiple Kill Vehicle 

PCME Pulse Code Modulation Encoder 

SAR Selected Acquisition Report 

STSS Space Tracking and Surveillance System 

THAAD Terminal High Altitude Area Defense 

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Page iv GAO-09-338 Defense Acquisitions 
United States Government Accountability Office

Washington, DC 20548 

 

March 13, 2009 

Congressional Committees 

The Missile Defense Agency (MDA) has spent almost $56 billion since its 

initiation in 2002 on developing and fielding a Ballistic Missile Defense 

System (BMDS) and is on course to spend about $50 billion more over the 

next 5 years. In 2002, the President directed the Department of Defense 

(DOD) to “deploy a set of initial missile defense capabilities beginning in 

2004”.1

 MDA began delivering an initial capability in late 2004, as directed, 

and deployed an initial capability in 2005 by concurrently developing and 

fielding BMDS assets.2

 Though this approach facilitated the rapid 

deployment of an initial BMDS capability, as MDA has proceeded beyond 

that initial capability, it has been less successful in fostering adequate 

knowledge of system capabilities prior to manufacturing and fielding 

BMDS assets. 

In its fiscal year 2002, 2007, and 2008 National Defense Authorization Acts, 

Congress directed GAO to assess the cost, schedule, testing, and 

performance progress that MDA is making in developing the BMDS.3

 We 

 

1

 This initial BMDS capability was to defend the U.S. homeland, deployed troops, friends, 

and allies against ballistic missiles of all ranges in all phases of flight. MDA was tasked with 

carrying out the President’s direction. 

2

 According to MDA, the agency was expected to field an initial increment of missile 

defense capability that provides initial protection of the entire United States from North 

Korea, partial protection of the United States from the Middle East threat and protection of 

deployed forces, allies, and friends with terminal defenses. MDA fielded a limited capability 

that included initial versions of Ground-based Midcourse Defense; Aegis Ballistic Missile 

Defense; Patriot Advanced Capability-3; and Command, Control, Battle Management, and 

Communications elements. MDA expected to enhance these initial capabilities and over 

time, produce an overarching BMDS capable of protecting the United States, deployed 

forces, friends, and allies from ballistic missile attacks of all ranges. 

3

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

(2001); John Warner National Defense Authorization Act for Fiscal Year 2007, Pub. L. No. 

109-364, § 224 (2006); and National Defense Authorization Act for Fiscal Year 2008, Pub. L. 

No. 110-181, § 225 (2007). 

Page 1 GAO-09-338 Defense Acquisitions 
 

have delivered assessments covering fiscal years 2003 through 2007.4 This 

report assesses the progress made during fiscal year 2008 toward BMDS 

goals as well as the progress MDA made in improving accountability and 

transparency through its agency operations, management, processes, and 

new block strategy. This report also includes an appendix that addresses 

the Senate Armed Services Committee’s request that we review the 

reasons behind and the effects on BMDS development of the cancellation 

of a Ground-based Midcourse Defense flight test designated FTG-04. 

To assess progress during fiscal year 2008, we examined the 

accomplishments of 10 BMDS elements that MDA is developing and 

fielding: the Aegis Ballistic Missile Defense (Aegis BMD); Airborne Laser 

(ABL); BMDS Sensors; Command, Control, Battle Management, and 

Communications (C2BMC); Ground-based Midcourse Defense (GMD); 

Kinetic Energy Interceptors (KEI); Multiple Kill Vehicles (MKV); Space 

Tracking and Surveillance System (STSS); Targets and Countermeasures; 

and Terminal High Altitude Area Defense (THAAD).5

 These elements 

collectively account for about 80 percent of MDA’s research and 

development budget. We also examined MDA’s Fiscal Year 2008 Statement 

of Goals, Program Execution Reviews, test plans and reports, production 

plans, and Contract Performance Reports. We interviewed officials within 

program offices and within MDA functional directorates, such as the 

Directorate for Cost Estimating. In addition, we discussed each element’s 

test program and its results with the BMDS Operational Test Agency and 

DOD’s Office of the Director, Operational Test and Evaluation (DOT&E). 

 

4

 We did not assess MDA’s progress in fiscal year 2002 as the agency did not establish goals 

for that fiscal year. We delivered the following reports for fiscal years 2003 through 2007: 

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 Acquisition Strategy Generates Results but Delivers Less at a Higher 

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

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

(Washington, D.C.: Mar.14, 2008). 

5

 The BMDS also includes an 11th element, Patriot Advanced Capability-3, which has been 

transferred to the Army for production, operation, and sustainment. This report does not 

evaluate Patriot Advanced Capability-3 because its initial development is complete and is 

now being managed by the Army. 

Page 2 GAO-09-338 Defense Acquisitions 
 

In assessing progress made toward improving accountability and 

transparency, we held discussions with officials in MDA’s Directorate of 

Business Operations to determine whether its new block structure 

improved accountability and transparency of the BMDS. In addition, we 

reviewed pertinent sections of the U.S. Code to compare MDA’s current 

level of accountability with federal acquisition laws. We also interviewed 

officials from the Office of the Under Secretary of Defense for Acquisition, 

Technology and Logistics to discuss the oversight role of the Missile 

Defense Executive Board. Additionally, we reviewed the board’s charter to 

determine its oversight responsibility. Our scope and methodology is 

discussed in more detail in appendix V. 

We conducted this performance audit from May 2008 to March 2009 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. 

MDA’s mission is to develop an integrated and layered system to defend 

the United States and its deployed forces, friends, and allies against 

ballistic missile attacks. The BMDS aims to engage all ranges of ballistic 

missiles during all phases of flight. This challenging expectation requires 

complex coordination within an integrated system of defensive 

components—space-based sensors, surveillance and tracking radars, 

advanced interceptors, and a battle management, command, control, and 

communication component. 

Background 

A typical engagement scenario to defend against an intercontinental 

ballistic missile would occur as follows: 

• Infrared sensors aboard early-warning satellites detect the hot plume 

of a missile launch and alert the command authority of a possible 

attack. 

• Upon receiving the alert, land- or sea-based radars are directed to 

track the various objects released from the missile and, if so designed, 

to identify the warhead from among spent rocket motors, decoys, and 

debris. 

• When the trajectory of the missile’s warhead has been adequately 

established, an interceptor—consisting of a kill vehicle mounted atop a 

Page 3 GAO-09-338 Defense Acquisitions 
 

booster—is launched to engage the threat. The interceptor boosts 

itself toward a predicted intercept point and releases the kill vehicle. 

• The kill vehicle uses its onboard sensors and divert thrusters to detect, 

identify, and steer itself into the warhead. With a combined closing 

speed of up to 10 kilometers per second (22,000 miles per hour), the 

warhead is destroyed above the atmosphere through a “hit to kill” 

collision with the kill vehicle. 

• Some interceptors use sensors to steer themselves into the inbound 

ballistic missile. Inside the atmosphere, these systems kill the ballistic 

missile using a range of mechanisms such as direct collision between 

the missile and the inbound ballistic missile or killing it with the 

combined effects of a blast fragmentation warhead (heat, pressure, 

and grains/shrapnel) in cases where a direct hit does not occur. 

Table 1 provides a brief description of 10 BMDS elements currently under 

development by MDA. 

Table 1: MDA BMDS Elements 

BMDS element Missile defense role 

Aegis Ballistic Missile Defense Aegis BMD is a ship-based missile defense system designed to destroy short- to 

intermediate-range ballistic missiles during the midcourse phase of their flight; its 

capability is being expanded to include the terminal phase of flight. Aegis BMD’s mission 

is twofold—an engagement capability against regional ballistic missile threats providing 

the BMDS with its first mobile, global, deployable and proven capability that can destroy 

ballistic missiles both above and within the atmosphere, as well as a forward-deployed 

combatant to search, detect, and track ballistic missiles of all ranges and transmit track 

data to the BMDS, performing a strategic role in homeland defense. To date, 18 ships 

have been upgraded for the Aegis BMD mission. MDA is planning to procure 147 Aegis 

BMD missiles—the Standard Missile-3 (SM-3)—from calendar years 2004 through 2013.

Airborne Laser ABL is an air-based missile defense system designed to destroy all classes of ballistic 

missiles during the boost phase of their flight. ABL employs a high-energy chemical laser 

to rupture a missile’s motor casing, causing the missile to lose thrust or flight control. 

MDA plans to demonstrate proof of concept in a system demonstration in 2009. 

BMDS Sensors MDA is developing radars for fielding as part of the BMDS. The BMDS uses these 

sensors to identify and track ballistic missiles. The ultimate goal is to provide continuous 

tracking of ballistic missiles in all phases of flight and increase the probability for 

successful intercept. 

Command, Control, Battle Management 

and Communications 

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

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

BMDS. 

Page 4 GAO-09-338 Defense Acquisitions 
 

BMDS element Missile defense role 

Ground-based Midcourse Defense GMD is a ground-based missile defense system designed to destroy intercontinental 

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

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

Currently, GMD has fielded 24 interceptors with the original configuration, known as 

Capability Enhancement-I (CE-I). GMD has recently begun emplacing a new 

configuration of the kill vehicle known as the Capability Enhancement-II (CE-II). This 

configuration was designed to replace obsolete parts. MDA is planning on fielding 44 

interceptors at Fort Greely, Alaska, and Vandenberg Air Force Base, California, by fiscal 

year 2011. MDA also plans to field 10 interceptors in Europe. 

Kinetic Energy Interceptors KEI is a mobile land-based missile defense system designed to destroy medium, 

intermediate, and intercontinental ballistic missiles during the boost and midcourse 

phases of their flight. The agency plans to conduct the first booster flight test in 2009. 

The KEI capability could be expanded to sea basing in subsequent blocks. 

Multiple Kill Vehicle The MKV is being designed as a spiral improvement to counter advancements in the 

threat for midcourse interceptors. This approach mitigates the need to pinpoint a single 

lethal object in a threat cluster by using numerous kill vehicles to engage all objects that 

might be lethal. The system under development consists of a carrier vehicle housing a 

number of smaller kill vehicles, which would primarily benefit the Ground-based and 

Kinetic Energy interceptors as well as the Aegis BMD SM-3. To mitigate risk, MDA has 

initiated a parallel acquisition with a second contractor. Because MKV is in the 

technology development stage, it does not project an initial capability date, but the 

program expects that the capability could be available by 2017. 

Space Tracking and Surveillance System STSS is designed to be a low-orbit constellation of space-based sensors that is able to 

observe targets in all phases of trajectory. MDA intends to launch two demonstration 

satellites in 2009. If the demonstration satellites perform successfully, MDA plans to 

have an operational capability of next-generation satellites. 

Targets and Countermeasures MDA maintains a series of targets used in BMDS flight tests to present authentic threat 

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

ranges and capabilities. In 2005, MDA began developing a new family of targets, the 

Flexible Target Family (FTF), which was to represent evolving threats of all ranges. 

However, in 2008, MDA narrowed the FTF focus to developing one long-range 72-inch 

target, the LV-2. The first launch of this target is scheduled for 2009. 

Terminal High Altitude Area Defense THAAD is a ground-based missile defense system designed to destroy short- and 

medium-range ballistic missiles during the terminal phase of flight, both inside and 

outside of the atmosphere. Its mission is to defend deployed U.S. forces and population 

centers. MDA plans to field a fire unit, which includes 24 missiles, in 2010 and a second 

unit in 2011. MDA also plans to field two additional fire units, which includes 24 missiles 

each, in 2012 and 2013, respectively. 

Source: MDA data. 

To manage BMDS development, MDA uses an acquisition strategy defined 

by a block structure. From its inception in 2002 through 2007, MDA 

developed BMDS capability in biennial increments, ultimately delivering 

two blocks—Block 2004 and Block 2006. These 2-year blocks each built on 

preceding blocks and enhanced the development and capability of the 

BMDS. However, in response to recommendations from GAO, in 

December 2007 MDA announced a new block structure that was intended 

to improve the program’s transparency, accountability, and oversight. The 

Page 5 GAO-09-338 Defense Acquisitions 
 

new blocks are not based on biennial time periods, but instead focus on 

fielding capabilities that address particular threats. Because the new block 

structure is not aligned to regular time periods, multiple blocks are 

underway concurrently. Table 2 details the current blocks and categories 

included in the BMDS block structure. 

Table 2: MDA Block Construct 

Block Description 

Block 1.0: Defend U.S. from Limited North 

Korean Long-Range Threats 

Provides an initial capability to protect the United States from a limited North Korean 

attack. It is the most mature capability and will be the first block delivered to the 

warfighter. 

Block 2.0: Defend Allies and Deployed 

Forces from Short- to Medium-Range 

Threats in One Region/Theater 

Includes capabilities needed to defend allies and deployed forces from short- to 

medium-range threats in one region/theater. 

Block 3.0: Expand Defense of the U.S. to 

Include Limited Iranian Long-Range 

Threatsa

Builds on the foundation established in Block 1.0 and includes capabilities needed to 

expand the defense of the United States against limited Iranian long-range threats. 

Block 4.0: Defend Allies and Deployed 

Forces in Europe from Limited Iranian LongRange Threats 

Builds on the foundation established by Blocks 1.0 and 3.0 capabilities needed to 

defend allies and deployed forces in Europe from limited Iranian long-range threats and 

to expand protection of the U.S. homeland. 

Block 5.0: Expand Defense of Allies and 

Deployed Forces from Short- to 

Intermediate-Range Threats in Two 

Regions/Theaters 

Builds on the foundation established by Block 2.0 and includes capabilities needed to 

expand defense of allies and deployed forces from short- to intermediate-range threats 

in two regions/theaters. 

Categories 

Capability Development Includes BMDS elements and other development elements that are not baselined in the 

existing agency block structure, such as ABL, KEI, and MKV. These programs have 

knowledge points tailored to critical risks. 

Sustainment Funding for Contractor Logistics Support and other operation and support activities. 

Mission Area Investment Investments that cut across several blocks and cannot be reasonably allocated to a 

specific block. Examples include modeling and simulation and intelligence and security. 

MDA Operations Contains operations support functions such as MDA headquarters management. 

Source: MDA data. 

a

Block 3.0 is subdivided into three sections: 3.1, 3.2, and 3.3. Block 3.0 will focus on more 

sophisticated sensors and algorithms, and therefore includes upgrades to the Ground-based 

Interceptors, sensors, and the C2BMC system to allow discrimination of the threat missile. MDA is 

pursuing two parallel and complementary approaches to counter complex countermeasures. The full 

implementation of this approach will be conducted in phases, with the first phase referred to as Near 

Term Discrimination (Block 3.1/3.2) and the second phase as Improved Discrimination and System 

Track. (Block 3.3). 

Page 6 GAO-09-338 Defense Acquisitions 
 

MDA uses a Statement of Baselines and Goals to report modifications to 

established block baselines.6

 For those blocks that are currently or will 

soon be underway, block baselines are created to make a firm 

commitment to Congress. The Statement of Goals also includes the 

following: 

• BMDS Baseline Capabilities – Assets and engagement sequence 

groups that will be made available for fielding for a particular block.7

During 2008, cost baselines were under development for Block 2.0 and 

Block increments 3.1/3.2. MDA established schedule and performance 

baselines for Blocks 1.0, 2.0, 3.1, and 3.2 in 2008. 

• BMDS Capability Goals – Assets and engagement sequence groups 

expected to be made available for future blocks. 

• Adversary Benchmarks – Adversary missile systems used for block 

performance estimates. 

• BMDS Budget Breakdowns – Detailed fielding, development, and 

integration budgets for each block and BMDS Capability Development 

activity. 

MDA also uses an incremental declaration process to designate BMDS 

capability for its blocks. Three capability designations are applied to all 

BMDS elements, their hardware and software components, and 

engagement sequence groups. This allows these BMDS features to play a 

limited role in system operations before they have attained their expected 

level of capability. Each capability designation in the delivery schedule 

represents upgraded capacity to support the overall function of BMDS in 

its mission as well as the level of MDA confidence in the system’s 

performance. The designations are defined as follows: 

 

6

 Beginning in 2009, this report—previously referred to as the Statement of Goals—will be 

called the BMDS Accountability Report. 

7

 BMDS hardware and software are grouped into engagement sequence groups, each of 

which is the specific combination of all sensors, weapons, and C2BMC capability that are 

needed to detect, track, and intercept a particular threat. The engagement sequence group 

construct was created as an engineering tool to provide a simple representation of BMDS 

capabilities, integration, and functionality and is defined as a unique combination of detectcontrol-engage functions performed by BMDS subsystems used to engage a threat ballistic 

missile. 

Page 7 GAO-09-338 Defense Acquisitions 
 

• Early Capability Delivery signifies readiness for contingency use. At 

this point, MDA has determined that the capability can be utilized by 

the BMDS. When integrated, the capability must be adequately 

demonstrated to build sufficient confidence that it will safely perform 

as intended without degrading the existing capabilities of the BMDS. 

• Partial Capability Delivery is an intermediate state of maturity 

indicating that a capability has been shown through testing to perform 

as intended in certain scenarios. At this point, MDA is sufficiently 

confident that the capability can support the warfighter’s partially 

mission-capable objectives and logistics support is adequate to achieve 

defensive operations. 

• Full Capability Delivery is the point at which a capability satisfies the 

BMDS block objectives and is considered to be completely mature and 

ready for full operational use. 

MDA’s capability goals for fiscal year 2008 for Blocks 1.0, 2.0, 3.1, and 3.2 

are shown in table 3. 

Page 8 GAO-09-338 Defense Acquisitions 
 

Table 3: Fiscal Year 2008 Capability Goals for Blocks 1.0, 2.0, and 3.1/3.2 

Engagement Sequence Group 

2008 Planned

Capability Deliveries

Block 1.0—Initial Defense of U.S. from North Korea Expected Completion: Fiscal Year 2009 

Ground-Based Interceptor (GBI) Launch on COBRA DANE/Upgraded Early Warning Radar Early

GBI Engage on COBRA DANE/Upgraded Early Warning Radar Full

GBI Engage on forward-based AN/TPY-2 radar Full

GBI Engage on Sea-based X-band radar Early

GBI Launch on Sea-based X-band radar Early

Block 2.0—Initial Defense of Allied Forces Expected Completion: Fiscal Year 2011 

SM-2 Engage on shipboard Aegis radar (AN/SPY-1) Early

SM-3 Engage on shipboard Aegis radar (AN/SPY-1) Full

SM-3 Launch on remote on shipboard Aegis radar (AN/SPY-1) Early

THAAD Interceptor Engage on AN/TPY-2 radar in the terminal mode Early

Block 3.1/3.2—Initial Defense of U.S. from Iran Expected Completion: Fiscal Year 2013 

GBI Engage on COBRA DANE/Upgraded Early Warning Radar Mod 1 (Fylingdales, UK; 

Forward-Based mobile radar (AN/TPY-2)) 

Partial

GBI Launch on shipboard Aegis radar Mod 1 (Fylingdales, UK; Sea-based X-band radar) Early

Source: GAO analysis of MDA data. 

Note: In addition to the engagement sequence groups listed above, as of October 2007 MDA had 

planned to declare the capability of several more engagement sequence groups in fiscal year 2008. 

However these were excluded from the February 2008 Statement of Goals. MDA continues to work 

toward declaring these additional engagement sequence groups. 

MDA has not yet established baselines for total costs or unit costs, both 

fundamental markers that most programs use to measure progress. MDA 

had planned to establish total cost baselines at the element and block 

levels in 2008, but the initial set of total cost baselines will not be available 

until the spring of 2009. Similarly, MDA has not established unit costs for 

selected assets, such as GBIs. Consequently, for the sixth year, we have 

been unable to assess MDA’s overall progress on total or unit cost. While 

MDA plans to establish some total cost baselines in 2009, most efforts will 

not be captured in a baseline. MDA also plans to establish unit costs, 

another improvement, but is considering a narrower definition of unit cost 

than is used by other weapon system programs. MDA’s definition will 

report a subset of procurement costs called flyaway costs, which only 

includes the major piece of equipment and excludes all research and 

development as well as some procurement costs—those for support 

equipment and spares. Moreover, these unit costs will only be tracked 

within those blocks that are baselined, which will represent a minority of 

Cost Tracking 

Deficiencies Hinder 

Assessment of Cost 

Performance 

Page 9 GAO-09-338 Defense Acquisitions 
 

those assets being produced and fielded. Without total cost baselines in 

place, the BMDS concept continually evolves, as indicated by the number 

of realignments to the program of work at the individual contract level. 

While the changing nature of the BMDS and the lack of total cost baselines 

precludes analysis of total cost progress, we were able to analyze 

contractor fiscal year performance on the current work under the 

contract. We were also able to project overruns or underruns at 

completion for BMDS contracts using the contracts’ current budgeted 

costs at completion as a basis for our projections. However, in some cases, 

the current budgeted cost at completion changed significantly over time. 

In one case, the budgeted cost at completion increased by approximately 

five times its original value. Our analysis of fiscal year 2008 progress 

shows that several prime contractors exceeded budgeted costs. 

Absence of Cost Baselines 

Prevents Assessment of 

System-Level Costs 

To provide accountability, major defense acquisition programs are 

required by statute to document program goals in an acquisition program 

baseline.8

 MDA is not yet required to establish an acquisition program 

baseline because of the acquisition flexibilities it has been granted. 

However, Congress has enacted legislation requiring MDA to establish 

some baselines.9

 Baselines serve an important discipline both by ensuring 

that the full cost commitment is considered before embarking on major 

development efforts and by identifying cost growth as a program 

proceeds. Since we began annual reporting on missile defense in 2004, we 

have been unable to assess overall progress on cost—that is, comparing 

BMDS baselined costs with actual costs. For example, under the prior 

block structure, we reported that BMDS costs grew by at least $1 billion, 

 

8

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

programs. The BMDS program meets the definition of a major defense acquisition program, 

which is defined in 10 U.S.C. § 2430; however, the requirement to establish a baseline is not 

triggered until entry into system development and demonstration. Because the BMDS has 

not yet formally entered the acquisition cycle, it has not yet been required to meet the 

minimum requirements of section 2435. 

9

 The Fiscal Year 2005 National Defense Authorization Act, Pub. L. No. 108-375 § 234(e), 

required the Director, MDA, to establish and report annually to Congress a cost, schedule, 

and performance baseline for each block configuration being fielded. Modification to the 

baseline and variations against the baseline must also be reported. In addition, the National 

Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181 § 223(g) required that 

no later than the submittal of the budget for fiscal year 2009, MDA shall “establish 

acquisition cost, schedule and performance baselines” for BMDS elements that have 

entered the equivalent of system development and demonstration or are being produced 

and acquired for operation fielding. 

Page 10 GAO-09-338 Defense Acquisitions 
 

but the total cost growth could not be determined because MDA did not 

account for all costs for a given block. 

In response to recommendations we made in March 2008, MDA agreed to 

develop cost estimates and to provide independent verification for blocks 

outlined under its new approach. Upon conclusion of those estimates, 

MDA will develop cost baselines. In addition, on April 1, 2008, the 

Director, MDA, testified before a Senate Armed Services Subcommittee 

that cost baselines for the new block structure would be available by the 

end of 2008. As of January 2009, the agency had not yet developed full cost 

baselines for any blocks. MDA plans to have these cost baselines for 

Blocks 2.0, 3.1 and 3.2 completed, independently reviewed by DOD’s Cost 

Analysis Improvement Group, and released by the spring of 2009. The only 

information that was available for this report was limited to budget 

projections for BMDS blocks and capability development for fiscal years 

2008 through 2013, totaling approximately $42 billion. 

Even with the release of some block cost estimates in 2009, all block costs 

will not be baselined and no date has been established for when the 

remaining block costs will be baselined. MDA does not plan to baseline 

Block 1.0 costs, but will provide the actual costs of the block since it is 

near completion. Full cost baselines for Block 2.0 are anticipated to be 

available in the spring of 2009, but only portions of Block 3.0 and none of 

Block 4.0 and 5.0 costs will be baselined at this time. As figure 1 shows, if 

MDA does complete baselines as planned, they will only cover about 26 

percent of its block and capability development costs. 

Page 11 GAO-09-338 Defense Acquisitions 
 

Figure 1: Estimated Percentage of Total BMDS Block and Capability Development 

Funds through Fiscal Year 2013 Expected to Be Baselined in 2009 

0

10

20

30

40

50

60

70

80

90

100

2010 2011 2012 2013

Percent

Fiscal year

Percentage of funding baselined (Blocks 2.0, 3.1, and 3.2)

Source: GAO analysis of MDA’s Fiscal Year 2009 Budget Estimate Submission and January 2008 Statement of Goals.

Note: Analysis is based on MDA’s fiscal year 2009 projected funding through fiscal year 2013 from 

the February 2008 request. Funding includes defense-wide resources projected for MDA. 

At this point, MDA plans to baseline between 2 and 26 percent of BMDS 

block and capability development costs from fiscal years 2010 to 2013 as 

depicted above. MDA has not determined when other blocks will be 

baselined. If other blocks were to be baselined before 2013, the percentage 

of funding baselined would be increased. The rapid decline in percentage 

of baselined funds also shows that initial baselines are being set late in a 

block’s duration. For example, Block 2.0 will be completed within 2 years 

of its baseline being set. If baselines are to facilitate management and 

oversight, they will have to be set sooner for Block 3.3 and beyond. 

Additionally, agency officials stated that although cost estimates will be 

developed for individual capability development efforts—such as ABL, 

KEI, and MKV—the agency does not plan to baseline their costs until these 

elements are matured and moved into a defined block. MDA may 

eventually baseline these elements as part of a block once a firm 

commitment can be made to Congress. The budgets for capability 

development elements account for approximately $22 billon—or more 

than half of MDA’s fiscal year 2008 6-year Future Years Defense Plan for 

BMDS blocks and capability development. 

Page 12 GAO-09-338 Defense Acquisitions 
 

Major defense acquisition programs are required by statute to report 

certain unit costs to Congress,10 track unit cost growth against their 

original and current baseline estimates, and perform an additional 

ed.11

g 

elop 

efense 

ment 

st of a delivered 

asset with its planned unit cost. For example, MDA plans to only report 

 

assessment of the program if certain cost growth thresholds are reach

This cost monitoring mechanism helps ensure that programs are bein

held accountable. MDA is not yet required to report these unit costs

because of the acquisition flexibilities it has been granted by DOD, but 

Congress has enacted legislation requiring MDA to provide unit cost 

reporting data for certain BMDS elements, and MDA does plan to dev

and report unit costs for some of its assets in the spring of 2009.12 The 

agency has also established thresholds for reporting cost growth. 

However, the approach MDA is taking, while an improvement, provides a 

much less comprehensive assessment of unit cost compared to the 

traditional acquisition costs that are typically reported for major d

acquisition programs. Normally, unit costs are reported in two ways: (1) 

program acquisition unit cost, which is the total cost for the develop

and procurement of, and system-specific military construction for, the 

acquisition program divided by the number of fully configured end items 

to be produced, or (2) average procurement unit cost, which is the total of

all funds programmed to be available for obligation for procurement 

divided by the number of end items to be procured.13 

MDA’s development of the BMDS outside of DOD’s normal acquisition

process makes it difficult to compare the actual unit co

Planned Unit Cost 

Reporting Will Not Be 

Comprehensive 

10 10 U.S.C. § 2432 requires DOD to submit to Congress a Selected Acquisition Report (SAR) 

for each major defense acquisition program that includes the program acquisition unit cost 

for each program. Unless waived by the Secretary of Defense, this requirement applies 

when funds have been appropriated for the program and the program has proceeded to 

system development and demonstration. Development programs that have not entered 

system development and demonstration may submit a limited SAR. MDA submits a limited 

SAR that does not include program acquisition unit costs. 

11 10 U.S.C. § 2433 (commonly referred to as Nunn-McCurdy). 

12 National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181 § 223(g) 

requires MDA to provide unit cost reporting data for each BMDS element that has entered 

the equivalent of the systems development and demonstration phase of acquisition or is 

being produced and acquired for operational use and secure independent estimation and 

verification of such cost reporting data. How MDA was to calculate these unit costs was 

not specified. 

13 10 U.S.C. § 2432. 

Page 13 GAO-09-338 Defense Acquisitions 
 

recurring unit flyaway costs for the blocks that are baselined.14 Figure 2

reveals the significant reduction in standard areas of costs covered by 

MDA’s approach compared to that normally reported for major defense 

acquisition programs. 

Figure 2: Difference in Traditional Unit Cost Reporting and MDA’s Unit Cost Reporting 

Flyaway cost

Procurement

• Prime equipment

• Development costs of Prime

 Mission Equipment and

support items

• Systems engineering

• Program management

• Test and evaluation

Military 

Construction

• Facilities

Procurement cost

Development cost

Program acquisition cost

Most major acquisitions programs report MDA plans to report

Procurement

• Support items

Procurement

• Initial spares

Procurement

• Prime equipment

Flyaway cost

Source: GAO analysis.

Research, Development, 

Test, and Evaluation

MDA’s decision to report only flyaway unit costs will not capture research 

and development costs associated with BMDS assets—which account for 

m

addition, the procurement costs for initial spares and support equipment 

are not included. Thus, while the flyaway cost baseline will provide 

visibility into changes in recurring manufacturing costs, it will not pr

ore than 97 percent of the nearly $56 billion MDA costs to date. In 

ovide 

 

14 Flyaway cost refers to the cost of procuring prime mission equipment (e.g., an aircraft, 

ship, tank, etc.). It is funded with Procurement appropriations and is part of the Investment 

cost category. This term includes the Work Breakdown Structure elements of Prime 

Mission Equipment, System Engineering/Program Management, System Test and 

Evaluation, Warranties, and Engineering Changes. 

Page 14 GAO-09-338 Defense Acquisitions 
 

a basis for comparison with the costs of other DOD programs. If a cost 

increase occurs in research and development or nonrecurring 

procurement, it will not be reported in MDA’s unit cost. 

Agency officials told us that the reason for using flyaway unit c

the new MDA block structure. They further explained tha

osts was 

t within the 

block structure, there are many cases where MDA procures and delivers a 

 are 

he 

s 

A 

the 

e in place for the full scope of 

the BMDS, in some cases the work currently under contract changes 

equently. These changes manifest themselves in realignments that often 

ents 

es 

Frequent Realignments 

Indicate That Full Scope Is 

weapon system for more than one block and, in some cases, the same 

configuration in more than one block. For example, THAAD deliveries

included in Blocks 2.0 and 5.0. Agency officials cite this as a key difference 

between MDA and other defense programs. For MDA, most of the 

development costs are assigned to the first block where a capability is 

delivered and very little of the development cost is assigned to subsequent 

blocks. MDA officials further stated that if the agency were to use t

standard unit cost methodology, it would show very dissimilar unit cost

between the first and subsequent block deliveries and the difference could 

not be explained by learning curves and manufacturing efficiencies. MD

officials also told us that they chose unit flyaway cost for unit cost 

reporting because flyaway cost provides a better measure of what the 

individual system components cost to procure. However, MDA is not 

precluded from also determining and reporting unit costs by taking 

entire cost of the asset being developed without regard to the capability or 

block for which it is originally developed. 

Without a firm cost commitment or baselin

fr

add scope, cost and time to the value of the work under the contract. 

Since contracts began on the BMDS, MDA has performed 31 realignm

where, in some cases, the period of stability between these major 

realignments average only between 1 to 2 years. These frequent chang

indicate that the total BMDS effort has not been fully determined and is 

likely to grow. While we have been able to make an assessment of 

contractor costs, that assessment is limited to the current approved 

program. 

Not Yet Determined 

Page 15 GAO-09-338 Defense Acquisitions 
 

Until total and unit cost baselines are established, the only tool for us to 

use in assessing BMDS costs is the costs reported on individual contracts 

. 

ram 

to describe a major realignment of 

the performance measurement baseline used to better correlate the 

•

 of the contract. 

nt 

ct and result in a 

For

cha nce work under the BMDS contracts first 

e 

t 

 

under BMDS’s Earned Value Management System.15 All BMDS contracts 

that we assessed have a cost and schedule baseline against which 

progress, measured by cost and schedule performance, can be measured

It is appropriate for a program to realign its current status with the

remaining contractual effort when officials conclude that the baseline no 

longer provides valid performance assessment information.16 A prog

can realign its current status with the remaining contractual effort through

rebaselines, replans, and restructures. 

• A rebaseline is a more general term

work plan with the baseline budget, scope, and schedule and can refer 

to replans and restructures as well. 

A replan is a reallocation of schedule or budget for the remaining 

effort within the existing constraints

• A restructure includes adding funds to the performance manageme

budget that exceed the value of the negotiated contra

contract modification. 

 purposes of this report, we refer to each of these types of program 

nges as realignments. Si

began, there have been a total of 31 realignments to the program which 

have added nearly $14 billion dollars to the value of the work under th

contracts. Table 4 shows the BMDS elements’ realignments since contrac

start. 

15 Earned Value Management is a program management tool that integrates the technical, 

cost, and schedule parameters of a contract. During the planning phase, an integrated 

baseline is developed by time phasing budget resources for defined work. As work is 

performed and measured against the baseline, the corresponding budget value is “earned.” 

16 According to the Over Target Baseline and Over Target Schedule Handbook, May 7, 

2003. 

Page 16 GAO-09-338 Defense Acquisitions 
 

[This page left blank intentionally.] 

Page 17 GAO-09-338 Defense Acquisitions 
 

Table 4: Analysis of Contractor Realignments from Contract Start through Fiscal 

Year 2008 

Contract start 

Date of the last 

realignmentsa

Total number 

realignments

ABL Nov-96 June-07 6

Aegis BMD Oct-03 Mar-06 1

C2BMC Feb-02 Nov-06 1

GMDbJan-01 Ongoing as-of Sep-08 8

KEI Dec-03 Apr-08 4

MKV Jan-04 July-07 4

Sensors Apr-03 N/A 0

STSS Apr-02 Oct-07 1

THAAD Aug-00 May-08 5

Targets and 

Countermeasures 

Dec-03 June-08 1

Total 31

Page 18 GAO-09-338 Defense Acquisitions 
 

Total contract value 

increase due to 

realignments 

Total period of 

performance increase 

due to realignments

(in months)

Average time

between realignments

Average contract value 

increase per year 

due to realignments 

Averageperiod

of performance

increase per year

due to realignments

(in months)

$2,590,881,491 80 2 years $218,947,732 7

0 0 4 years 11 months 0 0

36,514,950 0 6 years 7 months 5,546,575 0

8,086,607,706 27 1 year 1,054,774,918 4

1,639,800,000 20 1 year 2 months 345,000,000c4

51,213,935 14 1 year 2 months 10,974,415 3

0 0 N/A 0 0

232,293,329 13 6 years 5 months 36,201,558 2

1,179,000,000 15 1 year 7 months 146,000,000c2

41,300,000 0 4 years 9 months 8,694,737 0

$13,857,611,411 

Source: GAO analysis of MDA data. 

a

Dates for some elements reflect when realignments were completed and not necessarily when 

realignments were incorporated into cost and schedule performance reporting. 

b

The GMD program began a restructure during the fiscal year that includes a proposal to add 

between $350 million and $580 million to the contract value as well as 39 months to the period of 

performance. Since the replan is still ongoing and has not yet been placed on contract, this 

information is not totaled in the table above. 

c

The realignment data provided for the KEI and THAAD programs included rounding for contract 

value increases; therefore we have rounded the average contract value increase per year since 

contract start to reflect this. 

Some programs realigned more often than others. For example, GMD 

realigned work under its contract every year on average since its contract 

start in 2001, adding nearly 4 months and close to $1.1 billion to the time 

and value of the work under the contract with each realignment. KEI 

realigned its contract about every 14 months on average, adding more than 

$345 million and 4 months every year. Since contract start in 1996, ABL 

also added more than $218 million to the value of the work under its 

contract every year on average. Additionally, ABL adds approximately 7 

months to its period of performance every year on average—more than 

any other element. 

Page 19 GAO-09-338 Defense Acquisitions 
 

During fiscal year 2008, 5 of 10 BMDS elements performed a realignment—

KEI, Targets and Countermeasures, GMD, THAAD, and STSS. The KEI 

replan in April 2008 reflected an 8-month delay to the booster flight test 

date because of technical issues experienced by the program over the past 

2 years. Since the replan, the booster flight test has been further delayed to 

the fourth quarter of fiscal year 2009. However, during the replan, the 

program did not extend the period of performance or add value to the 

work under the contract. In June 2008, a delivery order under the Targets 

and Countermeasures element that is developing a new family of targets—

the FTF—performed a rebaseline adding more than $41 million to the 

value of the work under the contract but not extending the period of 

performance. The program changed major milestone delivery dates as a 

result of manufacturing delays for some systems, caused principally by 

qualification program failures, subsequent redesigns, and requalification 

efforts. 

GMD, THAAD, and STSS added time and money to the value of the work 

under their contracts during the fiscal year.17 GMD’s ongoing restructure 

includes a proposal to add between $350 million and $580 million to the 

value of the work under contract and more than 3 years to the period of 

performance. This ongoing restructure rephases and rescopes ongoing 

efforts to refine European capability requirements and to adjust program 

content as well as perform weapon system integration, perform flight test 

planning, and work to develop the two-stage booster among other tasks. 

During its realignment in May 2008, THAAD added approximately $80 

million and 3 months citing cost effects from insufficient target 

availability. In October 2007, STSS replanned work citing funding 

constraints and the addition of STSS software upgrades. This resulted in 

the program changing its launch date from December 2007 to July 2008 

and adding approximately $232 million to the value of the work under 

contract and 13 months to its period of performance. Since the replan, the 

program has further delayed launch of its demonstrator satellite to the 

third quarter of fiscal year 2009. 

 

17 The GMD program’s replan began in fiscal year 2008 but is currently ongoing and, as 

such, was not totaled into table 4. 

Page 20 GAO-09-338 Defense Acquisitions 
 

Our analysis of contractor costs indicates that during fiscal year 2008, 

MDA contractors collectively overran budgeted costs by $152.4 million.18

These overruns occurred in 11 of 14 MDA contracts we reviewed, with the 

STSS contract accounting for more than 50 percent of the total.19 Based on 

cost performance during the fiscal year and using formulas accepted 

within the cost community, we estimate that at completion the cumulative 

overrun in the contractors’ budgeted costs could be from about $2.0 billion 

to $3.0 billion. Our projections are based on the current budgeted costs at 

completion for each contract we assessed, which represents the total 

current planned value of the contract.20 However, the budgeted costs at 

completion, in some cases, have grown significantly over time. For 

example, the ABL contractor reported budgeted costs at completion 

totaling about $724 million in 1997, but as depicted in table 5, that cost has 

since grown to about $3.6 billion. Our assessment only reveals the overrun 

or underrun since the latest adjustment to the budget at completion. It 

does not capture, as cost growth, the difference between the original and 

current budgeted costs at completion. As a result, comparing the 

underruns or overruns for MDA programs in table 5 with cost growth on 

major defense acquisition programs is not appropriate because those 

major defense acquisition programs have established their full scope of 

work as well as developed total cost baselines, while these have not been 

developed for MDA programs. Our analysis is presented in table 5. 

Appendix II provides further details on the cost and schedule performance 

outlined in the table. 

MDA Contractors Overran 

Fiscal Year Cost and 

Schedule 

 

18 To determine if contractors are executing the work planned within the funds and time 

budgeted, each BMDS program office requires its prime contractor to provide monthly 

reports detailing cost and schedule performance. 

19 We analyzed three task orders for the MKV program issued as part of an Indefinite 

Delivery/Indefinite Quantity contract as well as three contracts managed by the Aegis BMD 

element. We assessed one contract for each of the other eight elements. Indefinite 

Delivery/Indefinite Quantity contracts provide for an indefinite quantity, within stated 

limits, of supplies or services during a fixed period. 

20 The current budgeted costs at completion are as-of September 30, 2008. 

Page 21 GAO-09-338 Defense Acquisitions 
 

Table 5: Prime Contractor Fiscal Year 2008 and Cumulative Cost and Schedule 

Performance 

(Dollars in millions) 

BMDS contract 

Fiscal year 2008 

cost performancea

Fiscal year 2008

schedule performancea

ABL (10.6) 2.2 

Aegis BMD Weapon System (7.0) (5.1)

Aegis BMD SM-3 CLIN 9 (20 Block 

1A missiles)b

(3.9) 3.9 

Aegis BMD SM-3 CLIN 1 (27 Block 

1A missiles)c

3.0 (7.6)

C2BMC (9.8) (3.6)

GMD 53.9 (77.4)

KEId(8.3) (8.5)

MKV Task Order 6 (Prototype 

Carrier Vehicle Seeker)e

(1.4) (1.5)

MKV Task Order 7 (Engagement 

Management Algorithms)e

1.4 0.0 

MKV Task Order 8 (Hover Test 

Bed)e

(10.7) (0.0)

Sensors (2.2) (27.4)

STSSf(87.9) 1.9

Targets and Countermeasures (35.7) 23.2 

THAADg(33.5) (7.4)

Total (152.4) (107.4)

Page 22 GAO-09-338 Defense Acquisitions 
 

Cumulative 

cost 

performance 

Cumulative 

schedule 

performance 

Percentage 

of contract 

completed 

Estimated contract 

overrun/underrun 

at completion 

Budget at 

completion Period of performance 

(84.8) (23.6) 91.1 Overrun of $89.7 to $95.4 $3,626.7 Nov. 1996 – Feb. 2010 

0.0 (8.4) 81.1 Overrun of $1.9 to $12.2 1,247.0 Oct. 2003 – Sept. 2010 

2.3 (0.1) 94.2 Underrun of $7.5 179.0 Aug. 2006 – Aug. 2008 

3.3 (7.0) 46.3 Underrun of $6.6 to overrun of 

$0.7 

237.5 May 2007 – Apr. 2010 

(24.3) (7.1) 71.1 Overrun of $37.1 to $76.8 1,040.0 Jan. 2002 – Dec. 2009 

(1,027.9) (130.3) 84.0 Overrun of $950.2 to $1,251.3 14,934.9 Jan. 2001 – Dec 2011 

(2.6) (21.3) 13.9 N/A 6,068.3 Dec. 2003 – Oct 2014 

(1.1) (0.6) 78.3 Overrun of $1.6 to $2.5 19.3 Nov. 2006 – May 2009 

1.7 

 

0.1 52.8 Underrun of $3.9 to $3.2 43.9 Dec. 2006 – May 2010 

(10.3) 0.3 81.4 Overrun of $5.7 to $13.8 48.0 Dec. 2006 – Jan 2009 

22.0 (9.6) 80.7 Underrun of $25.0 to overrun of 

$9.1 

1,125.2 Mar. 2003 – Dec 2010 

(319.3) (17.8) 53.2 Overrun of $621.7 to $1,157.9 1,603.0 Apr 2002 – Sept. 2011 

(52.8) (6.4) 84.5 Overrun of $63.7 to $75.9 1,056.4 Dec. 2003 – Dec 2009 

(228.7) (16.5) 91.4 Overrun of $252.0 to $274.0 4,649.4 Aug. 2000 – Sept. 2009 

(1,722.5) (248.3) Overrun of $1,980.8 to $2,959.0 

Source: Contract Performance Reports (data); GAO (analysis). 

Note: Comparing the percentage of total overrun to total budget at completion for MDA contracts with 

percentage of total cost growth for major acquisition defense programs that are past milestone B is 

not appropriate because the major defense acquisition programs have established their full scope of 

work as well as developed total cost baselines, while these have not been developed for MDA 

programs. 

a

Cost performance here is defined as the difference between the budget for the work performed and 

the actual cost of work performed; while the schedule performance is the difference between the 

budgeted cost of planned work and the budgeted cost of work performed. Negative cost performance 

(budget overruns) and negative schedule performance (less work performed than planned) are shown 

with parentheses around the dollar amounts. 

b

The Aegis BMD SM-3 contractor began work on contract line item number (CLIN) 9 in February 2007 

that concluded in August 2008 for the acquisition of an additional 20 SM-3 Block 1A missiles. All 

corresponding analysis is based on data through August 2008. 

c

The Aegis BMD SM-3 contractor began reporting performance on CLIN 1 in August 2007. This CLIN 

is for the production of a fourth lot of 27 Block 1A missiles. 

d

We could not estimate the likely outcome of the KEI contract at completion because a trend cannot 

be predicted until 15 percent of the planned work is complete. 

Page 23 GAO-09-338 Defense Acquisitions 
 

e

Out of the five task orders open during fiscal year 2008, there was sufficient cost performance data 

to report on the three listed above. 

f

The STSS contract includes line items for work that do not necessarily apply to the program being 

launched in the third quarter of fiscal year 2009. Removing these line items from our analysis, the 

program’s contract would be considered 78% complete. 

g

Earned Value data for the THAAD contract is reported under two CLINs, 1 and 10. We report only 

the contractor’s cost and schedule performance for CLIN 1 because it represents the majority of the 

total work performed under the contract. CLIN 10 provides for Patriot Common Launcher initiatives 

funded by the Army’s Lower Tier Program Office. 

Technical difficulties caused most elements to overrun their fiscal year 

2008 budgeted costs. For example, STSS attributed most of its overrun of 

approximately $87.9 million to hardware problems on the program’s 

second space vehicle including the flight communication box and the main 

spacecraft computer. The box overheated during testing which required a 

thorough test of the unit. Upon successful completion of this testing, it 

was determined it did not require a replacement. In addition, the program 

had a failure in the main spacecraft computer for which the program office 

initially recommended the removal of the entire computer from the 

spacecraft. However, after extensive research and testing, the program 

manager determined that the event with the spacecraft was an unverifiable 

failure with a low probability of occurrence and low mission impact and 

decided not to remove the computer from the spacecraft to resolve the 

issue. However, as a result of these issues, the launch was delayed from 

April 2008 to at least the third quarter of fiscal year 2009. 

The MKV Task Order 6 and ABL contractors also experienced technical 

difficulties. The MKV contractor for Task Order 6 reported cost overruns 

during the fiscal year of $1.4 million due mostly to software development 

issues and late delivery of government-furnished components. ABL’s fiscal 

year cost overruns of $10.6 million were mainly related to late deliveries of 

key laser system components and the acquisition or refurbishment of the 

Beam Control/Fire Control system components. For example, a major 

component of the laser system required redesign and fabrication, delaying 

planned delivery and installation onto the aircraft. Also, multiple Beam 

Control/Fire Control hardware components either were not refurbished to 

specification or failed initial testing, delaying delivery and integration 

testing. The overall effect was an approximate 1-month slip that the 

contractor believes will be made up in time to make the current lethality 

demonstration planned for the end of fiscal year 2009. 

Three elements’ contracts—Aegis BMD’s contract for 27 SM-3 Block 1A 

missiles, MKV Task Order 7, and GMD—performed below their fiscal year 

budgeted costs by nearly $58.3 million with the GMD element accounting 

Page 24 GAO-09-338 Defense Acquisitions 
 

for approximately $53.9 million of that. The GMD element’s underruns 

occurred partially because the contractors delayed or eliminated some 

planned work. For example, the GMD program did not emplace the three 

GBIs it expected to in fiscal year 2008 or conduct either of its two planned 

flight tests as scheduled during the fiscal year. As a result, it employed less 

labor than originally intended. Drivers for the MKV Task Order 7 contract’s 

fiscal year cost underruns include a restructuring of the effort and 

decisions to use one rather than several approaches for coordinated 

attack, and using less manpower than originally planned in its 

procurement and software efforts. Lastly, the Aegis BMD contract for 27 

SM-3 Block 1A missiles underran its fiscal year 2008 budget by 

approximately $3 million due in part to spending less than planned for 

engineering efforts with the missile’s third stage component as well as 

adjustments made in program management, labor efficiencies, and 

material transfers in the missile’s fourth stage component. 

Although several tests showed progress in individual elements and some 

system-level capabilities, all BMDS elements experienced test delays and 

shortfalls, in part due to problems with the availability and performance of 

target missiles. Most significantly, GMD was unable to conduct either of its 

planned intercept attempts during fiscal year 2008, however it was able to 

conduct one delayed intercept test in December 2008. As a result, key 

performance capabilities of the current configuration of the GMD kill 

vehicles may not be demonstrated and the new configuration is being 

fielded prior to flight testing. As a consequence of testing problems, none 

of the six MDA Director’s test knowledge points for 2008 were achieved. 

Poor performance of targets continues to be a problem that caused several 

tests to either fail in part or in whole. Shortfalls in testing have delayed 

validating the models and simulations that are used to assess the overall 

performance of the BMDS as a whole. Consequently, comprehensive 

assessments of the capabilities and limitations of the BMDS are not 

currently possible and therefore MDA still does not have the capability to 

model or simulate BMDS capability from enemy missile launch to its 

engagement. 

During fiscal year 2008, all BMDS elements experienced delays in 

conducting tests, most were unable to accomplish all objectives, and 

performance challenges continued for many. Moreover, the inability of 

MDA to conduct its full fiscal year 2008 flight test campaign as planned 

precluded the agency from collecting key information specified by the 

Director, MDA—known as Director’s test knowledge points—to make 

While Some Tests 

Succeeded, Others 

Were Deferred; 

Overall System 

Performance Cannot 

Yet Be Assessed 

Test, Targets, and 

Performance Challenges 

Continued during Fiscal 

Year 2008 for Several 

Elements 

Page 25 GAO-09-338 Defense Acquisitions 
 

certain decisions at critical points in some BMDS programs. Table 6 below 

summarizes test results and target performance for BMDS elements during 

the fiscal year. 

Table 6: Test and Targets Issues 

Element 

Tests/activities 

conducted as 

scheduled 

All objectives 

achieved Target issues 

ABL No Yes N/A 

Aegis BMD No No Target availability 

delayed key test 

from 2008 until at 

least the third 

quarter fiscal year 

2009. 

C2BMC No No N/A 

GMD No No Target failed to 

release 

countermeasures 

during December 

2008 flight 

test—FTG-05.a

KEI No No N/A 

MKV No NobN/A 

Sensors No No Target failed to 

release 

countermeasures 

during July 2008 

testing (FTX-03). 

STSS No No N/A 

Targets and 

Countermeasures 

No No FTF delivery 

delayed and 

experienced cost 

growth. 

THAAD No No Target experienced 

anomaly during a 

September flight test 

resulting in a no-test.

Sources: GAO (presentation); MDA (data). 

a

This flight test was originally scheduled for fiscal year 2008, but was later executed in fiscal year 

2009. 

b

The MKV program was able to achieve its objective in the first quarter of fiscal year 2009. 

Page 26 GAO-09-338 Defense Acquisitions 
 

As a result of test delays, MDA restructured its flight test plan for fiscal 

year 2009, increasing the number of tests and compressing the amount of 

time to analyze and prepare for subsequent tests. For example, MDA plans 

to conduct 14 of 18 flight tests in the third and fourth quarter of fiscal year 

2009. MDA’s past performance raises questions about whether this is 

realistic. In fiscal year 2008, MDA had planned to conduct 18 flight tests, 

but it only accomplished 10, plus it had several flight tests delayed into 

2009 from 2008. An MDA official acknowledged that the 2009 plan is 

aggressive, but stated that it can be achieved. Specifics of each element’s 

testing experience during fiscal year 2008 follow. 

According to Aegis BMD officials, budgetary constraints prompted the 

Aegis BMD element to delay some tests, reducing the number of tests 

planned for 2008. However, the program was able to successfully complete 

its first test involving two non-separating targets, conduct a short-range 

ballistic missile intercept, and participate in a THAAD intercept during the 

fiscal year. The program also planned to participate in a BMDS-level 

ground test during the year, but the test was delayed until at least the 

second quarter of fiscal year 2009 because of real-world events. Finally, 

Aegis BMD standard missile flight tests showed that interoperability issues 

persist between THAAD and Aegis BMDS with respect to correlation and 

object reporting. 

ABL experienced delays during fiscal year 2008, but achieved all of its 

primary test objectives. The program planned to complete the installation 

of its high energy laser on the aircraft by June 2008 in preparation for 

testing. However, it was not completed until August 2008 because of 

problems with activating some of the laser’s subsystems. The program 

delayed the final testing of the laser until the problems could be resolved. 

Once the problems were resolved, the ABL program was able to complete 

functionality testing of the laser in September 2008. 

C2BMC experienced delays in conducting tests, but achieved several test 

objectives. For example, software upgrade verification testing slipped 

from fiscal year 2008 to 2009 but the program was able to participate in 

many other system-level ground and flight tests during the year that 

enabled the program to demonstrate multiple capabilities, including 

situational awareness and sensor management.21 The C2BMC element 

 

21 Situational awareness is defined as the degree to which the perception of the current 

environment mirrors reality. 

Page 27 GAO-09-338 Defense Acquisitions 
 

extended development for its next software release, 6.4, by more than a 

year because of delays in system-level BMDS testing and challenges in 

developing the network server for version 6.2, as well as unplanned work 

to incorporate effects from earth rotation in the 6.4 C2BMC planning 

architecture. C2BMC added earth rotation effects to address a requirement 

that Spiral 6.2 and later releases have the ability to model the true extent 

of ranges for long-range threats. Finally, C2BMC is still developing its 

capability to generate a single track from multiple sensors through a new 

resource management function, the Global Engagement Manager. For 

example, the development team for this function had to modify the design 

of this function’s new track processing that experienced an unacceptable 

level of delays when processing data. 

In fiscal year 2008, the GMD program was unable to conduct either of its 

two planned intercept attempts—FTG-04 and FTG-05. MDA first delayed 

and then later canceled the FTG-04 test in May 2008 due to a problem with 

a telemetry component in the interceptor’s Exoatmospheric Kill Vehicle 

(EKV) needed to gather test data. MDA also delayed FTG-05 from fiscal 

year 2008 and conducted it in December 2008. Over the past two years 

MDA had expected to conduct seven GMD interceptor flight tests by the 

end of the first quarter of fiscal year 2009. However, MDA was only able to 

conduct two, as shown in figure 3. 

Page 28 GAO-09-338 Defense Acquisitions 
 

Figure 3: GMD Reduction in Flight Tests from January 2006 to March 2010 

FY06 FY07 FY08 FY09 FY10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

As of January 2009

FT-1 FTG-2 FTG-3a FTG-5 FTG-6

Integrated flight

tests planned

FY06 FY07 FY08 FY09 FY10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

As of September 2006

FT-1 FTG-2 FTG-3 FTG-4 FTG-5 FTG-6 FTG-7 FTG-8 FTG-9

Integrated flight

tests planned

Achieved CE I EKV CE II EKV New processor

Jan. 09

Source: GAO analysis of MDA data.

7

2

The cancellation of FTG-04 raised concerns within the test community and 

members of Congress. FTG-04 was at first delayed and then canceled. 

MDA replaced it with a test to assess sensor capability—FTX-03. The 

sensor test allowed GMD to verify fire control software and integration 

with multiple sensors. The DOT&E was not consulted on the decision to 

cancel FTG-04 and expressed concern that the elimination of any intercept 

test reduced the opportunity to gather data that might have increased 

confidence in the models and simulations. In the conference report 

accompanying the National Defense Authorization Act for Fiscal Year 

2008, conferees expressed concern about the loss of the FTG-04 flight test 

and requested that we review the circumstances and the effects on the 

BMDS. Details of our review of the FTG-04 flight test cancellation appear 

in appendix III. 

Page 29 GAO-09-338 Defense Acquisitions 
 

Because GMD conducted FTG-05 in December 2008, there are only two 

full sets of GMD intercept data to date available for analysis which limits 

the ability to verify and validate the models and simulations.22 Additionally, 

FTG-04 and the subsequent test—FTG-05—were planned to present 

different stresses to the kill vehicle which would provide critical data 

needed to further verify the fielded configuration of the kill vehicle. The 

cancellation and subsequent restructuring of the first test caused a delay 

in FTG-05 from the third quarter of fiscal year 2008 until December 2008. 

In the FTG-05 test, the interceptor hit its intended target. However, MDA 

judged the target as a failure because it failed to release its 

countermeasures as planned. Consequently, all primary test objectives 

were not achieved. 

Looking forward to the next GMD intercept flight test—FTG-06 in at least 

the fourth quarter of fiscal year 2009—MDA is accepting a higher level of 

risk than it previously expected in conducting this first test of the CE-II 

EKV because it will contain several objectives that had planned to be 

previously tested, but have not been. MDA had set up an approach to test 

one new major component change at a time. For example, MDA had 

planned to test the CE-I EKV first against simple targets, then the CE-I 

against a complex target, and once that had been proven MDA planned to 

test the CE-II EKV against a complex target. However, MDA was not able 

to test the CE-I EKV against a complex target due to a target failure. Due 

to testing problems, GMD has only been able to assess the CE-I EKV with a 

target without countermeasures. As a result, the FTG-06 flight test will be 

the first GMD test assessing both a CE-II EKV and a complex target scene. 

Adding to the risk, this will be only the second test using a newly 

developed FTF LV-2 target. 

During fiscal year 2008, the KEI program experienced problems during 

testing that required it to rework components which, in turn, caused a 

delay to subsequent testing. More importantly, due to technical issues 

experienced by the program over the past two years, the first booster 

flight test—a key decision point for the program—has been delayed by 

nearly a year and is not scheduled to occur until at least the fourth quarter 

of fiscal year 2009. Technical difficulties delayed the MKV program’s fiscal 

year 2008 hover test until fiscal year 2009. This hover test will allow the 

 

22 According to program officials, an earlier test—FTG-02—provided limited data for 

assessment purposes. However, the data was incomplete and could not be used to fully 

verify and validate the models and simulations. 

Page 30 GAO-09-338 Defense Acquisitions 
 

program to integrate and test key components of the system in a 

repeatable ground-based free flight environment as their technologies 

reach maturity. Although originally planned for the fourth quarter of fiscal 

year 2008, the test was successfully conducted in December 2008. The 

STSS program encountered problems during testing that forced the 

program to delay the launch of its demonstration satellites from April 2008 

to at least the third quarter of fiscal year 2009. The program continued to 

experience technical difficulties with its space vehicles. For example, 

during testing, the program experienced problems with its main spacecraft 

computer as well as an overheating flight communications box. After 

extensive testing, the program determined that these components were 

acceptable for flight. 

Similarly, in fiscal year 2008, the Sensors element also experienced flight 

test delays as well as difficulties in achieving planned objectives due to 

target performance, but met some primary objectives. The element 

successfully participated in other tests during the fiscal year which 

demonstrated the ability for the sensors to acquire and track a target. One 

test event, FTX-03, provided the first opportunity for four key sensors—

Sea-based X-band radar, AN/TPY-2, Upgraded Early Warning Radar, and an 

Aegis BMD radar—to operate in a more operationally realistic test 

scenario.23 This test demonstrated the capability for the sensors to 

correlate target information in order to conduct an intercept test. 

However, the target failed to release its countermeasures as planned. This 

failure precluded sensors from assessing capability against a dynamic 

lethal target scene with countermeasures. As a result, the sensors could 

not collect all of the expected data, which delayed the element’s ability to 

develop algorithms needed for the discrimination capability. These 

objectives will need to be addressed in future testing. The BMDS 

Operational Test Agency has had ongoing concerns regarding the 

formatting, tracking, and accounting of messages from GMD sensors. 24

The timely reception of messages from sensors to weapon systems is key 

to support decisions and achieve effective intercepts.Since 2000 the BMDS 

Operational Test Agency has reported these concerns to MDA about poor 

data collection and management practices involving sensors affecting its 

 

23 AN/TPY-2 was formerly known as Forward-Based X-Band Transportable radar. 

24 The BMDS Operational Test Agency conducts independent operational assessments of 

BMDS capability to defend the United States, its deployed forces, friends, and allies against 

ballistic missiles of all ranges and in all phases of flight. MDA funds all BMDS Operational 

Test Agency activities. 

Page 31 GAO-09-338 Defense Acquisitions 
 

assessment of tests. These data management problems prevented the 

analysis of message data, according to BMDS Operational Test Agency 

officials. In response, the contractor proposed a message monitoring 

system among communications nodes. Consequently, MDA recommended 

that this issue be closed out, but the BMDS Operational Test Agency still 

considers the matter to be open because GMD has not funded the 

monitoring system. 

THAAD planned to conduct three intercept attempts, but due to a target 

failure, it was only able to conduct two. The program could not complete 

its final flight test of the fiscal year because the target experienced an 

anomaly during flight. The test was planned to be a BMDS-level event and 

was designated as a developmental test/operational test mission utilizing 

multiple BMDS elements and operationally realistic criteria. The program 

also expected to demonstrate that it could launch more than one THAAD 

interceptor during the engagement. Program officials rescheduled this test 

for the second quarter of fiscal year 2009. In addition, THAAD’s radar data 

collection test, RDC-2, was planned for 2008 but was deleted due to target 

availability and funding. As a result, program officials told us that these 

test objectives will be covered in the future with hardware-in-the-loop 

simulations and other radar events. The program successfully completed 

its first two planned tests for the fiscal year. In October 2007, THAAD 

successfully demonstrated an intercept of a target outside the earth’s 

atmosphere. This was the first time THAAD had successfully conducted an 

intercept outside of the atmosphere since 1999. Additionally, in June 2008, 

THAAD completed a successful intercept of a separating target. This 

intercept utilized warfighter procedures developed by the U.S. Army Air 

Defense School. 

Key MDA Test Knowledge 

Points Not Achieved 

As a consequence of flight test delays as well as a delay in a key ground 

test, MDA was unable to achieve any of the Director’s test knowledge 

points scheduled for fiscal year 2008 as shown in table 7. 

Page 32 GAO-09-338 Defense Acquisitions 
 

Table 7: Status of Fiscal Year 2008 Director’s Test Knowledge Points 

Knowledge point Knowledge gained 

Flight and 

ground test 

Original 

completion 

Current 

projection 

Assess Capability to 

Deliver Real-Time 

Engagement Tracks 

Verification of initial Global Engagement 

Manager capability to support BMDS-level 

sensor/weapon system pairing. 

GTD-03a4th Quarter 2008 2nd Quarter 2009 

Verify 72-inch Flexible 

Target Family 

Confirmation of 72” performance. Viability of 

FTF concept to efficiently configure and 

transport target to launch facility. Confidence 

to discontinue use of STARS. 

FTM-15 4th Quarter 2008 3rd Quarter 2009 

Demonstrate HighAcceleration Booster Confirmation of Boost Phase Capability 

alternative to ABL and High Acceleration 

Booster for Midcourse Defense (mobile and 

fixed sites). 

FTK-01 4th Quarter 2008 4th Quarter 2009 

Confirm Constellation 

Affordability 

Space sensor performance against 

operationally realistic targets confirmed with 

existing Block 06 technology (anchors 

performance-cost baseline for future STSS). 

FTS-01 4th Quarter 2008 4th Quarter 2009 

Verify Capability to 

Conduct Launch on 

Tactical Digital Information 

Link BM Engagement 

Assessment of Aegis BMD 3.6 and SM-3 Block 

IA performance and ability to successfully 

engage and intercept a long-range ballistic 

missile target and to use an off-board sensor’s 

track data via Link-16 to initiate that 

engagement. 

FTM-15 4th Quarter 2008 3rd Quarter 2009 

Confirm Constellation 

Performance 

Space sensor performance against 

operationally realistic targets confirmed with 

existing Block 06 technology (anchors 

performance-cost baseline for future STSS). 

FTS-03 4th Quarter 2008 To Be 

Determined 

Source: GAO analysis of MDA data. 

a

GTD-03 was delayed to accommodate a real-world contingency as requested by the warfighter. 

In May 2007, the Director, MDA, established key system-level and elementlevel knowledge points to provide critical information for making key 

decisions regarding the BMDS. According to MDA, these knowledge points 

are unique management approaches chosen to manage MDA’s critical 

program risks.25 Each knowledge point is based on an event that provides 

critical information—or knowledge—for a key MDA decision requiring the 

Director’s approval. 

 

25 There are various categories of knowledge points. For example, an element knowledge 

point is based on an element event that provides critical information for a key element 

program decision requiring the Program Manager’s approval. Element knowledge points 

support one or more Director knowledge points, and may be supported by other 

knowledge points. 

Page 33 GAO-09-338 Defense Acquisitions 
 

In fiscal year 2008, among the Director’s test knowledge points delayed, 

MDA had to defer the confirmation of the 72” target performance due to 

delays in qualifying components. Additionally, MDA had to delay the 

confirmation of the booster for the KEI program as problems were 

encountered during testing of the nozzle. 

Poor Target Missile 

Performance Continues to 

Hamper BMDS Testing 

While targets have caused problems in fiscal year 2008 testing, poor 

performance of targets is not new. Targets’ reliability and availability 

problems have significantly affected BMDS development and testing since 

2006, and issues have grown even more problematic in recent years. 

Although target anomalies and failures have affected many of the missile 

defense elements, THAAD and GMD have been most affected. In 2006, the 

THAAD program was unable to achieve its first intercept attempt (FTT-04) 

because the target did not function properly. In 2007, two THAAD radar 

characterization tests (RDC-1c and RDC-1d) were unsuccessful due to 

target anomalies. These tests flew targets with characteristics needed for 

radar observation in support of advanced discrimination algorithm 

development. However, target problems prevented an opportunity for the 

radar to exercise all of the planned algorithms, causing a loss of expected 

data. In addition to target failure issues, the THAAD program deferred 

some flight tests because targets were not available, which cost the 

program about $201 million. GMD also experienced similar long-term 

effects on its flight test schedule when it was unable to achieve primary 

test objectives in a 2007 intercept attempt (FTG-03) due to a target failure. 

MDA’s existing targets are becoming less capable of meeting requirements 

for near-term flight tests. These targets are aging and likely to grow even 

less reliable with time; some components, such as the rocket motors, are 

more than 40 years old. Among other things, MDA’s Targets and 

Countermeasures program office has also had problems incorporating 

requirements into contracts and has experienced problems obtaining 

supplies as vendors left the market due to the lack of business. 

To address the growing need for more sophisticated and reliable targets 

for the future BMDS test program, MDA was developing a new family of 

targets called the FTF, which was originally intended to be a family of new 

short, medium, and long-range targets with ground-, air-, and sea- launch 

capabilities. MDA embarked on this major development without 

estimating the cost to develop the family of target missiles. MDA 

Page 34 GAO-09-338 Defense Acquisitions 
 

proceeded to develop and even to produce some FTF targets without a 

sound business case and, consequently, their acquisition has not gone as 

planned. 26 The funds required for the FTF were spent sooner than 

expected and were insufficient for the development. Getting the FTF 

target’s components through the qualification process, however, was more 

difficult and costly than the program expected. For example, MDA 

originally planned to launch the first FTF target—a 72-inch LV-2—in a 2008 

STSS flight test, but the test was rescheduled due to delays in satellite 

integration and target affordability and availability. While many of the 

target missile’s components are found on existing systems, their form, fit, 

function, and the environment they fly in have been changed for the 72-

inch LV-2 target. Consequently, many critical components initially failed 

shock and vibration testing and other qualification tests and had to be 

redesigned. The process was recently scheduled to be complete in early 

October 2008 but, after several delays, was not finished until December 

2008. Despite this, MDA expects the target to be complete and ready for its 

first launch in a third quarter fiscal year 2009 Aegis BMD flight test (FTM15). 

We recently reported that the FTF has been delayed, costs have increased 

and exceeded $1 billion, and the program’s scope has been reduced.27

Work on all but one of the FTF target variants, the 72-inch LV-2, was 

canceled in June 2008, including plans for development and production of 

the second type of FTF target, the 52-inch, originally scheduled to launch 

in 2009. With guidance from the Missile Defense Executive Board, MDA is 

currently conducting a comprehensive review of the targets program to 

determine the best acquisition strategy for future BMDS targets. It is 

expected to be completed in mid-2009. Whether or not MDA decides to 

restart the acquisition of the 52-inch targets, or other FTF variants, and the 

nature of those targets depends on the results of this review. 

Currently, MDA has narrowed its FTF development efforts, focusing on a 

single vehicle, the 72-inch LV-2 ground-launched target. The first launch 

was supposed to determine the viability of the FTF concept and the 

 

26 A sound business case demonstrates that (1) the identified needs are real and necessary 

and are best met with the chosen concept and (2) the chosen concept can be developed 

and produced with existing resources—such as technical, knowledge, funding, time and 

management capacity. 

27 GAO, Defense Acquisitions: Sound Business Case Needed to Implement Missile Defense 

Agency’s Targets Program, GAO-08-1113 (Washington, D.C.: Sept. 26, 2008). 

Page 35 GAO-09-338 Defense Acquisitions 
 

feasibility of discontinuing the use of existing targets. However, rather 

than first conducting a separate developmental test to confirm the target’s 

capability, MDA has chosen a much riskier approach. The first launch of 

the new LV-2 target will be in an Aegis BMD intercept test. Aegis BMD 

originally planned to use this new target in a fiscal year 2008 flight test; 

however, because the target was not ready, the test is delayed until at least 

the third quarter of fiscal year 2009. 

Repeated target problems and test cancellations have also affected the 

development of capabilities needed to discriminate the real target from 

countermeasures. Without opportunities to test the functionality of the 

software, there now is a system-level shortfall in BMDS progress toward 

developing a target discrimination capability against more sophisticated 

countermeasures in the midcourse phase of flight. In order to improve the 

effectiveness of the BMDS against evolving threats, MDA elements are 

developing advanced discrimination software in their component’s 

sensors. The advanced discrimination software is critical to distinguish the 

threat re-entry vehicle from associated countermeasures and debris. 

Target failures during tests prevented opportunities to gather data to 

assess how well discrimination software performs in an operational 

environment. 

Overall Performance of 

BMDS Can Not Yet Be 

Assessed 

MDA’s modeling and simulation program enables MDA to assess the 

capabilities and limitations of how BMDS performs under a wider variety 

of conditions than can be accomplished through the limited number of 

flight tests conducted. Flight tests alone are insufficient because they only 

demonstrate a single collection data point of element and system 

performance. Flight tests are, however, an essential tool used to both 

validate performance of the BMDS and to anchor the models and 

simulations to ensure that they accurately reflect real performance. 

Computer models of individual elements replicate how those elements 

function. These models are then combined into various configurations that 

simulate the BMDS engagement of enemy ballistic missiles. 

Page 36 GAO-09-338 Defense Acquisitions 
 

To ensure confidence in the accuracy of modeling and simulation in 

representing BMDS capability, the program goes through a process called 

accreditation.28 Element models are validated individually using flight and 

other test data and accredited for their intended use. MDA intends to 

group these models into system-level representations according to user 

needs. One such grouping is the annual performance assessment, a 

system-level end-to-end simulation that assesses the performance of the 

current BMDS configuration.29 The performance assessment integrates 

element-specific models into a coherent representation of the BMDS. 

Performance assessments are used to: 

• assess objectives from MDA’s Deputy of Engineering and the BMDS 

Operational Test Agency,30 

• support MDA decisions about engagement sequence group capability 

deliveries, and 

• support MDA decisions about BMDS fielding and declaring 

capabilities. 

Fundamentally, performance assessments anchored by flight and ground 

tests are a comprehensive means to fully understand the performance 

capabilities and limitations of the BMDS. 

Developing an end-to-end system-level model and simulation has been 

difficult. BMDS Operational Test Agency officials told us that they do not 

anticipate a fully accredited, system-level model and simulation capability 

to be available until 2011. MDA’s first effort to bring together different 

element models and simulations to produce a fully accredited, end-to-end 

model and simulation for Performance Assessment 2007 was unsuccessful 

primarily because of inadequate data for verification and validation to 

support accreditation and a lack of common threat and environment input 

data among element models. Though Performance Assessment 2007 was a 

success in establishing a capability for integrated modeling and simulation 

 

28 The accreditation of models and simulations is an official certification that a model or 

simulation is acceptable for use as their developers intended. Before a decision to accredit 

a model, MDA must first verify that the models and simulations operate as the designers 

conceptualized, and then validate that the models are sufficiently accurate representations 

of real-world conditions for their intended purposes. 

29 An end-to-end simulation represents a complete BMDS engagement—from enemy missile 

launch to attempted intercept by BMDS kill vehicle. 

30 The BMDS Operational Test Agency provides an independent accreditation of MDA 

models and simulations. 

Page 37 GAO-09-338 Defense Acquisitions 
 

in a short time frame, it was unsuitable to assess system-level performance 

due to low confidence from a lack of accreditation. Consequently, acting 

on a joint recommendation between MDA and the Operational Test 

Agency, MDA officials canceled their 2008 performance assessment efforts 

in April 2008 because of developmental risks associated with modeling 

and simulations, focusing instead on testing and models for Performance 

Assessment 2009. MDA officials believe that the refocused efforts will 

increase the chances for success during Performance Assessment 2009. 

According to the BMDS Operational Test Agency’s January 2009 Modeling 

and Simulation Accreditation Report, confidence in MDA’s modeling and 

simulation efforts remains low although progress was made during the 

year. MDA is now exercising stronger central leadership to provide 

guidance and resources as it coordinates the development of verified and 

validated models and simulations, as recommended by a 2004 Defense 

Science Board study. MDA and element officials are now working more 

closely with the BMDS Operational Test Agency. For example, MDA and 

the BMDS Operational Test Agency have agreed on performance 

parameters and criteria used to validate element models and simulations. 

Nonetheless, BMDS Operational Test Agency officials stated that there are 

several weaknesses in the BMDS testing program such as: 

• Insufficient consideration of modeling and simulation requirements in 

MDA flight test plans, though they emphasized that MDA is finalizing a 

list of such parameters for future flight test plans, 

• Use of artificialities in flight tests which limit the realism of scenarios 

for anchoring models and simulations,31 and 

• Inadequate test planning for comprehensive modeling of weather 

conditions.32 

MDA intends to verify and validate models and simulations by December 

2009 for Performance Assessment 2009. However, BMDS Operational Test 

Agency officials stated that there is a high risk that the Performance 

Assessment 2009 analysis will be delayed because of remaining challenges 

and MDA’s slow progress in accreditation, as follows: 

 

31 The BMDS Operational Test Agency defines artificialities as BMDS architecture, targets, 

procedures, and conditions that exist in flight tests but would not exist in the real world. 

Flight test artificialities are introduced for a number of reasons, such as increased chances 

of success, range safety, data collection, and asset availability. 

32 Weather conditions include rain, clouds, and snow. Severe sea states, ice loads, or winds 

could render tests unsafe to execute. 

Page 38 GAO-09-338 Defense Acquisitions 
 

• The compressed schedule of ground and flight tests leaves little time 

for data analysis that is essential to anchor models to those tests, 

particularly for a complete analysis supporting MDA’s Performance 

Assessment 2009. 

• Out of 40 models, the BMDS Operational Test Agency recommended in 

January 2009 full accreditation for only 6 models, partial accreditation 

for 9 models, and no accreditation for 25 models. 

• Because MDA canceled the follow-on Performance Assessment 2008, 

the BMDS Operational Test Agency did not receive verification and 

validation data that would have been included in the modeling and 

simulation portion of its 2008 operational assessment. 

BMDS Operational Test Agency officials told us that MDA also does not 

adequately plan for the collection of flight test data and post-flight 

reconstruction to support anchoring MDA models and simulations, even 

though post-flight reconstruction is needed to validate that models and 

simulations are adequate representations of the real world for their 

intended purpose.33 MDA guidance emphasizes that one of the primary 

objectives of the MDA ground and flight test program is to anchor BMDS 

models and simulations. Additionally, this guidance requires MDA’s testing 

program to work with the MDA engineers to define a test program that 

anchors these models and simulations across the operating spectrum. 

According to BMDS Operational Test Agency officials, the first full postflight reconstruction was conducted in December 2008. 

Despite the guidance delineating responsibilities for test data, MDA test 

plans currently do not include enough detail to allocate and synchronize 

resources in order to anchor models and simulations. MDA recently 

initiated a three-phase review of the entire BMDS test program. According 

to MDA, this three-phase review will emphasize the need for basing BMDS 

test planning and test design on critical factors that have not been proven 

to date and will drive target selection requirements. One outcome of the 

review will be to create integrated campaigns of ground and flight tests to 

efficiently collect data needed to validate the models and simulations. 

MDA intends to complete all three phases of the review by May 2009, after 

which MDA intends to have a date when all MDA models and simulations 

will be verified and validated. However, the current lack of flight test data 

for MDA’s and BMDS Operational Test Agency analysis prevents the timely 

 

33 Post-flight reconstruction is the process of manually recreating and running a past flight 

test scenario in a simulated environment. 

Page 39 GAO-09-338 Defense Acquisitions 
 

validation of models and simulations that are used to build the 2009 endto-end performance assessment. 

In fiscal year 2008, MDA met most of its delivery goals. However, it 

continued to pursue a concurrent development, manufacturing and 

fielding strategy in which assets are produced and fielded before they are 

fully demonstrated through testing and modeling. Although flight tests and 

modeling and simulation produced less validation of performance than 

planned, MDA continued manufacturing untested components and 

declaring capabilities ready for fielding. For example, 10 of the new 

configuration kill vehicles for the GBI will have been manufactured and 

delivered before being flight-tested. MDA also declared that it had fielded 

9 of 22 BMDS capabilities planned for 2008 (postponing 13), but due to test 

cancellations and performance assessment delays, it had to change the 

basis of these declarations, often relying on previous, less realistic testing. 

MDA achieved four of the five delivery goals it set for fiscal year 2008 as 

shown in the table 8. 

Production, Fielding, 

and Declaration of 

Capabilities Proceed 

despite Delays in 

Testing and 

Assessments 

MDA Met Most 2008 Asset 

Delivery Goals 

Page 40 GAO-09-338 Defense Acquisitions 
 

Table 8: BMDS Deliveries and Total Fielded Assets as of September 30, 2008 

BMDS element 

Fiscal year 2008 

delivery goals 

Assets delivered 

in fiscal year 2008 

Total assets available 

(cumulative total 

of assets since 2005) 

GMD 3 interceptors 0 interceptors 24 interceptorsa

Sensors 1 AN/TPY-2 radar 

Sea-based X-band radar 

1 AN/TPY-2 radar 

Sea-based X-band radarb

4 AN/TPY-2 radarsc 

Sea-based X-band radar 

Aegis BMD 20 SM-3 missiles 20 SM-3 missiles 34 SM-3 missiles 

15 destroyers 

3 cruisers 

C2BMC 1 fielding and activation site 1 fielding and activation site 6 suites 

31 Web browsers 

1 fielding and activation site 

46 enterprise workstations 

Source: MDA (data); GAO (presentation). 

a

The GMD program did not deliver any interceptors as planned in fiscal year 2008, but was able to 

deliver two interceptors—one in October 2008 and one in November 2008. Therefore, the cumulative 

total for GBIs as of December 2008 is 26. 

b

Partial capability for the Sea-based X-band radar will be based on satisfying planned objectives for 

two tests scheduled for fiscal year 2009. 

c

AN/TPY-2 radars were formerly known as Forward-Based X-Band- Transportable radars. 

According to MDA, an additional AN/TPY-2 radar has been provided and is undergoing 

Government ground testing. 

The agency planned to deliver the Sea-based X-band radar and three 

additional GBIs for Block 1.0, 20 additional SM-3 missiles for its Block 2.0 

capability, a C2BMC site for fielding and activation for its Blocks 3.1/3.2 

and 5.0 capabilities, and an additional AN/TPY- 2 radar.34 Although partial 

capability for the Sea-based X-band radar will not be declared until at least 

fiscal year 2009, it was approved for Early Capability Delivery in fiscal year 

2008. The agency delivered the Aegis BMD SM-3 missiles, the AN/TPY-2 

radar, and the C2BMC site in fiscal year 2008 as planned, but was unable 

to deliver the GBIs because the GMD element encountered development 

challenges with components for the CE-II EKV. In addition, the Navy 

Commander, Operational Test and Evaluation Force declared the Aegis 

BMD 3.6 system as operationally suitable and effective in October 2008. 

This decision signifies that 18 Aegis BMD-equipped ships and 90 SM-3 

missiles are ready for transition to the Navy. 

 

34 AN/TPY-2 radars were formerly known as Forward-Based X-Band-Transportable radars. 

According to MDA, an additional AN/TPY-2 radar has been provided and is undergoing 

Government ground testing. 

Page 41 GAO-09-338 Defense Acquisitions 
 

Despite developmental problems, test delays and MDA’s inability to 

complete all fiscal year 2008 Director’s test knowledge points, 

manufacturing, production, and fielding have proceeded close to schedule. 

In some cases fielding has gotten ahead of testing. For example, Aegis 

BMD expected to assess the ability of the SM-3 Block 1A missile to engage 

and intercept a long-range ballistic target to satisfy a Director’s test 

knowledge point. Even though that test has been delayed until the third 

quarter of fiscal year 2009, MDA purchased 20 SM-3 Block 1As in fiscal 

year 2008. 

Production and 

Fielding of BMDS 

Systems Getting 

Ahead of Testing 

Furthermore, MDA intended to assess, through flight tests, the CE-I EKV’s 

capability against scenarios that included complex target scenes with 

countermeasures. However, due to the frequent restructuring of its test 

plan and a target failure during its most recent flight test, the fielded 

configuration for GMD has not completed a test against countermeasures. 

According to MDA, no more CE-I flight tests have been approved, although 

the agency is considering additional flight testing of the CE-I EKV in the 

future. Moreover, earlier ground and flight testing, along with 

manufacturing discoveries prompted the GMD program to initiate a 

refurbishment program for the kill vehicles and the boosters. 

Refurbishment consists of: (1) reliability improvements to address high 

priority risks and to support the development and understanding of GBI 

reliability and (2) surveillance of aging through the examination of 

removed components. Consequently, the capability of the CE-I, including 

improvements designed to mitigate risk, as well as understand its 

capabilities and limitations against targets employing countermeasures 

may not be flight-tested, yet all 24 interceptors with this configuration are 

already emplaced and declared operational. 

More importantly, the GMD program continues to experience test delays, 

causing fielding to outpace flight tests as shown in figure 4. 

Page 42 GAO-09-338 Defense Acquisitions 
 

Figure 4: GMD Flight Test and Fielding Plan for Interceptors Comparison—September 2006 versus January 2009 

FY06 FY07 FY08 FY09 FY10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

As of January 2009

FT-1 FTG-2 FTG-3a FTG-5 FTG-6

Integrated flight

tests planned

Fieldings

FY06 FY07 FY08 FY09 FY10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

As of September 2006

FT-1 FTG-2 FTG-3 FTG-4 FTG-5 FTG-6 FTG-7 FTG-8 FTG-9

Integrated flight

tests planned

Fieldings

Achieved CE I EKV CE II EKV New processor

Jan. 09

Source: GAO analysis of MDA data.

7

16

2

13

For example, the program has only been able to conduct two intercepts 

since 2006 for verifying the fielded configuration yet the production of 

interceptors continues. According to GMD’s September 2006 flight test 

Page 43 GAO-09-338 Defense Acquisitions 
 

plan, for fiscal years 2007 and 2008, and the first quarter of fiscal year 2009 

it was going to conduct seven flight tests, including a test that would 

utilize 2 GBIs against a single target—known as a salvo test35 —and field 16 

new GBIs. By January 2009 GMD had changed its plan, removing the salvo 

test and conducting two flight tests, yet it fielded 13 GBIs. 

Similarly, GMD had planned to conduct an intercept test to assess the 

enhanced version of the EKV called the Capability Enhancement II in the 

first quarter of fiscal year 2008, months before emplacing any interceptors 

with this configuration. However, developmental problems with the new 

configuration’s inertial measurement unit and the target delayed the first 

flight test with the CE-II configuration—FTG-06—until at least the fourth 

quarter of fiscal year 2009. Despite these delays, MDA expects to have 

emplaced five CE-II interceptors before this flight test. MDA indicated that 

these five interceptors will not be declared operational until the 

satisfactory completion of the test and the Program Change Board 

declares their status. However, MDA projects that 10 CE-II EKVs will have 

been manufactured and delivered before that first flight test demonstrates 

the CE-II capability. This amounts to over half of the CE-II EKV deliveries 

that are currently on contract. 

MDA did not emplace the three GBIs it needed to meet its fiscal year 2008 

fielding goals. MDA will have to emplace twice as many GBIs than planned 

in fiscal year 2009 before Block 1.0 can be declared complete. As of 

January 2009, the agency had emplaced two and must emplace four more 

in order to complete Block 1.0 as planned. 

Major defense and acquisition programs must complete operational test 

and evaluation before entering full-rate production.36 Because MDA 

considers the assets it has fielded to be developmental, it has not 

advanced BMDS elements to DOD’s acquisition cycle or begun full-rate 

production. Therefore, MDA has not yet triggered the requirement for an 

operational test and evaluation prior to fielding. However, MDA’s 

concurrent approach to developing and fielding assets has led to testing 

 

35 The National Defense Authorization Act for Fiscal Year 2002, Pub. L. No. 107-107, § 

234(c), states that “for ground-based midcourse interceptor systems, the Secretary of 

Defense shall initiate steps during fiscal year 2002 to establish a flight test capability of 

launching not less than three missile defense interceptors and not less than two ballistic 

missile targets to provide a realistic test infrastructure.” Currently, GMD has not conducted 

this test. 

36 10 U.S.C. § 2399. 

Page 44 GAO-09-338 Defense Acquisitions 
 

problems and concerns about the performance of some fielded assets. 

After two flight test failures in 2005, MDA undertook a Mission Readiness 

Task Force to establish confidence in GMD’s ability to reliably hit its 

target, establish credibility in setting and meeting test event dates, build 

increasing levels of operationally realistic test procedures and scenarios, 

raise confidence in successful outcomes of flight missions, and conduct 

the next flight test as soon as practical within acceptable risk bounds. 

However, GMD accelerated the objectives for its test program after the 

first Mission Readiness Task Force flight test and the program continues 

to experience developmental problems with key interceptor components. 

MDA also separately established a refurbishment program designed to 

replace questionable interceptor parts and increase reliability of GBIs. 

Since 2006, we have reported that the performance of some fielded GBIs 

was uncertain. 

Despite MDA’s previous efforts to build confidence in its test program, 

MDA continues to pursue a risky approach for fielding BMDS assets under 

its new block structure. In March 2008, we reported that MDA’s new block 

structure did not address whether it would continue its practice of 

concurrently developing and fielding BMDS elements and components. 

However, in 2008 the agency continued to field assets without adequate 

knowledge. MDA emplaced GBIs during the year although its 

refurbishment program was barely underway, meaning that the risks of 

rework continue. To date, 26 GBIs have been emplaced—many of which 

may contain unreliable parts—and only a few have been refurbished since 

the initiation of the refurbishment program in 2007. According to program 

officials, some improvements have already been introduced into the 

manufacturing flow and demonstrated during flight testing. 

While it is always a concern when tests are eliminated or the complexity of 

a planned test is reduced, the concern is heightened for a system of 

systems such as the BMDS because of the complex interaction of 

components within an element, and between that element and the other 

elements within the BMDS. Consequently, the need to synchronize the 

development and testing of different capabilities is crucial before fielding 

begins. For example, for certain engagement scenarios, the ground-based 

interceptor will launch based on information provided by an entirely 

separate element such as an Aegis cruiser or destroyer. If a problem is 

discovered during these flight tests, post-flight reconstruction using 

models needs to be conducted, the root-cause must be determined, a 

solution or mitigation must be developed and implemented, and a new test 

to confirm the effectiveness of the solution or mitigation must be 

performed. 

Page 45 GAO-09-338 Defense Acquisitions 
 

When MDA determines that a capability can be considered for operational 

use, it does so through a formal declaration. MDA uses an incremental 

declaration process to designate BMDS capability for its blocks in three 

levels—early, partial and full. The first two levels allow these BMDS 

features to play a limited role in system operations before they have 

attained their full level of capability. Each capability designation in the 

delivery schedule represents upgraded capacity to support the overall 

function of BMDS in its mission as well as the level of MDA confidence in 

the system’s performance. Capability declarations are important because 

MDA uses them to assess progress toward block completion. MDA 

guidance calls for an orderly sequence of events that lead to declaring that 

a fielded capability has been achieved and is ready for consideration for 

operational use. 

Reduced Testing Has 

Delayed Some Capability 

Declarations and 

Weakened the Basis for 

Others 

MDA bases its declarations on, among other things, a combination of 

models and simulations—such as end-to-end performance assessments—

and ground tests all anchored to flight test data. Because performance 

assessments analyze the BMDS as an entire system in a variety of ways, 

they provide more comprehensive information than flight tests alone. 

These events and assessments build on each other every year as MDA adds 

capabilities by improving hardware and software. MDA decision makers 

would then declare the achievement of capability goals for engagement 

sequence groups based on performance assessments. While in some 

instances, declarations of capability have been deferred, in other instances 

MDA has declared capabilities despite shortfalls in testing, modeling and 

simulation, and performance assessments. The agency declared the 

delivery of nine capabilities during fiscal year 2008 as shown in figure 5 

below. It declared three early capabilities for Block 1.0 engagement 

sequence groups, three early as well as one full capability for Block 2.0 

engagement sequence groups, and one early capability and one partial 

capability for Block 3.1/3.2 engagement sequence groups. 

Page 46 GAO-09-338 Defense Acquisitions 
 

Figure 5: Timeline Showing Declaration of Capabilities in Fiscal Year 2008 

SM-3 Engage-on 

shipboard Aegis radar

SM-3 Launch on remote 

shipboard Aegis radar

SM-2 Engage-on 

shipboard Aegis radar

THAAD Engage-on 

AN/TPY-2 radar 

(terminal mode)

Source: GAO analysis of MDA data.

E E

E E

E

E

E

P

E

E

E E

E E

E

Milestone Delayed

scheduled

E

P

Milestone

achieved

E

P

F F

Early

Partial

Full

Capability 

declaration

Block 1.0

GBI Launch-on COBRA 

DANE radar (Beale)

GBI Engage-on sea-based 

X-band radar

GBI Launch-on sea-based 

X-band radar

Block 2.0

GBI Engage on 

COBRA DANE radar 

Mod 1 (Fylingdales, 

UK; forward-based 

(AN/TPY-2 radar))

GBI Launch on shipboard 

Aegis radar Mod 1 

(Fylingdales, UK; sea-based 

X-band radar)

Block 3.1/3.2

F F

Q1 Q2 Q3 Q4

FY08

Note: Our analysis above is based on the MDA Master Execution Fielding Schedule dated October 

2007 as well as the Master Fielding Plan dated February 2008. Commensurate with its new block 

structure, MDA reported a subset of these as part of its fiscal year 2008 Statement of Goals dated 

January 2008. However, MDA continues to work toward declaring all of the October 2007 

engagement sequence groups. 

Page 47 GAO-09-338 Defense Acquisitions 
 

MDA had intended to use the results of a flight test (FTG-04), that was 

later canceled; 37 a distributed ground test (GTD-03), that was delayed into 

fiscal year 2009; 38 and the results of Performance Assessments 2007 and 

2008 to determine if capabilities were ready for declaration in fiscal year 

2008. Consequently, these shortfalls in knowledge led MDA to reduce the 

basis for declaring capability goals. Performance Assessment 2007—

identified by MDA as a key source to assess capabilities during fiscal year 

2008—achieved only limited accreditation.39 This less-than-full 

accreditation indicated that MDA could not rely on the assessment’s 

results to gauge end-to-end BMDS performance. Subsequently, MDA 

officials decided to cancel Performance Assessment 2008 because they 

needed time to address problems and prepare for Performance 

Assessment 2009. 

While MDA officials declared these capabilities during fiscal year 2008, 

they did so after mostly reducing the basis for the declarations. They 

reverted back in several cases to older ground and flight tests, though 

MDA in a few cases added some newer flight and ground tests as well. For 

example, MDA declared early Block 1.0 capability for three engagement 

sequence groups in fiscal year 2008 without the planned results from 

Performance Assessment 2007. In all cases, though MDA had intended to 

use the final results from comprehensive performance assessments, after 

revising the basis for declaring capability goals it eliminated them entirely. 

Specifically, MDA dropped some sources of data it expected to use, such 

as the canceled Performance Assessment 2008, and shifted from flight and 

ground tests planned to occur in fiscal year 2008 to older flight and ground 

tests. For example, in Block 2.0 MDA declared full capability during fiscal 

year 2008 for one engagement sequence group, Aegis BMDS engage on its 

shipboard radar, even though Performance Assessment 2008 had been 

canceled. MDA instead based its decision on integrated and distributed 

ground tests (GTI-02 and GTD-02) conducted in calendar year 2007 as well 

as prior flight tests during fiscal years 2006 through 2008. However, the 

 

37 See app III which details reasons for the FTG-04 cancellation. 

38 GTD-03 was delayed to support warfighter needs and resulted in delayed capability 

assessments and capability declaration later than planned. 

39 The accreditation of models and simulations is an official certification that a model or 

simulation is acceptable for use as their developers intended. Before a decision to accredit 

a model, MDA must first verify that the models and simulations operate as the designers 

conceptualized, and then validate that the models are sufficiently accurate representations 

of real-world conditions for their intended purposes. 

Page 48 GAO-09-338 Defense Acquisitions 
 

BMDS Operational Testing Agency raised concerns about the 

comprehensiveness of the GTI-02 scenarios,40 specifically, the incorrect 

configuration of U.S. satellites and threat data. 

MDA also deferred 13 capability goals scheduled to occur in fiscal year 

2008 to the end of fiscal year 2009, as shown in figure 6 below. 

 

40 GTI-02 included models and simulations. 

Page 49 GAO-09-338 Defense Acquisitions 
 

Figure 6: Timeline Showing Deferred Declaration of Capabilities from Fiscal Year 2008 to 2009 

GBI Engage-on COBRA DANE 

radar (Beale)

GBI Launch-on COBRA 

DANE radar (Beale)

GBI Engage-on shipboard Aegis

radar 

GBI Launch-on shipboard Aegis

radar 

GBI Engage-on forward-based 

AN/TPY-2 radar

GBI Launch-on forward-based 

AN/TPY-2 radar

GBI Engage-on sea-based X-band 

radar

SM-3 Launch-on shipboard Aegis

radar

GBI Launch-on sea-based X-band 

radar

Source: GAO analysis of MDA data.

F

F

F

F

F

P

P

P

P

F

P

F

F

F

F

P

P

F F

F F

F F

Milestone scheduled E P F

Delayed

Capability declaration Early Partial Full

Block 1.0

Block 2.0

GBI Engage on COBRA

DANE radar Mod 1

(Fylingdales, UK; forward-based

AN/TPY-2 radar)

GBI Launch on forward-based

AN/TPY-2 radar

Mod 1a (Hercules 1)

GBI Engage on forward-based

AN/TPY-2 radar

Mod 1a (Hercules 1)

Block 3.1/3.2

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY08 FY09

F

E

E

F

Page 50 GAO-09-338 Defense Acquisitions 
 

Note: Our analysis above is based on the MDA Master Execution Fielding Schedule dated October 

2007 as well as the Master Fielding Plan dated February 2008. Commensurate with its new block 

structure, MDA reported a subset of these as part of its fiscal year 2008 Statement of Goals dated 

January 2008. However, MDA continues to work toward declaring all of the October 2007 

engagement sequence groups. Several engagement sequence groups are not shown here because 

they are Block 3.3, which MDA has not yet baselined. 

MDA intended to declare all Block 1.0 engagement sequence groups as 

fully capable by the middle of fiscal year 2009.41 However, as MDA 

encountered test delays and technical challenges, it had to defer full 

capability declaration for these engagement sequence groups until the end 

of fiscal year 2009. For Block 2.0, MDA also deferred declaring full 

capability for one of the two planned full capability declarations for fiscal 

year 2008. This declaration is contingent upon the review of a ground test 

that has been rescheduled to the second quarter of fiscal year 2009 and a 

flight test rescheduled to the third quarter of fiscal year 2009. MDA also 

deferred one full and two early capability declarations for Block 3.1/3.2 

beyond the end of fiscal year 2009. 

In response to the limitations of Performance Assessment 2007, the 

cancellation of Performance Assessment 2008 and FTG-04, and the 

delayed GTD-03 and FTG-05 flight tests, MDA is planning to rely on older 

ground and flight tests; a sensor flight test, FTX-03, instead of intercept 

flight tests; and the initial quick look review of Performance Assessment 

2009 instead of the previously planned full analysis. Appendix IV provides 

a detailed layout for the reduced basis of capability declarations for fiscal 

years 2008 and 2009. 

Since MDA was only able to declare a few of the capabilities it planned for 

fiscal year 2008, the schedule for fiscal year 2009 and subsequent years 

will be compressed if the agency plans to maintain the schedule it has set 

for its blocks. For example, MDA may need to declare three times as many 

capabilities than originally planned for fiscal year 2009 in order to meet 

the 2009 capability declaration schedule. In addition, if the schedule 

cannot be maintained, MDA will likely have to make further adjustments 

to mitigate additional delays in BMDS capabilities. 

Increased reliance on integrated ground testing will provide less 

knowledge than a complete analysis of capabilities from a performance 

 

41 Our assessment of engagement sequence groups utilizes MDA’s plans as of October 1, 

2007. Commensurate with the new block structure, MDA devised a baseline in February 

2008 for engagement sequence groups for Blocks 1.0, 2.0, 3.1, and 3.2. 

Page 51 GAO-09-338 Defense Acquisitions 
 

assessment. Integrated ground testing involves less robust conditions than 

distributed ground testing, which involves operational systems in the field. 

The MDA master fielding plan indicates that the agency originally intended 

to take a more comprehensive approach upon which to base capability 

declarations. Reliance on an upcoming Performance Assessment 2009 

quick look for Block 1.0 completion is a particular concern because the 

knowledge it provides may be limited with respect to testing, according to 

BMDS Operational Test Agency officials. For example, officials told us 

that a quick look may indicate anomalies from a test but will not analyze 

their causes. In contrast, MDA originally planned to have a complete 

analysis from the Performance Assessment 2009 models, simulations, and 

tests. 

In March 2008, we reported that efforts were underway to improve BMDS 

management, transparency, accountability, and oversight including a new 

executive board outside of MDA and a new block structure along with 

other improvements within MDA.42 Since that time, the executive board 

that was established in 2007 has acted with increased oversight. MDA’s 

efforts, however, have not made the expected progress. In particular, MDA 

has decided to retain the option of deferring work from one block to 

another; cost baselines have not been established; test baselines remain 

relatively unstable; and requesting procurement funds for some assets, as 

directed by Congress, will not occur until fiscal year 2010.43

Limited Progress 

Made in Improving 

Transparency and 

Accountability 

To accomplish its mission, in 2002 the Secretary of Defense gave MDA 

requirements, acquisition, and budget flexibilities and relief from some 

oversight mechanisms and reporting responsibilities. The flexibility 

granted to MDA has allowed concurrent development, testing, 

manufacturing, and fielding. MDA used this flexibility to quickly develop 

and field the first increment of capability in 2005. In August 2008, in 

response to Congressional direction to assess the current and future 

missions, roles, and structure of MDA, an independent study group agreed 

that there is a need to move MDA toward more normal acquisition 

processes. However, the group noted that the continuous evolution of the 

 

42 GAO-08-448. 

43 Section 223(b) of the National Defense Authorization Act of 2008, Pub. L. No. 110-181 

(Jan. 28, 2008) specified a revised budget structure of the missile defense budget to be 

submitted in the President’s budget no later than the first Monday in February. 31 U.S.C. 

§1105. 

Page 52 GAO-09-338 Defense Acquisitions 
 

BMDS requires that the approach to setting requirements for, developing, 

and fielding increments of capability should remain as special authorities 

with oversight of the Missile Defense Executive Board (MDEB). Further, 

in regards to budget flexibilities, the independent group concluded that 

while these flexibilities may have been deemed necessary at the time, it 

should not have been expected that all the special authorities granted to 

MDA would continue or would have a need to continue in full force 

beyond achieving the President’s goal of deploying a set of initial 

capabilities. 

Missile Defense Executive 

Board’s Oversight Role 

More Active in 2008 

During 2008, the MDEB appeared to act with an increased level of 

authority in providing oversight of MDA and the BMDS. For example, the 

board took on a major role in making key decisions regarding the 

transition of elements to military services. We previously reported that 

MDA and the military services had been negotiating the transition of 

responsibilities for the sustainment of fielded BMDS elements, but this 

process had been proven to be arduous and time consuming. However, in 

2008, with the influence of the MDEB, a lead military service designation 

was appointed for one BMDS asset—the Sea-based X-band radar.44 

In March 2008, we reported that the MDEB could play a key role in the 

Joint Requirements Oversight Council’s proposal to return the BMDS to 

the Joint Capabilities Integration and Development System requirements 

process—a formal DOD procedure followed by most DOD programs that 

defines acquisition requirements and evaluation criteria for future defense 

programs. In responding to the proposal, the Acting Under Secretary of 

Defense for Acquisition, Technology, and Logistics recommended that the 

Deputy Secretary of Defense delay his approval of the Joint Staff’s 

proposal until the MDEB could review the proposal and provide a 

recommendation. According to Acquisition, Technology and Logistics 

officials, no decision has been made regarding returning the BMDS to the 

requirements process. However, the Deputy Secretary of Defense, in 

September 2008, appeared to strengthen the oversight role of the MDEB, 

clarifying the roles of the MDEB as well as MDA, the Office of the 

Secretary of Defense, Combatant Commands, and Military Departments. 

With respect to the role of the MDEB, he established a life cycle 

management process for the BMDS stating that the MDEB will recommend 

 

44 Lead services have already been designated for Aegis BMD, the AN/TPY-2 radar, THAAD, 

GMD, ABL, the European radar, Cobra Dane, and upgraded early warning radars. 

Page 53 GAO-09-338 Defense Acquisitions 
 

and oversee implementation of strategic policies and plans, program 

priorities, and investment options to protect our Nation and our allies 

from missile attack. One of the MDEB functions is to provide the Under 

Secretary of Defense for Acquisition, Technology, and Logistics—or 

Deputy Secretary of Defense, as necessary—a recommended strategic 

program plan and feasible funding strategy for approval. The Deputy 

Secretary further noted that, through the use of the BMDS Life Cycle 

Management Process outlined in the memo, the MDEB will oversee the 

annual preparation of the BMDS portfolio, including BMDS-required 

capabilities and a program plan to meet the requirements with Research, 

Development Test & Evaluation, procurement, operations and 

maintenance, and military construction resources in defense-wide 

accounts. 

To further increase BMDS transparency and oversight of the BMDS, the 

Under Secretary of Defense Acquisition, Technology, and Logistics plans 

to hold program reviews for several BMDS elements commensurate with 

the authority granted to the MDEB by the Deputy Secretary of Defense. 

According to Under Secretary of Defense for Acquisition, Technology, and 

Logistics officials, the MDEB conducted its first of such reviews in 

November 2008 of the THAAD program. This review covered production 

and the element’s contract schedule. Under Secretary of Defense for 

Acquisition, Technology, and Logistics officials told us that these reviews 

are designed to provide the Deputy Director Acquisition, Technology, and 

Logistics with comprehensive information that will be used as the basis for 

MDEB recommendations for the BMDS business case and baseline 

processes— a process which, according to these officials, is similar to the 

traditional Defense Acquisition Board process for reviewing other major 

acquisition programs. However, it is unclear whether the information 

provided to the MDEB will be comparable to that produced for other 

major acquisition program reviews as most of the information appears to 

Page 54 GAO-09-338 Defense Acquisitions 
 

be derived or presented by MDA as opposed to independent sources as 

required for traditional major defense acquisition programs.45 

Efforts to Improve 

Transparency of MDA’s 

Work Have Not Progressed 

as Planned 

In 2007, MDA redefined its block structure to better communicate its plans 

and goals to Congress. The agency’s new structure is based on fielding 

capabilities that address particular threats instead of the biennial time 

periods previously used to develop and field the BMDS. Last year, we 

reported that MDA’s new block plans included many positive changes.46

However, MDA, with its submission of its Fiscal Year 2008 Statement of 

Goals, reversed some of the positive aspects of the new block structure. 

For example, we previously reported that the new block structure would 

improve the transparency of each block’s actual cost by disallowing the 

deferral of work from one block to another. Under its prior block 

structure, MDA deferred work from one block to another; but it did not 

track the cost of the deferred work so that it could be attributed to the 

block that it benefited. Because MDA did not track the cost of the deferred 

work, the agency was unable to adjust the cost of its blocks to accurately 

capture the cost of each. This weakened the link between budget funds 

and the work performed. Last year, MDA officials told us that under its 

new block approach, MDA would no longer transfer work under any 

circumstances to a different block. However, MDA officials recently said 

that they are retaining the option to move work from one block to another 

as long as it is accompanied by a rebaseline. This change allows the 

Deferral of Work 

 

45 Before a program can enter the system development and demonstration phase of the 

acquisition cycle, statute requires that certain information be developed. 10 U.S.C. § 2366b. 

In 2002, the Secretary of Defense deferred the application of some of DOD’s acquisition 

processes to BMDS. Therefore, MDA has not yet entered System Development and 

Demonstration which would trigger the statutes requiring the development of information 

that the Defense Acquisition Board uses to inform its decisions. Most major defense 

acquisition programs are also required by statute to obtain an independent verification of 

program cost prior to beginning system development and demonstration, and/or 

production and deployment. 10 U.S.C. § 2434. Statute also requires an independent 

verification of a system’s suitability for and effectiveness on the battlefield before a major 

defense acquisition program can proceed beyond low-rate initial production. 10 U.S.C. § 

2399. 

46 GAO-08-448. 

Page 55 GAO-09-338 Defense Acquisitions 
 

agency to continue the practice of moving work from one block to 

another, which thereby reduces the transparency of the new block 

structure and undermines any baselines that are established. 

In March 2007, we reported that the majority of MDA’s funding comes 

from the Research, Development, Test, and Evaluation appropriation 

account, another flexibility provided by law.47 In past years, Congress 

authorized MDA to pay for assets incrementally using research and 

development funds. This allowed MDA to fund the purchase of assets over 

multiple years. Congress recently restricted MDA’s authority and required 

MDA to purchase certain assets with procurement funds and directed that 

for any year after fiscal year 2009, MDA’s budget materials must delineate 

between funds needed for research, development, test, and evaluation, 

procurement, operations and maintenance, and military construction. 

Requiring MDA to request funding in these appropriation categories will 

mean that it will be required to follow the funding policies for each 

category. For example, using procurement funds will mean that MDA will 

be required to ensure that assets are fully funded in the year of their 

purchase, rather than incrementally funded over several years. 

Use of Procurement Funds 

Congress directed in the 2008 National Defense Authorization Act, for any 

year after fiscal year 2009, that MDA’s budget materials delineate between 

funds needed for research, development, test, and evaluation, 

procurement, operations and maintenance, and military construction. We 

have previously reported that using procurement funds will mean that 

MDA generally will be required to adhere to congressional policy that 

assets be fully funded in the year of their purchase, rather than 

incrementally funded over several years. The Congressional Research 

Service reported in 2006 that “incremental funding fell out of favor 

because opponents believed it could make the total procurement costs of 

weapons and equipment more difficult for Congress to understand and 

track, create a potential for DOD to start procurement of an item without 

necessarily stating its total cost to Congress, permit one Congress to ‘tie 

the hands’ of future Congresses, and increase weapon procurement costs 

by exposing weapons under construction to uneconomic start-up and stop 

costs.”48 

 

47 GAO-07-387. 

48 Congressional Research Service, Defense Procurement: Full Funding Policy—

Background, Issues, and Options for Congress (Oct. 20, 2006). 

Page 56 GAO-09-338 Defense Acquisitions 
 

In the 2008 National Defense Authorization Act, Congress also provided 

MDA with the authority to use procurement funds for fiscal years 2009 and 

2010 to field its BMDS capabilities on an incremental funding basis, 

without any requirement for full funding. Congress has granted similar 

authority to other DOD programs. In the conference report accompanying 

the Act, Conferees cautioned DOD that additional authority will be 

considered on a limited case-by-case basis and noted that they expect that 

future missile defense programs will be funded in a manner more 

consistent with other DOD acquisition programs. 

MDA did not request any procurement funds for fiscal year 2009. During 

our audit, the agency had not yet released the 2010 budget request to 

include such funding categories. However, MDA officials told us that the 

agency plans to request procurement funds for some of its assets in its 

fiscal year 2010 request, but could not elaborate on its plans to do so. 

Given that data was unavailable, it is unclear for which assets 

procurement funds will be requested or the extent to which the request 

will meet the direction given by Congress. According to MDA officials, 

information regarding its plans to request procurement funding will not be 

released until spring 2009. 

Baselines represent starting points against which actual progress can be 

measured. They are thus used to provide indications of when a program is 

diverting from a plan. Baselines can be established to gauge progress in 

different areas, including cost, schedule and testing. Overall, the BMDS 

does not have baselines that are useful for oversight. With regard to cost, 

we have already discussed the lack of total and unit cost baselines for 

missile defense as well as the frequency of changes in contract baselines. 

MDA made some progress with developing a schedule baseline for its 

blocks and their associated capabilities. The agency’s annual Statement of 

Goals identifies its schedule baseline as the fiscal year dates for early, 

partial, and full capability deliveries of hardware and functionality for a 

block. Thus, while MDA has changed its schedule for making declarations, 

the effect of the change can be determined by comparison with the 

original schedule. 

Baselines 

MDA does not have test baselines for its blocks. The agency does however, 

have baselines for its test program, but revises them frequently. They are 

therefore not effective for oversight. The agency identified its Integrated 

Master Test Plan as the test baseline for the BMDS. However, as depicted 

in table 9, the agency has made a number of changes to the content of the 

baseline. 

Page 57 GAO-09-338 Defense Acquisitions 
 

Table 9: MDA BMDS Test Baseline Revisions 

Version 

Revisions/ 

change date Rationale for change 

Version 

approved 

5.6.2 February 20 Interim Update: Changed for signature X 

8.01 August 15 Incorporated MDA new block construct; 

migrated from calendar year format to 

fiscal year format. 

8.04 October 12 Updated funding status. Incorporated 

Operational Test Agency input. 

8.06 November 6 Preparation for internal MDA 

coordination. 

8.07 December 11 Program Change Board changes 

incorporated. Includes some fiscal year 

2008 and 2009 budget decisions. 

8.1 February 5 Updated with Program Change Board 

changes 

X 

8.4 July 19 Quarterly update based on Program 

Change Board and working group 

decisions 

9.1 September 26 Quarterly update limited to schedules. 

Source: GAO analysis of MDA documents. 

The official approved test baseline changes every year and there are 

numerous more informal changes that happen more frequently. Most of 

the annual revisions to the test baseline occur either because MDA has 

changed the substance of test, changed the timing of tests, or added tests 

to the baseline. 

The Integrated Master Test Plan establishes the executable test program 

for the current fiscal year and extends through the following fiscal year. 

According to MDA, the test plan is updated quarterly based upon decisions 

from MDA leadership or formal decision-making forums such as the 

Program Control Board, and is also coordinated annually with external 

agencies such as the Office of the Director of Operational Test and 

Evaluation. However, as shown in table 9, there are several versions for a 

given quarter and as many as seven versions have been developed since 

the fiscal year 2008 baseline was established. It is unclear which Integrated 

Master Test Plan version MDA manages to at any given time. For example, 

in November 2008, we requested the latest version of the Integrated Master 

Test Plan and were told that the latest approved version was 8.4, which 

was revised in July 2008. However, the signature page for that version is 

from a prior version—version 8.1. Since there is no signature page 

Page 58 GAO-09-338 Defense Acquisitions 
 

referring to version 8.4, it appears that this version is unapproved though 

MDA officials told us that it was being used to manage the BMDS. 

Agency officials maintain that the document is used to manage tests and 

associated requirements for key test events. However, it is unclear how 

well the baseline is integrated with other key aspects of testing such as the 

acquisition of targets needed to execute tests. For example, in some 

instances, targets are placed on contract for two or more years in advance 

of the planned tests. Yet, the test baseline—the Integrated Master Test 

Plan—does not appear to include events beyond the following fiscal year 

that are key to the BMDS test program. As we reported in September 2008, 

MDA officials acknowledged that its target contracts did not capture all 

element testing requirements and target baselines were not always 

established before targets contracts were signed.49 

In 2002, MDA was given unusual authorities to expedite the fielding of an 

initial BMDS capability. As this initial capability was fielded in 2005, it 

showed the benefits of these flexibilities. MDA has improved on this 

capability in the ensuing years, including 2008, the focus of this report. 

Today, the program is still operating at a fast pace, as production and 

fielding of assets outstrips the ability to test and validate them. A collateral 

effect of these flexibilities has been reduced visibility into actual versus 

planned progress. Some fundamental questions of an oversight nature are 

not yet answerable. For example, a comparison of actual versus planned 

costs at the system or asset level is not yet possible, nor is an assessment 

of the performance of the fielded system as a whole. Beginning in 2007, 

MDA began efforts to improve visibility into its actual performance, 

beginning with the new way of defining blocks, coupled with DOD’s 

creation of the MDEB. However, progress has been slow in some areas 

and value for money cannot be satisfactorily assessed. Delays are 

especially important in a program of this size, as a year delay in 

establishing cost baselines means another $8 billion to $10 billion may be 

spent in the meantime. 

Conclusions 

With the transition to a new administration, the deployment and 

subsequent improvement of an initial capability, a new agency Director, 

and a new block structure for managing the BMDS, an opportunity exists 

to revisit and strengthen the processes by which MDA operates. Looking 

 

49 GAO-08-1113. 

Page 59 GAO-09-338 Defense Acquisitions 
 

to the future, decision makers in Congress and DOD face multi-billion 

dollar investment decisions in allocating funds both within MDA and 

between MDA and other DOD programs. At this point, a better balance 

must still be struck between the information Congress and DOD need to 

conduct oversight of the BMDS and the flexibility MDA needs to manage 

across the portfolio of elements that collectively constitute the system’s 

capability. 

At this point, the balance does not provide sufficient information for 

effective oversight. In particular: 

• Total cost and unit cost baselines have not been set and contract 

baselines are subject to frequent changes. Even if such baselines are 

set as planned, they will only capture about 26 percent of MDA’s work. 

• Less testing is conducted than planned, thus delaying the validation of 

the models and simulations needed to assess the overall performance 

of the BMDS. Moreover, test plans do not hold and are revised often, in 

many cases due to the poor performance of target missiles. The 

current test plan is at risk given its ambitious scope. 

• Manufacturing, production, and fielding are outpacing testing, 

modeling, and validation. Consequently, fielding decisions and 

capability declarations are being made with limited understanding of 

system effectiveness. 

We recommend that the Secretary of Defense direct the MDEB to assess 

how the transparency and accountability of MDA’s acquisitions can be 

strengthened to enhance oversight, such as by adopting relevant aspects of 

DOD’s normal requirements, acquisition and budgeting processes, without 

losing the beneficial features of MDA’s existing flexibility. 

Recommendations for 

Executive Action 

In the near term we recommend that the Secretary of Defense direct MDA 

to undertake the following 10 actions: 

In the area of cost: 

1. Complete total cost baselines before requesting additional funding 

for Blocks 2.0 and 3.0 and commit to a date when baselines for all 

blocks will be established. 

2. Ensure that transfers of work from one block to another are 

transparent and reported as cost variances. 

Page 60 GAO-09-338 Defense Acquisitions 
 

3. Provide additional unit costs reports, beyond flyaway unit costs, 

that incorporate both procurement and research and development 

funding so that there is a more comprehensive understanding of 

the progress of the acquisitions. 

In the area of testing and performance: 

4. Expand the BMDS test baseline to include tests scheduled beyond 

the first succeeding year of the plan to ensure its synchronization 

with BMDS contracts. 

5. Ensure that DOT&E is consulted before making significant changes 

to the test baseline so that the tests planned provide DOT&E with 

sufficient data to assess the performance of the BMDS elements. 

6. Ensure that planned test objectives include concrete data 

requirements anchoring models and simulations to real-world tests, 

synchronized with flight and ground test plans and that the effects 

on models and simulations of test cancellations, delays or 

problems are clearly identified and reported. 

7. Reassess the flight tests scheduled for the end of fiscal year 2009 to 

ensure that they can be reasonably conducted and analyzed given 

targets and other constraints. 

In the area of knowledge-based decisions: 

8. Synchronize the development, manufacturing, and fielding 

schedules of BMDS assets with the testing and validation 

schedules to ensure that items are not manufactured for fielding 

before their performance has been validated through testing. 

9. Conduct a flight test of the CE-I EKV against a complex target 

scene with countermeasures to complete MDA’s previous testing 

goal of understanding the performance capabilities of the first 24 

fielded GBIs. 

10. Strengthen the capability declarations by using the complete 

analysis from annual performance assessments as the basis for 

declaring engagement sequence groups as fully capable and block 

development as fully complete; otherwise, indicate the limitations 

of the capabilities and steps that MDA will take to reduce the risks. 

Page 61 GAO-09-338 Defense Acquisitions 
 

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

comments are reprinted in appendix I. DOD also provided technical 

comments, which were incorporated as appropriate. 

Agency Comments 

and Our Evaluation 

DOD fully concurred with 10 of our 11 recommendations and partially 

concurred with our recommendation that the Secretary of Defense direct 

MDA to synchronize the development, manufacturing, and fielding 

schedules of BMDS assets with testing and validation schedules to ensure 

that items are not manufactured for fielding before their performance has 

been validated through testing. Yet, even DOD’s response to this 

recommendation appears to be, in substance, concurrence. 

DOD concurred with our recommendation that the Secretary of Defense 

direct MDA to ensure that transfers of work from one block to another are 

transparent and reported as cost variances. DOD noted in its response that 

MDA will report block baselines and variances annually to Congress in the 

BMDS Accountability Report. The Department further noted that for the 

purposes of unit cost reporting, MDA has defined a cost variance as a 

confirmed increase of 10 percent or more in block or unit costs when 

compared to the current cost baseline or 20 percent or more compared to 

the original cost baseline, stating that transfers of work creating such cost 

variances will be reported. The intent of our recommendation is to 

increase visibility into transfers of work between blocks regardless of the 

amount of the increase or the baseline status of the blocks. The trigger for 

reporting the variances selected by DOD will not necessarily provide that 

visibility. Given that only between 2 and 26 percent of BMDS block and 

capability development costs from fiscal year 2010 to 2013 will be 

baselined initially, visibility into transfers into blocks that are not yet 

baselined may not occur. Further, an increase may not be reported in the 

baselined block from which work is transferred because the transfer 

would actually yield a decrease in the cost of the baselined block. An 

increase would also not be reported in the receiving block if that block is 

not baselined or if the transfer did not increase costs above the threshold. 

MDA may need to consider a different approach to reporting that captures 

meaningful transfers of work into and out of blocks regardless of whether 

any of the blocks are baselined. MDA should work with Congress to 

determine what constitutes a meaningful or significant cost increase. 

DOD also concurred with our recommendation that the Secretary of 

Defense strengthen the capability declarations by using the complete 

analysis from annual performance assessments. In responding to our 

recommendation, DOD noted that if there is limited performance 

assessment data, the overall capability assessment will factor in the 

Page 62 GAO-09-338 Defense Acquisitions 
 

knowledge gained from ground tests and flight tests against the identified 

risks. While we recognize that MDA is not always able to complete all of 

its planned tests in a given time period, when MDA decides to change the 

planned basis for its capability declarations to a different or reduced set of 

data it is important for the agency to clearly report the limitations that 

affect the capability declaration as well as the mitigation steps it is taking. 

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

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

GAO Web site at http://www.gao.gov. 

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

contact me at (202) 512-4841. Contact Points for our offices of 

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

Paul Francis 

of this report. The major contributors are listed in appendix VI. 

Director, Acquisition and Sourcing Management 

Page 63 GAO-09-338 Defense Acquisitions 
 

List of Congressional Committees 

The Honorable Carl Levin 

Chairman 

The Honorable John McCain 

Ranking Member 

Committee on Armed Services 

United States Senate 

The Honorable Daniel K. Inouye 

Chairman 

The Honorable Thad Cochran 

Ranking Member 

 Subcommittee on Defense 

Committee on Appropriations 

United States Senate 

The Honorable Ike Skelton 

Chairman 

The Honorable John M. McHugh 

Ranking Member 

Committee on Armed Services 

House of Representatives 

The Honorable John P. Murtha 

Chairman 

The Honorable C.W. Bill Young 

Ranking Member 

 Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 

Page 64 GAO-09-338 Defense Acquisitions 
Appendix I: Comments from the Department Appendix I: Comments from the Department of Defense 

of Defense 

Page 65 GAO-09-338 Defense Acquisitions 
Appendix I: Comments from the Department 

of Defense 

Page 66 GAO-09-338 Defense Acquisitions 
Appendix I: Comments from the Department 

of Defense 

Page 67 GAO-09-338 Defense Acquisitions 
Appendix I: Comments from the Department 

of Defense 

Page 68 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance Appendix II: BMDS Prime Contractors during Fiscal Year 2008 

Exceed Budgeted Cost and Schedule 

Performance during Fiscal Year 2008 

Based on our analysis of 14 Ballistic Missile Defense System (BMDS) 

elements’ prime contractor earned value management performance, we 

determined that collectively the contractors overran budgeted cost by 

$152.4 million and were behind schedule by approximately $107.4 million 

during the fiscal year.1

 Our insight of the dollar gained or lost for each 

dollar invested is based on monthly earned value reports which are 

required of each BMDS program office’s prime contractor. These reports 

compare monthly progress to the cost or schedule performance baseline 

to reveal whether the work scheduled is being completed on time and if 

the work is being completed at the cost budgeted. For example, if the 

contractor was able to complete more work than scheduled and for less 

cost than budgeted, the contractor reports a positive schedule and cost 

variance. Alternatively, if the contractor was not able to complete the 

work in the scheduled time period and spent more than budgeted, the 

contractor reports both a negative schedule and cost variance. The results 

can also be mixed by, for example, completing the work under cost (a 

positive cost variance) but taking longer than scheduled to do so (a 

negative schedule variance). 

We also used contract performance report data to base predictions of 

likely overrun or underrun of each prime contractor’s budgeted cost at 

completion. Our predictions of final contract cost are based on the 

assumption that the contractor will continue to perform in the future as it 

has in the past. In addition, since they provide the basis for our projected 

overruns, we also provide the total budgeted contract cost at completion 

for each contract we assessed in this appendix.2

 However, the budgeted 

costs at completion, in some cases, have grown significantly over time. For 

example, in one case the budgeted cost at completion increased by 

approximately five times its original value. Since our assessment does not 

reveal, as cost growth, the difference between the original and current 

budgeted costs at completion it would be inappropriate to compare the 

underruns or overruns for MDA programs with cost growth on major 

 

1

 Earned Value Management is a program management tool that integrates the technical, 

cost, and schedule parameters of a contract. During the planning phase, an integrated 

baseline is developed by time phasing budget resources for defined work. As work is 

performed and measured against the baseline, the corresponding budget value is “earned.” 

Using this earned value metric, cost and schedule variances can be determined and 

analyzed. 

2

 The total contract cost at completion is based on budgeted cost at completion for each 

contract we assessed. The budget at completion represents the total planned value of the 

contract. 

Page 69 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

defense acquisition programs since those major defense acquisition 

programs have established their full scope of work as well as developed 

total cost baselines, while these have not been developed for MDA 

programs.3

The Aegis Ballistic Missile Defense (Aegis BMD) program manages two 

prime contractors for work on its two main components—the Aegis BMD 

Weapon System and the Standard Missile-3 (SM-3). We report on work 

under one of the two separate Aegis BMD SM-3 contract’s contract line 

item numbers (CLIN)on which we received sufficient performance data 

during fiscal year 2008. The first Aegis BMD SM-3 contract’s CLIN 9 was 

for the production of 20 Block 1A missiles which began in February 2007 

and finished deliveries in August 2008. Deliveries were completed $7.5 

million under budget on the contractor’s total budgeted cost of $179.0 

million. The other Aegis BMD SM-3 contract’s CLIN 1 is for a fourth lot of 

27 Block 1A missiles and began reporting performance data in August 2007 

for work that is still ongoing. The weapon system contractor experienced 

cost growth and schedule delays while the SM-3 contractor for the ongoing 

CLIN 1 for 27 Block 1A missiles had mixed performance. Neither of these 

CLINs experienced a realignment during fiscal year 2008. 

Aegis BMD 

Contractors 

Experienced Mixed 

Performance during 

the Fiscal Year 

The Aegis BMD weapon system contractor experienced cumulative cost 

growth and schedule delays throughout the year. The Aegis BMD weapon 

system contractor overran budgeted cost and schedule during the fiscal 

year by $7 million and $5.1 million respectively. Although cumulative cost 

performance remains positive at $16 thousand, cumulative schedule 

performance continued to decline to negative $8.4 million. The negative 

cumulative schedule variance is driven by late engineering data, delays to 

qualification efforts, and the need to return components experiencing 

issues back to the vendor which required more time than originally 

planned. See figure 7 for cumulative cost and schedule performance 

during the fiscal year. 

 

3

 The current budgeted costs at completion are as-of September 30, 2008. 

Page 70 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

Figure 7: Aegis BMD Weapon System Fiscal Year 2008 Cost and Schedule Performance 

-15

-10

-5

0

5

10

Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08

Dollars (in millions)

Source: Contractor (data), GAO (presentation).

Months

Cumulative cost variance

Cumulative schedule variance

The program attributes the fiscal year cost and schedule overruns mainly 

to the additional time and testing needed to ensure that the weapon 

system fielded capability was what was originally promised to the 

warfighter. To account for some of the overruns, the program performed 

fewer risk reduction efforts for a future weapon system capability release. 

If the contractor continues to perform as it has during the fiscal year, we 

project that at contract completion in September 2010, the contractor will 

overrun its budgeted cost of $1.2 billion by between $1.9 million and $12.2 

million. 

The Aegis BMD SM-3 contractor, producing another lot of 27 Block 1A 

missiles under its CLIN 1, ended the fiscal year by underrunning budgeted 

costs by $3.0 million. The Aegis BMD SM-3 contractor for CLIN 1 work 

also ended the year with a negative $7.6 million schedule variance, which 

means that the contractor was unable to accomplish $7.6 million worth of 

planned work. Since reporting began in August 2007, cumulative and fiscal 

year variances are nearly equal with cumulative cost variances at a 

positive $3.3 million and cumulative schedule variances at negative $7.0 

Page 71 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

million. See figure 8 for a graphic representation of the cumulative cost 

and schedule variances during fiscal year 2008. 

Figure 8: Aegis BMD SM-3 CLIN 1 Fiscal Year 2008 Cost and Schedule Performance 

-8

-6

-4

-2

0

2

4

6

Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08

Dollars (in millions)

Source: Contractor (data), GAO (presentation).

Months

Cumulative cost variance

Cumulative schedule variance

The contractor was able to accomplish fiscal year 2008 work for $3.0 

million less than originally planned in part due to adjustments made in 

program management, labor efficiencies, reductions in vendor cost, and 

material transfers in the missile’s fourth stage component. The 

unaccomplished work in negative $7.6 million worth of fiscal year 

schedule variances is largely in the first, second, and fourth stages portion 

of work. In the first stage booster, the contractor attributes some of the 

negative schedule variance to more than a year delay in testing the first 

stage due to rework needed to correct errors in the original drawing 

packages. In addition, the contractor cites second stage component 

delivery delays as drivers for the negative schedule variance. Vendors 

were unable to deliver these components due to holdups in approving 

waivers, achieving recertification after test equipment failures, and 

property damage to facilities. Lastly, the contractor experienced delays in 

components for the fourth stage which also contributed to the unfavorable 

schedule variance. If the contractor continues to perform as it did through 

Page 72 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

September 2008, our analysis predicts that, at completion in April 2010, the 

work under the contract could cost from $6.6 million less to $0.7 million 

more than the budgeted cost of $237.5 million. 

For fiscal year 2008, the Airborne Laser (ABL) contractor overran fiscal 

year budgeted costs by $10.6 million but had a positive fiscal year schedule 

variance of $2.2 million. Despite some gains in its schedule variance during 

the fiscal year, the program still maintains negative cumulative cost and 

schedule variances of $84.8 million and $23.6 million respectively. The 

contractor mostly attributes the negative cumulative variances in cost and 

schedule to late beam control/fire control hardware deliveries. Despite a 

replan in June 2007, the ABL contractor did not perform any type of 

realignment during fiscal year 2008. Figure 9 shows cumulative variances 

at the beginning of fiscal year 2008 along with a depiction of the 

contractor’s cost and schedule performance throughout the fiscal year. 

ABL Contractor 

Overran Budgeted 

Fiscal Year Cost 

Figure 9: ABL Fiscal Year 2008 Cost and Schedule Performance 

-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08

Dollars (in millions)

Source: Contractor (data), GAO (presentation).

Months

Cumulative cost variance

Cumulative schedule variance

Technical issues with key components of the Beam Control Fire Control 

system that required new hardware or refurbishment of existing 

components as well as late deliveries of key laser system components are 

Page 73 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

the primary drivers of the unfavorable fiscal year cost variance of $10.6 

million. These issues have caused delays in integration and test activities 

for the overall ABL weapon system. Based on the contractor’s 

performance up through fiscal year 2008, we estimate that, at completion 

in February 2010, the contractor will overrun its budgeted cost of $3.6 

billion by between $89.7 million and $95.4 million. 

Our analysis of the Command, Control, Battle Management, and 

Communications’ (C2BMC) cumulative contract performance indicates 

that the prime contractor’s performance declined during fiscal year 2008. 

The contractor overran its fiscal year 2008 budget by $9.8 million and did 

not perform $3.6 million of work on schedule. By September 2008, this 

resulted in an unfavorable cumulative cost variance of $24.3 million and an 

unfavorable cumulative schedule variance of $7.1 million. The main 

drivers for the negative cumulative cost variances were costs associated 

with unplanned work, increased technical complexity, and reduction to 

cost efficiency due to losing key staff. The contractor attributes the 

unfavorable cumulative schedule variances to software issues related to 

the global engagement manager and components of test training 

operations. Although the C2BMC contractor performed a replan in 

November 2006, the contractor did not perform any type of realignment 

during fiscal year 2008. Trends in cost and schedule performance during 

the fiscal year are depicted in figure 10. 

C2BMC Program 

Incurred Negative 

Cumulative and Fiscal 

Year Variances 

Page 74 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

Figure 10: C2BMC Fiscal Year 2008 Cost and Schedule Performance 

-30

-25

-20

-15

-10

-5

0

5

Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08

Dollars (in millions)

Source: Contractor (data), GAO (presentation).

Months

Cumulative cost variance

Cumulative schedule variance

The negative fiscal year cost variance of $9.8 million is driven mainly by 

problems in the performance of work under Part 4 and Part 5 of the 

contract. The Part 4 effort, which began in December 2005, includes 

completing several spiral capabilities, upgrading spiral suites, and 

implementing initial global engagement capabilities at an operations 

center. The Part 5 effort began in December 2007 and covers operations 

and sustainment support for fielded C2BMC; the delivery of spiral 

hardware, software, and communications; as well as development, 

planning, and testing for other spiral capabilities. The contractor was able 

to use reserves to cover some of its Part 4 unfavorable fiscal year cost 

variances. 

The Part 5 fiscal year cost variance’s primary drivers are unexpected 

complexities with the network design, unplanned work that required more 

resources for developing the planner, and the extension of efforts past the 

completion date on the global engagement management portion of work. 

The unfavorable fiscal year schedule variance of $3.6 million is 

attributable to the Part 5 portion of work and primarily caused by an 

unexpected reallocation of resources off of the global engagement 

management portion of work to other areas, delays in requesting material 

Page 75 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

procurement also for global engagement management, and a lagging 

schedule for building out a testing lab. If the contractor continues to 

perform as it has in the past, we predict that the contractor will overrun its 

budgeted cost of $1.0 billion at completion in December 2009 by between 

$37.1 million and $76.8 million. 

The government and the Ground-based Midcourse Defense (GMD) 

contractor began a contract restructuring during the fiscal year to rephase 

and rescope on-going efforts to refine capability requirements and to 

adjust program content as well as perform weapon system integration, 

perform flight test planning, and work to develop the two-stage booster 

among other tasks. The ongoing realignment includes a proposal to add 

between $350 million and $580 million to the cost of the work under 

contract and to add 39 months to the period of performance. 

GMD Contractor 

Maintained Negative 

Cumulative Cost and 

Schedule Variances 

throughout the Fiscal 

Year 

The GMD contractor reports a cumulative negative cost variance of more 

than $1.0 billion that it attributes to technical challenges with its 

Exoatmospheric Kill Vehicle (EKV) as well as supplier component quality 

problems. The contractor also carries a total unfavorable cumulative 

schedule variance of $130.3 million, the bulk of which the contractor 

attributes to the technical issues connected with the Ground-based 

Interceptor (GBI), particularly the EKV. For example, during the fiscal 

year the program experienced difficulties in manufacturing the Capability 

Enhancement II (CE-II) EKVs. Although the CE-II EKVs are expected to 

provide better performance, the contractor produced the kill vehicles 

before completing developmental tests, discovered problems during 

manufacturing, incorporated a new design, and continued manufacturing 

them. Although these issues contributed unfavorable fiscal year cost 

variances of $42.7 million, the program was able to make up for these 

losses in other areas. The variances, depicted in figure 11 represent the 

GMD contractor’s cumulative cost and schedule performance over fiscal 

year 2008. 

Page 76 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

Figure 11: GMD Fiscal Year 2008 Cost and Schedule Performance 

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Dollars (in millions)

Source: Contractor (data), GAO (presentation).

Months

Cumulative cost variance

Cumulative schedule variance

The GMD contractor did have a favorable fiscal year cost variance of $53.9 

million, which it attributed to labor efficiencies in the ground system as 

well as less field maintenance support required than planned, and labor 

efficiencies in the deployment and sustainment portion of the work under 

the contract. However, the GMD element’s underruns occurred partially 

because the contractors delayed or eliminated some planned work. For 

example, the GMD program did not accomplish the emplacement of three 

GBIs, or conduct either of its two planned flight tests. As a result, it 

employed less labor than originally intended. The program also reports an 

unfavorable fiscal year schedule variance of $77.4 million which it 

attributes to an administrative error that occurred in September 2007. This 

error incorrectly adjusted the baseline to the booster effort in September 

which was then updated in October. However, it should also be noted that 

Missile Defense Agency (MDA) officials believe that ongoing adjustments 

to the GMD element’s baseline have skewed recent variances to such a 

degree that they should not be used to predict future costs. We did 

perform analysis based on the contractor’s reported performance through 

fiscal year 2008, and our analysis estimates that at contract end planned 

Page 77 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

for December 2011, the contractor could overrun its budgeted cost of 

$14.9 billion by between $950.2 million and $1.25 billion. 

Despite a replan in April 2007 and again in April 2008, the Kinetic Energy 

Interceptors (KEI) contractor continued to experience declining cost and 

schedule performance during the fiscal year. Although the contractor 

began the year with a positive cost variance, the contractor overran fiscal 

year 2008 budgeted costs by $8.3 million, ending the year with an 

unfavorable cumulative cost variance of $2.6 million. In addition, the 

program was unable to accomplish $8.5 million worth of work which 

added to an unfavorable cumulative schedule variance of $21.3 million. 

Cumulative cost and schedule variances were mainly driven by costs 

associated with delays to booster drawing releases, delays in procurement, 

and unexpected costs and rework related to issues with the second stage. 

Figure 12 depicts the cost and schedule performance for the KEI 

contractor during fiscal year 2008. 

KEI Cost and 

Schedule 

Performance 

Continued to Decline 

after Replan 

Figure 12: KEI Fiscal Year 2008 Cost and Schedule Performance 

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10

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Dollars (in millions)

Source: Contractor (data), GAO (presentation).

Months

Cumulative cost variance

Cumulative schedule variance

Page 78 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

The KEI contractor attributes its unfavorable fiscal year cost and schedule 

variances of $8.3 million and $8.5 million, respectively, to issues with its 

interceptor booster. Problems initially arose in fiscal year 2007 with a 

motor case failure during acceptance testing which led to unexpected 

redesigns. In October 2007, the program experienced several issues with 

the nozzle during a second stage ground test and also experienced a 

deviation in measured performance from pre-test predictions. These issues 

added costly redesigns and delays to its knowledge point, a booster flight 

test. The program performed a replan of its work in April 2008 because of 

these issues in order to realign the schedule with their booster flight test 

knowledge point which was delayed from August 2008 to April 2009. Since 

the replan, the booster flight test has been further delayed to the fourth 

quarter of fiscal year 2009. As a result of the replan, the program zeroed 

out some schedule variances from the baseline to reflect the program’s 

progress toward the newly defined schedule. Despite this replan in April, 

our analysis shows that the replan has not improved overall performance 

as cumulative cost and schedule variances continue their downward trend. 

We were unable to estimate whether the total work under the contract is 

likely to be completed within budgeted cost since trends cannot be 

developed until at least 15 percent of the work under the contract is 

completed. 

The Multiple Kill Vehicles (MKV) program began utilizing an indefinite 

delivery indefinite quantity contract in January 2004. Since then, the 

program has initiated eight task orders, five of which were open during 

fiscal year 2008—Task Orders 4 through 8. Task Order 4 provided 

insufficient data to complete full earned value analysis for the fiscal year. 

In addition, Task Order 5 was completed shortly after the fiscal year 

began, without providing enough data to show performance trends. 

Therefore we performed analysis for Task Orders 6, 7, and 8 as shown 

below. None of the task orders were realigned during the fiscal year. 

Limited Contractor 

Data Prevented 

Analysis of All MKV 

Task Orders 

MKV Task Order 6 began in November 2006 for the component 

development and testing of a prototype carrier vehicle seeker (a longrange sensor). According to the task order, this seeker for the carrier 

vehicle will assign individual kill vehicles for target destruction. This task 

will culminate in a demonstration planned for fiscal year 2010. As shown 

in figure 13 below, performance data over the course of the fiscal year 

illustrates declining cost and schedule performance. Although it began the 

fiscal year with slightly positive cumulative cost and schedule variances, 

the program ended the year with slightly negative cumulative cost and 

schedule variances of $1.1 million and $0.6 million respectively. In 

Page 79 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

addition, the contractor has unfavorable fiscal year cost and schedule 

variances of $1.4 million and $1.5 million, respectively. The program 

attributes its negative cumulative cost and schedule variances to increased 

work necessary to resolve software development issues, unplanned efforts 

as a result of late hardware arrivals, and a government-directed change in 

vendors for hardware resulting in additional design work. Based on our 

analysis and the assumption that the contractor will continue to perform 

as it has through fiscal year 2008, we predict that at its contract 

completion in May 2009, the contractor on Task Order 6 will overrun its 

budgeted cost of $19.3 million by between $1.6 million and $2.5 million. 

Figure 13: MKV Task Order 6 Fiscal Year 2008 Cost and Schedule Performance 

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Dollars (in millions)

Source: Contractor (data), GAO (presentation)

Months

Cumulative cost variance

Cumulative schedule variance

The MKV Task Order 7 is for the development and testing of engagement 

management algorithms and the test bed in which it will be demonstrated. 

These algorithms will be a critical capability of the carrier vehicle to 

manage the kill vehicle engagements relying on target information from 

the BMDS sensors and the carrier vehicle long-range sensor. The 

contractor on this task order performed positively during the fiscal year, 

both in terms of its cumulative and fiscal year cost and schedule variances. 

The program had a favorable fiscal year cost variance of $1.4 million and a 

Page 80 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

positive fiscal year schedule variance of $11 thousand, adding to its 

favorable cumulative cost and schedule variances of $1.7 million and $0.1 

million, respectively. The program attributes its cumulative cost underruns 

to several reasons including a programmatic decision to proceed with one 

approach for organizing kill vehicles in attack formation rather than 

funding several different approaches. In addition, the contractor 

experienced cost savings with greater efficiencies than expected in the kill 

vehicle portion of the work under the contract and less manpower than 

planned in other portions of the work under the contract. If the contractor 

continues to perform as it has in the past, we estimate that at completion 

in May 2010 the work under the contract could cost between $3.2 million 

and $3.9 million less than the expected $43.9 million budgeted for the 

work under the contract. See figure 14 below for an illustration of 

cumulative cost and schedule performance during fiscal year 2008. 

Figure 14: MKV Task Order 7 Fiscal Year 2008 Cost and Schedule Performance 

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1.0

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Dollars (in millions)

Source: Contractor (data), GAO (presentation).

Months

Cumulative cost variance

Cumulative schedule variance

MKV Task Order 8 was awarded in January 2007 and began reporting full 

performance data in July 2007. The task order is for the development and 

testing of a hover test bed and hover test vehicle. This hover test bed will 

allow the program to integrate and test key components of the system in a 

Page 81 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

repeatable ground-based free flight environment as their technologies 

reach maturity. The program experienced a continuing schedule 

performance decline as seen in figure 15. 

Figure 15: MKV Task Order 8 Fiscal Year 2008 Cost and Schedule Performance 

Although the contractor began the year with a positive cumulative cost 

variance, overruns during the fiscal year of $10.7 million led the program 

to a total cumulative cost overrun of $10.3 million. The element’s fiscal 

year schedule variance was slightly negative at an unfavorable $15 

thousand, leaving its cumulative schedule variance largely unchanged at a 

favorable $0.3 million. The program attributes the cumulative cost 

variances to increased labor, procurement, and material costs as well as 

increased hardware and engineering drawings, and management oversight 

to resolve subcontractor inefficiencies. In addition, the program increased 

expenditures to resolve technical and schedule issues associated with the 

development of avionics subsystems. The planned date for the task order’s 

main effort—completing the hover test—was delayed 2 months from its 

original date to December 2008 in part because of technical issues 

associated with the test vehicle’s power unit and a software anomaly. 

These issues were resolved prior to the hover test being conducted. Based 

Page 82 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

on its prior performance, the MKV contractor could overrun the budgeted 

cost of $48.0 million for the work under the contract at completion in 

January 2009 by between $5.7 million and $13.8 million. 

As of September 2008, the Sensor’s contractor had overrun its fiscal year 

budget by $2.2 million and was behind in completing $27.4 million worth 

of work. Considering prior years’ performance, the contractor is 

performing under budget with a favorable cumulative cost variance of 

$22.0 million. However, the contractor has a cumulative unfavorable 

schedule variance of $9.6 million. The contractor reports the cumulative 

schedule variance is driven by delays in the manufacturing of the sixth 

radar and a software capability release that is 2 to 3 months behind 

schedule. Additionally, the contractor reports that its favorable cumulative 

cost variance is attributable to efficiencies in the second radar’s 

manufacturing, design, development, and software. The Sensors 

contractor has not performed a realignment of its work since contract 

start in April 2003. See figure 16 for trends in the contractor’s cost and 

schedule performance during the fiscal year. 

Sensors’ Radar 

Experienced Fiscal 

Year Cost and 

Schedule Growth 

Figure 16: Sensors Fiscal Year 2008 Cost and Schedule Performance 

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15

20

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Dollars (in millions)

Source: Contractor (data), GAO (presentation).

Months

Cumulative cost variance

Cumulative schedule variance

Page 83 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

The contractor reports that its unfavorable fiscal year schedule variance of 

$27.4 million is due to a decrease of previously earned positive schedule 

variances reaped from the manufacturing efficiencies leveraged from the 

Terminal High Altitude Area Defense radar hardware design. In addition, 

late delivery of components also contributed to the negative fiscal year 

schedule variances. The negative fiscal year cost variance of $2.2 million is 

largely due to a contract change related to its incentive fee. Our analysis 

predicts that if the contractor continues to perform as it has through fiscal 

year 2008, the work under the contract could cost from $25 million less to 

$9.1 million more than the budgeted cost of $1.1 billion at completion 

currently planned for December 2010. 

After a replan of work in October 2007, the Space Tracking and 

Surveillance System (STSS) contractor experienced an unfavorable cost 

variance of $87.9 million during the fiscal year. The replan was undertaken 

in order to extend the period of performance and delay the launch date of 

its demonstrator satellite. Despite fiscal year cost overruns, the contractor 

was able to make gains on the cumulative schedule variance by 

accomplishing $1.9 million more worth of work than was originally 

planned. Cumulatively, the program has both unfavorable cost and 

schedule variances at $319.3 million and $17.8 million, respectively. The 

program attributes cumulative cost variances and schedule variances to 

continual launch date schedule slippages. In addition, problems in the 

space segment portion of work also added to the cumulative cost 

variances. Figure 17 shows both cost and schedule trends during fiscal 

year 2008. 

Technical Issues 

Drove STSS Cost 

Growth during the 

Fiscal Year 

Page 84 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

Figure 17: STSS Fiscal Year 2008 Cost and Schedule Performance 

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Dollars (in millions)

Source: Contractor (data), GAO (presentation).

Months

Cumulative cost variance

Cumulative schedule variance

Program cost variances during the fiscal year were driven primarily by 

technical issues with hardware installed on the second space vehicle. 

These issues included an overheating flight communications box, a leak on 

the propulsion side of the satellite, and problems with the spacecraft 

processor that failed to send a critical command to the onboard computer. 

To resolve the issues with the processor, the program office initially 

recommended the removal of the entire computer from the spacecraft. 

However, after extensive research and testing, the program manager 

determined that the event with the spacecraft is an unverifiable failure 

with a low probability of occurrence and low mission impact and decided 

not to remove the computer from the spacecraft to resolve the issue. We 

estimate that if the contractor continues to perform as it has through fiscal 

year 2008, the work under the contract at completion in September 2011 

could exceed its budgeted cost of $1.6 billion by between $621.7 million 

and $1.2 billion. 

Page 85 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

In June 2008, a delivery order under the Targets and Countermeasures’ 

element that is developing a new family of targets—the Flexible Target 

Family (FTF)—performed a rebaseline as a result of experiencing 

manufacturing delays to several components. The majority of the delays 

were from qualification failures, subsequent redesigns, and requalification 

efforts. The rebaseline was to realign the work under the contract to 

reflect realistic hardware delivery dates. This rebaseline did not affect cost 

variances, but did rebaseline major milestone delivery dates and, as a 

result, set some of the previously existing schedule variances to zero. 

Targets and 

Countermeasures 

Program’s Rebaseline 

Positively Affected 

Fiscal Year Schedule 

Variances 

The Targets and Countermeasures contractor made gains with a favorable 

$23.2 million fiscal year schedule variance due in part to the rebaseline in 

June 2008. However, the contractor ended the year with an unfavorable 

cumulative schedule variance of $6.4 million which was primarily driven 

by delays in the completion of the FTF qualification program.4

 The 

program also ended the year with a cumulative cost variance of $52.8 

million which the contractor attributed to costs associated with the FTF’s 

avionics components integration and qualification issues, and more effort 

than expected required on motors for one of the targets in the program. 

See figure 18 below for an illustration of cumulative cost and schedule 

variances during the course of the fiscal year. 

 

4

 MDA is developing the FTF to represent evolving threats of all ranges. MDA has narrowed 

its FTF development efforts, focusing on a single vehicle, the 72-inch LV-2 ground-launched 

target. 

Page 86 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

Figure 18: Targets and Countermeasures Fiscal Year 2008 Cost and Schedule Performance 

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Dollars (in millions)

Source: Contractor (data), GAO (presentation).

Months

Cumulative cost variance

Cumulative schedule variance

The contractor attributes its unfavorable fiscal year cost variances of $35.7 

million to the increased cost of completing the first four FTF 72-inch 

targets. Delays in completing component qualification extended the period 

of performance which invariably led to higher costs. In addition, the 

contractor cites cost increases to the failure of one of its targets in July 

2008 that added mission assurance and testing cost to the follow-on 

mission using the same target configuration. We estimate that if the 

contractor continues to perform as it has in the past, it will overrun its 

budgeted cost of $1.1 billion at contract’s end in December 2009 by 

between $63.7 million and $75.9 million. 

The Terminal High Altitude Area Defense (THAAD) program experienced 

target issues during fiscal year 2008. The THAAD program performed a 

realignment in May 2008 to extend the flight test program after 

experiencing several delayed target deliveries. Because of the cost impact 

of these delayed targets, the program will increase its value of the work 

under its contract by approximately $80 million. The THAAD program 

performed a similar realignment in December 2006 as a result of delayed 

THAAD Contractor 

Spent More Money 

and Time Than 

Budgeted 

Page 87 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

target deliveries as well. As a result of this realignment, the program 

extended its flight test program and added an estimated $121 million to the 

value of work under its contract. 

The THAAD contractor experienced downward trends in its cost and 

schedule performance during fiscal year 2008. The program overran its 

budgeted costs for the fiscal year by $33.5 million. It was also unable to 

accomplish $7.4 million worth of work during the fiscal year. Both of these 

unfavorable variances added to the negative cumulative cost and schedule 

variances of $228.7 million and $16.5 million, respectively, as shown in 

figure 19. 

Figure 19: THAAD Fiscal Year 2008 Cost and Schedule Performance 

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Dollars (in millions)

Source: Contractor (data), GAO (presentation).

Months

Cumulative cost variance

Cumulative schedule variance

The THAAD prime contractor’s fiscal year cost overrun of $33.5 million 

was primarily caused by the radar, missile, and launcher portions of work. 

Design problems delayed the prime power unit design review and slowed 

parts production, causing the radar’s negative cost trend. In addition, the 

missile’s negative cost trend for this same period was driven by design 

complexity, ongoing rework/retest of subsystems, unexpected 

qualification discoveries, and unfavorable labor variances at key 

Page 88 GAO-09-338 Defense Acquisitions 
Appendix II: BMDS Prime Contractors Exceed 

Budgeted Cost and Schedule Performance 

during Fiscal Year 2008 

subcontractors. Lastly, the launcher variances were driven by hardware 

and software complexities and higher-than-expected costs for 

transitioning a portion of this effort to a different facility for production. 

The contractor reports that its unfavorable fiscal year schedule variance of 

$7.4 million is primarily driven by the radar and missile components. The 

radar’s negative schedule variance is associated with vendor delays in 

delivering trailers for both of the system’s prime power units. The late 

delivery of the trailers has subsequently delayed delivery of the prime 

power units. Missile rework due to qualification test discoveries also 

negatively affected schedule performance. If the contractor continues to 

perform as it has through fiscal year 2008, we project that at the contract’s 

completion currently scheduled for September 2009, the contractor could 

overrun its budgeted cost of $4.6 billion by between $252 million to $274 

million. 

Page 89 GAO-09-338 Defense Acquisitions 
Appendix III: FTG-04 Flight Test Cancellation 

Page 90 GAO-09-338 

Appendix III: FTG-04 Flight Test Cancellation

On May 23, 2008, the Senate Armed Services Committee requested that we 

review the reasons behind the cancellation of a GMD flight test designated 

FTG-04. Initially, on May 1, 2008, the Director, MDA decided to delay this 

test due to problems discovered in a telemetry device, the Pulse Code 

Modulation Encoder (PCME). This device does not affect operational 

performance, but rather is a critical component needed to transmit flight 

test data only. The PCME problems were due in large part to 

manufacturing defects, which the manufacturers and MDA concluded 

likely affected all the PCMEs. However, on May 8, the Director of MDA 

instead decided to cancel this flight test entirely, resulting in one less GMD 

end-to-end intercept flight test. MDA told us that delaying the flight test 

until the PCMEs could be repaired would cause delays in future tests since 

various test assets were shared. MDA officials therefore decided to cancel 

FTG-04 and transfer some test objectives to other tests, including a new 

non-intercept flight test, FTX-03, and an already planned intercept flight 

test, FTG-05. Also, for some remaining objectives not captured in FTG-05 

and FTX-03, MDA stated that it planned a third intercept test, FTG-X. We 

were asked to investigate this test cancellation and answer the following 

questions: 

• Why did the MDA change its initial decision to delay FTG-04 until 

November 2008 and decide to cancel FTG-04 instead and what 

deliberative process did MDA follow in deciding to cancel FTG-04? 

• When and how, if ever, will each of the specific test objectives 

previously planned for FTG-04 be accomplished? 

• What are the implications of canceling this flight test on the ensuing 

test program, on demonstrating the capability of the GMD system, and 

on other programmatic decisions? 

MDA initially delayed the FTG-04 flight test because of defects in the 

PCME, a telemetry component in the Exoatmospheric Kill Vehicle (EKV) 

only needed to gather test data. Although the PCME does not affect 

operational performance, it is needed for test assets to determine if design 

and operational issues have been resolved. The FTG-04 had four prior 

delays and was originally scheduled for the first quarter of fiscal year 2007. 

In responding to these delays, multiple tests over several years were 

affected. 

Faulty Telemetry 

Component Caused 

Delay and Subsequent 

Cancellation of FTG04 

Several defects contributed to the problem, the first three of which are 

presumed to affect all PCMEs manufactured up to that point and all 24 

fielded Test Bed/Capability Enhancement (CE) I EKVs: 

• The PCMEs experienced gold embrittlement due to lack of pretinning. 

 Defense Acquisitions 
Appendix III: FTG-04 Flight Test Cancellation 

• Insufficient oscillator stand-off height increased thermal stress. 

• Circuit board deflection caused by three washers missing from the 

board. 

In addition to these manufacturing defects, there were stress fractures in 

the solder of three PCMEs caused by the removal and replacement of a 

chip on the device. This chip was removed because a clock on a chip was 

asynchronous with another component’s clock. It was estimated that there 

was an 18 to 48 percent chance of the loss of telemetry data at some point 

during a flight test due to the asynchronous chip problem. Again, all 24 

fielded Test Bed/CE-I EKVs have the chip with this problem. This chip 

does not affect operational performance, but rather is a critical component 

needed to transmit flight test data only. 

See table 10 for timeline of events related to this cancellation. 

Table 10: Timeline of Events 

1/12/08 -2/4/08 During early tests of the Payload 33 PCME at the subcontractor’s 

facility, no failures were detected. 

2/7/08 During final test readiness reviews at Vandenburg Air Force Base, 

the first failure was identified. 

2/8/08-2/22/08 Trouble shooting isolates problem to PCME and EKV is returned 

to contractor for removal of PCME. 

2/22/2008 MDA de-emplaced interceptor as a replacement (Payload 32). 

3/3/08-3/26/08 Troubleshooting continues, failures are repeatable but intermittent.

3/28/08-4/2/08 Fault isolated to oscillator and solder joints. 

4/30/08-5/1/08 Tiger Team formed to assess risk and presented risk assessment 

to the Director, MDA. 

5/1/08 Director, MDA delays FTG-04 test. 

5/8/08 Program Change Board recommends cancellation; Director, MDA 

makes the decision to cancel, replace it with FTX-03 and informs 

Congress. 

Source: GAO presentation; MDA documentation 

The contractor, Boeing, and the subcontractors, Raytheon and the 

manufacturer of the component, L-3, took actions to mitigate the problem. 

They eliminated the gold embrittlement problem by sending the oscillator 

out for pretinning, they designed custom washers for two already 

produced PCMEs and raised three bosses for new PCMEs to eliminate the 

need for washers, and they tightened tolerances on the board to eliminate 

the deflection issue. These first three PCME manufacturing improvements 

were finalized on May 16, 2008. They also made changes to correct the 

Page 91 GAO-09-338 Defense Acquisitions 
Appendix III: FTG-04 Flight Test Cancellation 

chip with the asynchronous clock problem in all newly manufactured 

PCMEs. None of the previously fielded GBIs will be refurbished with 

improved PCMEs needed for flight tests, but the GBIs emplaced starting in 

October 2008 and thereafter have the improved PCME. 

On May 1, 2008, MDA’s Program Change Board considered five options. 

1. Execute FTG-04 as scheduled, using payload (32) “as is” 

2. Continue diagnostic testing of payload 32, but if decision was made 

that it was not ready, substitute payload 33, leading to a delay in 

the test schedule 

3. Refurbish payload 32, but if it did not improve, substitute payload 

33 

4. Immediately replace payload 32 with 33 without further testing 

5. Immediately return payload 32 for repair 

The Director, MDA chose option 5, delaying the FTG-04 into the November 

to December 2008 timeframe, but keeping the program on track to provide 

this intercept data as planned. MDA consulted the test community, 

Director, Operational Test and Evaluation (DOT&E) and the BMDS 

Operational Test Agency, on this initial decision to delay the test and both 

agreed with this decision. According to MDA, the Director also asked for 

options for a sensor test in the summer of 2008. 

On May 8, 2008, MDA’s Program Change Board reconvened to consider 

three options for a sensor test (FTX-03) and canceling instead of delaying 

FTG-04: 

1. Conduct FTX-03, with a baseline like the planned FTG-04, but 

without a live intercept attempt. 

2. Conduct FTX-03 with a baseline like the FTG-05, an intercept flight 

test to be conducted in December 2008. 

3. Similar to option 2, but with more sensor data collected. 

The Director MDA changed the May 1 decision to delay, refurbish and fly 

the planned FTG-04 test and chose instead to cancel FTG-04 and pursue 

the modified option 3 above. Choosing option 3 resulted in restructuring 

Page 92 GAO-09-338 Defense Acquisitions 
Appendix III: FTG-04 Flight Test Cancellation 

the intercept test into a test designed to assess multiple sensor integration 

capability. This new test benefited sensor modeling and simulation as 

post-flight reconstruction could occur now on two missions. 

According to MDA, it canceled the FTG-04 at the May 8, 2008 meeting 

instead of delaying it, in part, because rescheduling FTG-04 would have 

caused a major delay in another test, the Distributed Ground Test-03 

(GTD-03). GTD-03 and FTG-04 required many of the same assets, so 

conducting FTG-04 would have delayed GTD-03 and thus the delivery of 

this new capability by four months. Ground tests assess the increased 

BMDS capability to be fielded next and GTD-03 was to provide the means 

by which a more realistic simulation of threats and scenarios and the 

means by which new software capability could be declared ready to move 

into the operational baseline. MDA consulted with BMDS Operational Test 

Agency officials on this decision and they supported it. DOT&E was not 

consulted on this decision and expressed concern that the elimination of 

any intercept test reduced the opportunity to gather additional data that 

might have increased confidence in models and simulations. DOT&E has 

repeatedly expressed concerns over the lack of test data needed to 

validate MDA’s models and simulations. 

According to MDA, all FTG-04 test objectives were allocated to other flight 

tests. However, partly due to differences in how MDA describes test 

objectives, it is unclear whether all planned FTG-04 test objectives will be 

accomplished in follow-on tests. The loss of a primary objective, an 

intercept of a complex target scene, will slow MDA’s efforts to build 

confidence in the EKV’s ability to consistently achieve intercepts, unless 

an additional intercept is scheduled. In August 2008, MDA informed 

Congress that it planned to conduct a new intercept test called FTG-X in 

fiscal year 2009. However, in January 2009 MDA stated that the FTG-X 

intercept test was never formally approved and is no longer planned. 

Most FTG-04 Test 

Objectives Will Be 

Allocated to Followon Tests 

In addition, some test objectives related to modeling and simulations have 

been redefined so it is unclear whether they will be fully tested. Models 

and simulations are critical to understanding and assessing the 

performance of the BMDS because flight tests are limited by their cost, 

complexity, and range safety constraints. Modeling and simulation is 

therefore the primary way to fully assess the overall performance of the 

BMDS and its various components. According to DOT&E, cancellation of 

FTG-04 reduced interceptor and EKV data available for modeling, leaving 

only two intercepts (FTG-3a and FTG-05) that have provided complete sets 

of information. In October 2008, MDA stated that modification of FTG-04 

Page 93 GAO-09-338 Defense Acquisitions 
Appendix III: FTG-04 Flight Test Cancellation 

into a sensor test eliminated a second opportunity to anchor the models of 

EKV-fielded software. Test objectives in MDA planning documents 

describe modeling and simulation objectives at a high level. However, it is 

difficult to determine whether modeling and simulation objectives are 

addressed in the near term because the objectives are defined differently 

for each test. For example, the FTX-03 and FTG-05 objectives do not 

distinguish between primary and secondary objectives while the FTG-04 

does. One objective that seems to be absent in the FTG-05 and FTX-03 is to 

collect data to support validation and anchoring of system-level (vs. 

element-level) simulations, MDA stated that the exclusion from the test 

objectives was inadvertent and it will be addressed by the tests. 

BMDS Operational Test Agency objectives related to the GBI engagement 

were not met, although the test agency officials indicate the majority of 

their non-intercept sensor related objectives for FTG-04 were met in the 

FTX-03 test. However, BMDS Operational Test Agency officials state that 

some of their intercept objectives may be addressed through a 

combination of previous intercept test, FTG-03a, and recently conducted 

FTG-05. Finally, several warfighter objectives for FTG-04, related to 

tactics, techniques, and procedures, will be met through the ground tests 

instead because, according to the warfighter representative at the BMDS 

Operational Test Agency, flight tests do not offer the best opportunity to 

assess this kind of objective. 

The cancellation has increased the strain on the ensuing test program. 

GMD’s current plans call for two intercept attempts in fiscal year 2009—

FTG-05, which was conducted in December 2008, and FTG-06—and one 

booster verification test. This is an ambitious schedule as GMD has been 

able to conduct only one intercept flight test per year—FTG-02 in 

September 2006, FTG-03a in September 2007 and FTG-05 in December 

2008. MDA had planned to conduct five intercept tests with varying 

stresses to assess the EKV capability between February 2007 and 

December 2008. Flight test failures and test plan revisions caused MDA to 

only carry out two intercept tests in that period—FTG-03a and FTG-05— 

both of which resulted in an intercept. 

Cancellation 

Eliminates One of 

Few Opportunities to 

Demonstrate GMD 

Capabilities 

In addition, the number of future flight tests planned has been reduced. 

MDA has not funded or scheduled an intercept replacement for FTG-04. In 

January 2008 MDA decided to merge two intercept tests—FTG-06 and 

FTG-07—into one single intercept attempt. This merger removes another 

opportunity to gather end-game EKV performance data needed to assess 

Page 94 GAO-09-338 Defense Acquisitions 
Appendix III: FTG-04 Flight Test Cancellation 

capability. In January 2008 MDA also decided to accelerate a two-stage 

verification non-intercept test required to assess the European component. 

The cancellation of FTG-04 removed one chance to obtain end-game 

performance data needed to develop GMD models and to assess the 

capability of the CE-I EKV. The repetition of intercept-related objectives is 

important to build confidence in the intercept capability. These models are 

the primary way to fully assess the overall system performance, since 

flight tests are limited by their cost, complexity and range safety concerns. 

MDA planned to test the CE-I EKV against a dynamic target scene with 

countermeasures in both FTG-04 and FTG-05. FTG-04 was canceled and an 

FTG-05 target anomaly affected this objective. According to MDA, no more 

CE-I EKV flight tests have been approved, although it is considering 

whether to conduct an intercept test using a CE-I EKV in the future. GMD 

developed some mitigations to various developmental issues, but realistic 

flight testing is needed to anchor the models and to determine the 

effectiveness of these mitigations. 

The test cancellation and target problems have reduced the knowledge 

that MDA expected to use for its upcoming end-to-end performance 

assessment. Performance assessments are annual system-level 

assessments to test, evaluate, and characterize the operational capability 

of the BMDS as of the end of the calendar year. Currently, MDA has only 

completed one—Performance Assessment 2007. Furthermore, acting on a 

joint recommendation between MDA and the Operational Test Agency, 

MDA officials canceled their 2008 performance assessment efforts in April 

2008 because of developmental risks associated with modeling and 

simulations. Instead, MDA is focusing on testing and models for 

Performance Assessment 2009. However, the planned performance 

information available for Performance Assessment 2009 will be reduced. 

The FTG-04 cancellation reduced one set of data that was expected to be 

available. In addition, both FTX-03 and FTG-05 will be used to anchor data 

for Performance Assessment 2009, but target anomalies in each test 

precluded the completion of all planned test objectives. Neither target 

presented the complexity needed for advanced algorithm development. 

Manufacturing and emplacement continue unabated by reductions and 

delays in tests. Twenty-four CE-I GBIs have been fielded and the new CE-II 

GBIs are now being fielded without important knowledge about the 

systems capabilities expected to be gained through tests. The first CE-II 

GBI emplacement occurred prior to any flight testing of this configuration. 

The first flight test is FTG-06 currently scheduled to occur no earlier than 

the fourth quarter of fiscal year 2009. According to MDA, these CE-II GBIs 

Page 95 GAO-09-338 Defense Acquisitions 
Appendix III: FTG-04 Flight Test Cancellation 

will not be declared operational until after the successful completion of 

FTG-06. FTG-04 was also identified as a key source of data supporting a 

number of capabilities declarations. The cancellation of FTG-04, plus other 

testing delays, prompted MDA to defer some capabilities and to declare 

others based on previous tests. 

The cancellation of the FTG-04 flight test increases the risk to the GMD 

program and to the overall BMDS capability, since the lack of adequate 

intercept data adversely affects confidence that the system could perform 

as intended in a real-world situation. The GMD program has reduced its 

plans to assess operational performance of the fielded configuration 

between February 2007 and December 2008 from five to two intercept 

tests, leaving gaps in knowledge about the repeatability of the 

performance of fielded assets. In addition, the opportunity to obtain 

additional intercept data vital to the anchoring of models and simulations 

has been lost, unless the FTG-X flight test is conducted, adding to an 

existing concern expressed by DOT&E. Despite test reductions and effects 

on assessing system-level performance, production and fielding of assets 

continues as planned. 

Conclusions 

Page 96 GAO-09-338 Defense Acquisitions 
Appendix IV: Reduced Basis for Capability 

Declarations 

Page 97 GAO-09-338 

The two tables below list test events supporting MDA capability 

declarations during fiscal year 2008 for certain engagement sequence 

groups in Blocks 1.0 through 3.0 (see table 11), as well as for the full 

completion of Bock 1.0 by the end of fiscal year 2009 (see table 12). Both 

tables illustrate that MDA reduced the basis for declaring certain 

engagement sequence groups as early or fully capable. The basis for 

declaring an early, partial, or full capability includes flight and ground 

tests as well as performance assessments. 

Table 11: Engagement Sequence Groups with Revised Basis for Fiscal Year 2008 Capability Declarations 

Engagement sequence Capability declaration 

Planned basis 

for 2008 declaration 

Revised basis 

for 2008 declarationa

Block 1.0 

PA 07 Dropped 

GTD-02 √ 

GTI-02 √

GBI Launch on COBRA DANE/Upgraded Early 

Warning Radar 

Early 

GTG-04-3 

PA 07 Dropped 

GTD-02 √

GTI-02 √

GBI Engage on Sea-based X-band Radar Early 

GTG-04-3 

PA 07 Dropped 

GTD-02 √

GTI-02 √

GBI Launch on Sea-based X-band Radar Early 

GTG-04-3 

Block 2.0 

PA 08 Dropped 

FTM-15 Dropped 

GTD-03 Dropped 

GTI-03 Dropped 

GTX-03aDropped 

FTM-10,-11,-12,-13 

GTD-02 

SM-3 Engage on shipboard Aegis Radar Full 

GTI-02 

GTD-02 Dropped 

GTI-02 Dropped 

FTM-13 Dropped 

SM-3 Launch on Remote shipboard Aegis 

Radar 

Early 

FTM-14 

Appendix IV: Reduced Basis for Capability 

Declarations 

 Defense Acquisitions 
Appendix IV: Reduced Basis for Capability 

Declarations 

Engagement sequence Capability declaration 

Planned basis 

for 2008 declaration 

Revised basis 

for 2008 declarationa

FTT-09 √

FTT-07,-08 

GTI-02,-03 

THAAD Engage on AN/TPY-2 (terminal mode) Early 

GTX-03a 

Block 3.0 

GTX-03aDropped 

GTD-02 

GTI-02 

GTI-03 

GBI Launch on shipboard Aegis Radar Early 

FTX-03 

Source: GAO analysis of MDA data. 

a

Planned assessment or test was actually used for the capability declaration indicated by an “√“ in 

this column. 

Page 98 GAO-09-338 Defense Acquisitions 
Appendix IV: Reduced Basis for Capability 

Declarations 

Table 12: Block 1.0 Engagement Sequence Groups with Revised Basis for Completion at End of Fiscal Year 2009 

Engagement sequence Capability declaration 

Planned basis 

for 2008 declaration 

Revised basis 

for 2009 declarationa

PA-07 Dropped 

GTD-02 √

GTI-02 √

GBI Engage on COBRA DANE 

(Beale Air Force Base, CA) 

Full 

FTG-04 Dropped 

GTD-03 Dropped 

GTI-03 √

FTG-04 Dropped 

GTD-02 

Partial 

FTI-02 

PA-08 PA-09 Quick Look 

GTD-03 √

GTI-03 √

GBI Launch on COBRA DANE (Beale Air Force 

Base, CA) 

Full 

FTG-05 Dropped 

GTD-03 Dropped 

GTI-03 √

Partial 

PA-08 PA-09 Quick Look 

GTD-03 √

GTI-03 √

GBI Engage on Sea-based X-band radar 

Full 

FTG-05 Dropped 

GTD-03 Dropped 

GTI-03 √

Partial 

FTG-04 Dropped 

PA-08 PA-09 Quick Look 

GTD-03 √

GTI-03 √

GBI Launch on Sea-based X-band radar 

Full 

FTG-05 Dropped 

PA 07 Dropped 

GTI-03 

GTD-02 √

GTI-02 √

FTG-04 Dropped 

GBI Engage on forward-based AN/TPY-2 radar Full 

FTX-03 

Page 99 GAO-09-338 Defense Acquisitions 
Appendix IV: Reduced Basis for Capability 

Declarations 

Engagement sequence Capability declaration 

Planned basis 

for 2008 declaration 

Revised basis 

for 2009 declarationa

PA 07 Dropped 

GTI-03 

GTD-02 √

GTI-02 √

FTG-04 Dropped 

GBI Launch on forward-based AN/TPY-2 radar Full 

FTX-03 

PA 07 Dropped 

GTI-03 

GTD-02 Dropped 

GTI-02 Dropped 

FTG-04 Dropped 

GBI Engage on shipboard Aegis radar Full 

FTX-03 

PA 07 Dropped 

GTI-03 

GTD-02 Dropped 

GTI-02 Dropped 

FTG-04 Dropped 

GBI Launch on shipboard Aegis Radar Full 

FTX-03 

Source: GAO analysis of MDA data. 

a

Planned assessment or test for the capability declaration that hasn’t changed is indicated by an “√“ 

in this column. 

Page 100 GAO-09-338 Defense Acquisitions 
Appendix V: Scope and Methodology Appendix V: Scope and Methodology 

To examine the progress MDA made in fiscal year 2008 toward its cost, 

schedule, testing, and performance goals, we examined the efforts of 10 

BMDS elements that MDA is developing and fielding. The elements 

included in our review collectively accounted for 80 percent of MDA’s 

fiscal year 2008 research and development budget requests. In assessing 

each element, we examined the BMDS Fiscal Year 2008 Statement of 

Goals, Program Execution Reviews, test plans and reports, production 

plans, Contract Performance Reports, MDA briefings, and earned value 

management data. We developed data collection instruments that were 

completed by MDA and each element program office. The instruments 

gathered detailed information on planned and completed program 

activities including tests, design reviews, prime contracts, estimates of 

element performance, and challenges facing the elements. In addition, we 

discussed fiscal year 2008 progress and performance with officials in 

MDA’s Agency Operations Office, each element program office, as well as 

the Office of DOD’s Director, Operational Test and Evaluation, and DOD’s 

Operational Test Agency. To assess each element’s progress toward its 

cost goals, we reviewed Contract Performance Reports and, when 

available, the Defense Contract Management Agency’s analyses of these 

reports. We applied established earned value management techniques to 

data captured in Contract Performance Reports to determine trends and 

used established earned value management formulas to project the likely 

costs of prime contracts at completion. 

To evaluate the sufficiency of MDA’s modeling and simulation practices, 

we reviewed DOD and MDA policies, memos, flight and test plans related 

to modeling and simulations, the Acquisition Modeling and Simulation 

Master plan, as well as verification, validation and accreditation plans and 

reports for various elements, and MDA white papers discussing modeling 

and simulation techniques. We also interviewed officials in element 

program offices to discuss modeling and simulation plans and procedures 

particular to each. 

In assessing MDA’s accountability, transparency, and management 

controls, we interviewed officials from the Office of the Under Secretary 

of Defense’s Office for Acquisition, Technology, and Logistics, as well 

officials in the MDA Agency Operations Directorate. We also reviewed an 

Institute for Defense Analysis study, two Congressional Research Service 

reports, a Congressional Budget Office report, U.S. Code, DOD acquisition 

system policy, various DOD directives, the Missile Defense Executive 

Board charter, and various MDA statements and documents related to the 

agency’s block structure. 

Page 101 GAO-09-338 Defense Acquisitions 
Appendix V: Scope and Methodology 

To ensure that MDA-generated data used in our assessment are reliable, 

we evaluated the agency’s management control processes. We discussed 

these processes with MDA senior management. In addition, we confirmed 

the accuracy of MDA-generated data with multiple sources within MDA 

and, when possible, with independent experts. To assess the validity and 

reliability of prime contractors’ earned value management systems and 

reports, we interviewed officials and analyzed audit reports prepared by 

the Defense Contract Audit Agency. Finally, we assessed MDA’s internal 

accounting and administrative management controls by reviewing MDA’s 

Federal Manager’s Financial Integrity Report for Fiscal Years 2003, 2004, 

2005, 2006, 2007, and 2008. 

Our work was performed primarily at MDA headquarters in Arlington, 

Virginia. At this location, we met with officials from the Aegis Ballistic 

Missile Defense Program Office; Airborne Laser Program Office; 

Command, Control, Battle Management, and Communications Program 

Office; MDA’s Agency Operations Office; DOD’s Office of the Director, 

Operational Test and Evaluation; and the Office of the Under Secretary of 

Defense for Acquisition, Technology and Logistics. In addition, in 

Huntsville, Alabama, we met with officials from the Ground-based 

Midcourse Defense Program Office, the Sensors Program Office, the 

Terminal High Altitude Area Defense Project Office, the Kinetic Energy 

Interceptors Program Office, the BMDS Kill Vehicles Program Office, the 

Targets and Countermeasures Program Office, and the Office of the 

Director for BMDS Tests. We also met with Space Tracking and 

Surveillance System officials in El Segundo, California. 

In December 2007, the conference report accompanying the National 

Defense Authorization Act for Fiscal Year 2008 noted the importance of 

DOD and MDA providing information to GAO in a timely and responsive 

manner to facilitate the review of ballistic missile defense programs. 

During the course this audit, we experienced significant delays in 

obtaining information from MDA. During the audit, MDA did not provide 

GAO staff with expeditious access to requested documents which delayed 

some audit analysis and contributed to extra staff-hours. Of the documents 

we requested, we received approximately 19 percent within the 10-15 

business day protocols that were agreed upon with MDA. Pre-existing 

documentation took MDA on average about 50 business days to provide 

and many pre-existing documents took over 100 business days to be 

provided to GAO. Notwithstanding these delays, we were able to obtain 

the information needed to satisfy our objectives in accordance with 

generally accepted government auditing standards. 

Page 102 GAO-09-338 Defense Acquisitions 
Appendix V: Scope and Methodology 

We conducted this performance audit from May 2008 to March 2009 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. 

Page 103 GAO-09-338 Defense Acquisitions 
Appendix VI: 

A

GAO Contact and Staff 

cknowledgments 

Page 104 GAO-09-338 

Appendix VI: GAO Contact and Staff 

Acknowledgments 

Paul Francis (202) 512-4841 or francisp@gao.gov 

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

LaTonya Miller; Beverly Breen; Ivy Hübler; Tom Mahalek; Steven Stern; 

Claire Cyrnak; Isabella Johnson; Meredith Allen Kimmett; Kenneth E. 

Patton; Karen Richey; and Alyssa Weir made key contributions to this 

report. 

 Defense Acquisitions 

GAO Contact 

Acknowledgments 

(120744) 
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