GAO-04-643R Cost Increases in the Airborne Laser Program

United States General Accounting Office

Washington, DC 20548 

May 17, 2004 

The Honorable Bill Nelson 

Ranking Minority Member 

Subcommittee on Strategic Forces 

Committee on Armed Services 

United States Senate 

The Honorable Daniel K. Akaka 

United States Senate 

Subject: Uncertainties Remain Concerning the Airborne Laser’s Cost and Military 

Utility 

In 1996, the Air Force launched an acquisition program to develop and produce a 

revolutionary laser weapon system, the Airborne Laser (ABL), capable of defeating an 

enemy ballistic missile during the boost phase of its flight. Over the last 8 years, the 

program’s efforts to develop this technology have resulted in significant cost growth 

and schedule delays. These events led you to request that we answer the following 

questions: (1) How much and why has the ABL’s cost increased since the program’s 

inception? (2) What is the expected military utility of the initial ABL aircraft? (3) 

What support systems will be required when the ABL is fielded and what is the likely 

cost of those systems? (4) Have recent program changes resulted in a more cost 

effective strategy for developing the weapon? 

After we began our review, the Missile Defense Agency (MDA) refocused the ABL 

program to pursue a more knowledge-based approach, where program knowledge is 

demonstrated at critical points in the development cycle.1

 We examined the planned 

changes to determine whether they will result in a more cost-effective strategy for 

developing the ABL element. This report summarizes that information and transmits 

the briefing charts that have been revised to address program changes made by MDA 

after our presentation to your staff on March 4, 2004. 

In conducting our review, we analyzed Department of Defense (DOD), MDA, Air 

Force, and ABL program documents and interviewed key program officials. To 

 

1

 A knowledge-based approach contains three phases that are each distinguished by the knowledge 

attained. During technology development, scientists apply scientific knowledge to a practical 

engineering problem and demonstrate that components with the desired form, fit, and function can be 

developed. During product development, the second phase, engineers integrate components into a 

stable design and demonstrate that the design will result in a product that meets the customer’s needs 

and can be produced with the time and money available. The final phase, production, is the 

manufacturing of the product. 
Page 2 GAO-04-643R Cost Increases in the Airborne Laser Program

determine how much ABL’s cost increased since the program was initiated and why 

this growth occurred, we reviewed both the ABL prime contract awarded in 1996 and 

significant modifications made to the contract through July 2003. We also assessed 

the contractor’s cost and schedule performance by analyzing contractor cost 

performance reports using Earned Value Management principles. To determine the 

expected military utility of the initial ABL aircraft, we interviewed key DOD, MDA, 

and intelligence officials and analyzed relevant documents, including studies and 

reports. To determine the necessary support systems and their costs, we examined 

relevant documents and held discussions with the Air Force Air Combat Command. 

We also reviewed the Air Force Total Ownership Cost database to identify support 

systems and costs for other high value air assets. To determine whether recent 

program changes resulted in a more cost-effective strategy for developing the ABL, 

we compared the program office’s previous plans, goals and activities with its recent 

efforts to refocus the program. We conducted our work from October 2003 through 

May 2004 in accordance with generally accepted government auditing standards. 

Results in Brief 

The prime contractor’s costs for developing ABL have nearly doubled from the Air 

Force’s original estimate and additional cost growth is occurring. The cost growth 

occurred primarily because the program did not adequately plan for and could not 

fully anticipate the complexities involved in developing the system. MDA continues to 

face significant challenges in developing the ABL’s revolutionary technologies and in 

achieving cost and schedule stability. From 1996 through 2003, the value of the prime 

contract, which accounts for the bulk of the program’s cost, increased from about $1 

billion to $2 billion. According to our analysis, costs could increase between $431 

million to $943 million more through first full demonstration of the ABL system. Cost 

growth has been spurred by rework that was necessary because rapid prototyping 

forced the program to integrate components before all subcomponents were fully 

tested. In addition, fabricating ABL’s unique components and developing its complex 

software proved more costly and time-consuming than anticipated. Although ABL’s 

prime contractor has added additional personnel to the contract, the program is faced 

with a bow wave of uncompleted work from prior years. Recognizing that the 

technology development activities directed by the contract could not be completed 

within the contract’s cost ceiling, the ABL program office began development of a 

new cost estimate for completing these activities. 

Predictions of the military utility of the initial ABL aircraft are still highly uncertain 

because these forecasts are not based on any demonstrated capability of the system, 

but rather on modeling, simulations, and analysis. These assessment tools predict 

that the initial Airborne Laser will be militarily useful against most theater and 

intercontinental ballistic missiles; but flight-test data are not yet available to anchor 

these tools. According to test officials, the models and simulations are adequate for 

establishing system parameters, but may not be sufficient for estimating the 

effectiveness of a fielded system. Additionally, other factors will influence ABL’s 

military utility, including the availability of support infrastructure and the number of 

aircraft available. 
Page 3 GAO-04-643R Cost Increases in the Airborne Laser Program

When it is fielded, ABL is expected to require unique support for its laser and beam 

control and fire control components in addition to the support burdens attached to all 

high-value air assets.2 For example, to carry out a wider range of missions, ABL will 

need laser fuel production facilities close to the theater of operations. ABL will also 

require unique maintenance, such as re-calibration and re-coating of beam control 

and fire control subcomponents. In addition, it will require the typical support 

systems needed by other high-value air assets, such as escort aircraft for protection. 

MDA has not yet determined the cost of ABL’s unique support systems, but operating 

costs3 for other high-value air assets range from about $24,000 per hour to $92,000 per 

hour. 

MDA refocused the ABL program in February 2004 to pursue a more cost-effective 

development strategy. The program now plans to follow a knowledge-based rather 

than a schedule-driven approach to the element’s development. For example, the 

program is no longer working to deliver a contingency sensor capability in Block 2004. 

Instead it will concentrate on maturing and demonstrating ABL’s critical 

technologies. In addition, the program has delayed indefinitely the purchase of a 

second aircraft and a test facility. 

To provide better information to decision makers as they consider whether to 

continue investing in the ABL program, we are recommending that DOD provide an 

analysis that quantifies the confidence that decision makers should have in the new 

cost estimate. DOD concurred.

Background 

From 1996 to 2001, the ABL program was an Air Force major defense acquisition 

program. However, in October 2001, the Department of Defense (DOD) transferred 

responsibility for the program to the Ballistic Missile Defense Organization (now 

MDA) where the ABL became one element of the Ballistic Missile Defense System 

(BMDS). The ABL’s mission is to destroy enemy ballistic missiles in the boost phase 

as part of the layered defense strategy. Similar to other BMDS elements, the ABL is 

being developed incrementally in a series of 2-year blocks. During the first block, 

known as Block 2004, MDA’s goal is to mature the ABL’s critical technologies. 

The ABL includes four major components: a modified 747 aircraft, which serves as 

the platform for other components; a high-energy chemical laser; a beam control and 

fire control system; and a battle management and command and control system. The 

high-energy laser is a chemical oxygen-iodine laser that generates energy through 

chemical reactions. The prototype, or demonstrator aircraft, that is under 

development will include six laser modules that will be linked together to produce a 

laser beam with megawatts of power. The beam control and fire control component 

is designed to track and stabilize the beam so that its energy remains focused on a 

small area of an enemy missile. ABL uses its high-energy laser to defeat enemy 

 

2

 Examples of other high-value air assets are the Airborne Warning and Control System and the Joint 

Surveillance Target Attack Radar System. 

3

 According to the U.S. Air Force Total Ownership Costs Database, operating costs include costs for 

mission personnel, unit-level consumption, intermediate maintenance, depot maintenance, contractor 

support, sustaining support, and indirect support. 
Page 4 GAO-04-643R Cost Increases in the Airborne Laser Program

missiles by rupturing a missile’s motor casing, causing the missile to lose power. 

MDA expects that the battle management and command and control component will 

plan and execute each ABL engagement. 

Program Complexity Drives Cost Growth 

Because it did not adequately plan for and could not fully anticipate the complexity of 

developing and demonstrating ABL’s critical technologies, the program has 

experienced continual cost growth and schedule delays. The prime contract, which 

consumes the bulk of the program’s funding, will reach its cost ceiling in May 2004. 

The program office is in the process of developing a new cost estimate as the basis 

for raising the contract’s ceiling price. Additionally, in recognition of the contract’s 

rising cost, MDA has increased its cost goal for completing ABL’s technology 

development phase during Block 2004. 

Contract’s Current Value Has Doubled Since 1996 and Continues to Increase

From the contract’s award in 1996 through 2003, the cost of ABL’s primary research 

and development contract increased from about $1 billion to about $2 billion. In fiscal 

year 2003 alone, work completed by the contractor cost about $242 million more than 

expected. The contractor also experienced schedule delays and was unable to 

complete $28 million of work planned for the fiscal year. Based on the contractor’s 

2003 cost and schedule performance, we estimate that the prime contract will exceed 

the contractor’s July 2003 cost estimate of about $2.1 billion by between $431 million 

and $943 million through first full demonstration of the ABL system. 

Since 1996, the ABL program has experienced several major restructurings and 

contract re-baselines, due primarily to the unforeseen complexity in manufacturing 

and integrating critical technology. According to program officials, rapid prototyping 

(integrating components into a prototype system prior to demonstrating the maturity 

of all critical technologies) limited subcomponent testing, causing rework and 

changing requirements. Today the program faces a bow wave of incomplete work 

from previous years even though the prime contractor has increased the number of 

people devoted to the program and has added additional shifts to bring the work back 

on schedule. In addition, unanticipated difficulties in software coding and integration 

issues, as well as difficulty in manufacturing advanced optics and laser components, 

have caused cost growth. 

Increasing Cost of Prime Contract Causes Revisions in Technology Development 

Cost Goal 

According to program officials, the prime contract will reach its cost ceiling in May 

2004. The ABL program office is in the process of developing a new cost estimate for 

the remaining technology development activities, including component ground tests, 

beam control and fire control flight-tests, integration of components into a working 

ABL prototype, and a demonstration of the prototype’s lethality against a boosting 

ballistic missile. The program will use this estimate as the basis for raising the 

contract’s ceiling price. 
Page 5 GAO-04-643R Cost Increases in the Airborne Laser Program

MDA also recognized the impact that the prime contract’s rising cost is having on the 

agency’s cost goal for completing ABL’s technology development. In February 2003, 

MDA reported in its fiscal year 2004 Budget Estimate Submission4 that its cost goal 

for maturing and demonstrating ABL’s critical technologies during Block 2004 was 

about $494 million. However, in its fiscal year 2005 submission, MDA increased its 

Block 2004 cost goal by $583 million to $1.077 billion by moving ABL funds from 

Blocks 2006 and 2008 to Block 2004. The program manager told us that MDA plans to 

continue updating its cost goal for completing technology development as part of 

each year’s budgeting process. To better assess the program’s annual funding needs, 

the contractor will plan work in about 12-month increments. 

Successful developers have found that it is difficult to make highly reliable cost and 

schedule estimates until the maturity of a product’s critical technologies has been 

demonstrated. The ABL program has not yet reached this point. One wellestablished tool for providing decision makers with an increased understanding of 

the reliability of developed cost estimates is an “uncertainty analysis.” An uncertainty 

analysis simulates a model by randomly and repeatedly generating values for certain 

variables. After hundreds or thousands of trials, one can view the statistical results 

and determine the confidence level in any outcome. For example, the model may 

show that there is a 10-percent chance that the project can be completed for $50 

million, a 50-percent chance that it can be completed for $70 million, or a 90-percent 

chance that the project will cost $100 million or less. Although there remains a gap in 

the knowledge MDA needs to make highly reliable estimates of the cost to complete 

ABL’s technology development, other programs have found that uncertainty analyses 

help to understand the size of such a gap. 

Military Utility of Initial ABL Aircraft Is Highly Uncertain 

Predictions of the military utility of the initial ABL aircraft are highly uncertain 

because these forecasts are based on modeling, simulations, and analysis, rather than 

the demonstrated capability of the system. The Airborne Laser program office 

predicts that the ABL prototype being developed during Block 2004 will have a 

capability to defeat most classes of theater and intercontinental ballistic missiles. 

However, program officials base these predictions on analyses, models, and 

simulations that are not yet anchored by flight test data. These assessment tools take 

into consideration various factors, such as the projected power output of the 6-

module laser weapon, the stand-off range that ABL maintains to protect itself from 

threat weapons, and the characteristics of the threat missiles. Should any of the 

assumptions made in modeling these factors prove incorrect, the output of the 

assessment tools might prove similarly incorrect. According to test officials, models 

and simulations are adequate for establishing system parameters, but may not be 

sufficient for understanding the effectiveness of a fielded system.5

 In addition, the 

Department of Defense has not yet assessed the Airborne Laser’s military utility and 

has no fixed time frame for doing so. 

 

4

 For the last 2 fiscal years, MDA has issued a document known as a Budget Estimate Submission that 

lays out planned expenditures for each near-term block by element and the activities planned during 

those blocks. 

5

 We did not examine the models and simulations that MDA uses to forecast ABL’s capability or 

attempt to replicate MDA’s predictions of ABL’s military utility. 
Page 6 GAO-04-643R Cost Increases in the Airborne Laser Program

Even if the program office’s assessment proves to be correct, other factors, such as 

reduced time on station and limited forward operating capability, will limit ABL’s 

initial military utility. For example, with only one aircraft, 24-hour operations are not 

possible. In addition, in order to operate from a forward location the aircraft will 

require a forward-based chemical facility for replenishment of the chemicals that fuel 

the high-energy laser. Without these facilities, the Airborne Laser is capable of 

performing three constrained missions. 

Support Costs Will Likely Be Higher Than Those of Other High 

Value Air Assets 

The ABL will require unique support in addition to the already substantial support 

required for all high-value air assets. For example, to remain on station for extended 

periods of time, ABL will need a production facility close to the theater of operations 

that can store and mix chemicals for the high-energy laser. Likewise, ABL will 

require unique maintenance, such as re-calibration and re-coating of beam control 

and fire control subcomponents; chemical facilities must be secured; and a ground 

support squadron and chemicals must be transported to a forward location. 

The ABL will also require support systems, such as a protective escort, that are 

typical of all high-value air assets. Our review of the U.S. Air Force Total Ownership 

Costs Database6

 shows that operating costs for other high-value air assets, such as 

the Airborne Warning and Control System or Joint Surveillance Target Attack Radar 

System, range from about $24,000 per hour to $92,000 per hour. While the ABL 

program office has identified some of the support systems ABL will require once it is 

fielded, the program does not plan to fully address this issue, including support costs, 

before Block 2006. 

Program Changes Likely to Result in a More Cost-Effective 

Strategy

MDA made program changes in February 2004 that should make its strategy for 

developing ABL more cost-effective. The primary change is that the program will no 

longer try to develop ABL according to a set schedule, but will follow a more 

knowledge-based approach. For example, MDA no longer plans to deliver a 

contingency sensor capability in the Block 2004 time frame. Instead it plans to focus 

on ground- and flight-testing components and demonstrating technologies before 

proceeding to the next development phase. However, it does not intend to lose sight 

of its overall objective of testing the prototype ABL aircraft against a short-range 

ballistic missile in what has become known as a lethal demonstration. Program 

officials also told us that they plan to defer indefinitely the purchase of a second 

aircraft and other hardware, which MDA initially planned to initiate during Block 

2004. 

 

6

 The Air Force Total Ownership Costs database provides detailed cost information on all Air Force 

major weapon systems. 
Page 7 GAO-04-643R Cost Increases in the Airborne Laser Program

Conclusion 

We believe the ABL program made a sound and cost-effective decision to defer the 

purchase of the second aircraft and additional hardware and to pursue a more 

knowledge-based approach to the element’s development. It has also taken an 

important first step by setting a cost goal for ABL’s technology development phase. 

However, good investment decisions depend upon an understanding of the total 

funds that will be needed to obtain an expected benefit, and, at this time, MDA has 

not been able to provide decision makers assurances that the agency’s cost 

projections to complete technology development can be relied upon. Decision 

makers could make more informed decisions about further investments in the ABL 

program if they understood the likelihood and confidence associated with MDA’s cost 

projections. 

Recommendation 

To provide a better framework for making investment decisions during the program’s 

research and development phase, we recommend that the Secretary of Defense direct 

the Director, MDA, to complete an uncertainty analysis on the contractor’s new cost 

estimate that quantifies the confidence that may be placed in the estimate. 

Agency Comments and Our Evaluation 

In written comments to a draft of this report (see encl. II), the DOD concurred with 

our recommendation. DOD also provided separate technical comments, which we 

have incorporated as appropriate. 

- - - - - 

As requested by your offices, unless you publicly announce the contents of this report 

earlier, we plan no further distribution of it until 30 days from the date of this letter. 

At that point, copies of this report will be sent to the Secretary of Defense; the 

Director, Missile Defense Agency; and other interested congressional committees. 

We will also make copies available to others upon request. In addition, the report will 

be available at no charge on the GAO Web site at http://www.gao.gov. 
Page 8 GAO-04-643R Cost Increases in the Airborne Laser Program

Should you or your staff have any questions on matters discussed in this report, 

please contact me on (202) 512-4841 or Barbara Haynes at (256) 922-7535. Principal 

contributors to this report were Beverly Breen, Alan Frazier, LaTonya Miller, and 

Karen Richey. 

Robert E. Levin 

Director, Acquisition and Sourcing Management 

Enclosure 
Enclosure I 

Page 9 GAO-04-643R Cost Increases in the Airborne Laser Program

1

Airborne Laser Costs and 

Military Utility 

A Briefing to the Subcommittee on Strategic Forces,

Committee on Armed Services

March 4, 2004

Revised as of May 3, 2004
Enclosure I 

Page 10 GAO-04-643R Cost Increases in the Airborne Laser Program

2

Overview

• Review objectives

• Background

• Findings

• Cost and schedule 

• Military utility 

• Support costs and structure

• Alternative development and acquisition strategy

• Conclusions

• Recommendation

• Scope and methodology
Enclosure I 

Page 11 GAO-04-643R Cost Increases in the Airborne Laser Program

3

Review Objectives

• How much and why has the Airborne Laser’s cost 

increased since the program’s inception?

• What is the expected military utility of the Airborne Laser 

demonstrators?

• What support systems will the Airborne Laser require 

when fielded and what is the likely cost of those 

systems?

• Have recent program changes resulted in a more cost 

effective strategy for developing the weapon?
Enclosure I 

Page 12 GAO-04-643R Cost Increases in the Airborne Laser Program

4

Background

• Air Force major defense acquisition program launched in 1996

• Initial operational capability planned for September 2006

• Total research and development effort expected to cost about $2.5 billion

• Development of objective system

• Transferred to Ballistic Missile Defense Organization–now MDA--in October 2001 

and is an element of the Ballistic Missile Defense System

• Development in increments, known as blocks

• First block or blocks demonstrate technology

• ABL’s mission:

• Destroy enemy ballistic missiles in the “boost” phase as part of layered 

defense strategy

• Engage theater and intercontinental ballistic missiles

• System components:

• Modified Boeing 747 aircraft

• Beam control/fire control

• High-energy laser

• Battle management 
Enclosure I 

Page 13 GAO-04-643R Cost Increases in the Airborne Laser Program

5

How Much and Why Has Cost Increased 

Since The Program’s Inception?

• Significant cost growth and schedule slips since 1996 in primary research and 

development (R&D) contract

• Contract’s cost increased about $1 billion since 1996

• Original fielding date: September 2006 

• According to program officials, the current fielding date is TBD

• Prime contract now valued at about $2.1 billion

• Costs continue to increase during FY 2003

• Cost overrun of $242 million

• Negative schedule variance of $28 million

• According to program officials, the contract is expected to reach cost ceiling 

by May 2004

• Bow wave of incomplete work from previous years caused design rework and 

software coding, component fabrication and integration issues

• Limited number of qualified people to troubleshoot problems
Enclosure I 

Page 14 GAO-04-643R Cost Increases in the Airborne Laser Program

6

How Much and Why Has Cost Increased 

Since The Program’s Inception? (cont.)

• Based on fiscal year 2003 performance, prime contract could overrun 

budgeted costs by $431 million to $943 million through first full 

demonstration of the ABL system.

• Causes of Cost Growth 

• Complexity not planned for or anticipated in manufacturing and 

integrating advanced optics and laser components

• According to program officials, rapid prototyping limited 

subcomponent testing, causing rework and changing 

requirements
Enclosure I 

Page 15 GAO-04-643R Cost Increases in the Airborne Laser Program

7

Program History: Major Changes and 

Impact

Initiated $1,021,655,199

program 

definition 

and risk 

reduction

Design, fabrication, integration, 

and testing of the ABL prototype

Original (PDRR) 

Contract Award

November 

1996

Increased 1,241,864,301

cost growth 

primarily

for laser 

modules

Unforeseen complexity in 

optics and laser manufacturing 

technology discovered

Critical Design 

Review

April 2000

Increased 1,226,766,457

contract 

costs

1-year 

schedule 

growth

According to program officials, 

additional funds were added for 

laser module tests and the 

introduction of the System 

Integration Laboratory

Contract 

Restructure

April 1999

Prime Contract 

Value

Impact to 

program

Date Event Reason

Largest portion of ABL’s budget is used for the program’s prime contract. Several events 

throughout the program’s history caused program and prime contract costs to increase.

Source: GAO analysis of MDA data.
Enclosure I 

Page 16 GAO-04-643R Cost Increases in the Airborne Laser Program

8

Program History: Major Changes and 

Impact (cont.)

Work consistently 2,119,708,895

cost more than 

budgeted

Late hardware deliveries, 

increased testing 

requirements, and on-going 

integration issues

Contract

Rebaseline

July 2003

Increased contract 1,822,045,437

cost 

Schedule Stretched: 

Lethality 

Demonstration 

moved to February 

2005

Complexity associated with 

manufacturing laser plumbing 

and hardware components, 

design of the Optical 

Diagnostic System, and 

aircraft interfaces

Program 

Restructure

August 

2002

Work cost more than $1,511,050,835

budgeted

Program transitioned from a 

paper design to 

manufacturing of beam 

control and laser components

Contract

Rebaseline

November 

2001

Prime Contract 

Value

Impact to 

Program

Date Event Reason

Source: GAO analysis of MDA Data.
Enclosure I 

Page 17 GAO-04-643R Cost Increases in the Airborne Laser Program

9

Increasing Estimates of Contract Cost 

AB L's Increasing C ost E stim ates

1997 to 2003

$ -

$ 20 0,00 0

$ 40 0,00 0

$ 60 0,00 0

$ 80 0,00 0

$ 1,00 0,00 0

$ 1,20 0,00 0

$ 1,40 0,00 0

$ 1,60 0,00 0

$ 1,80 0,00 0

$ 2,00 0,00 0

Feb-97Jun-97

Oct-97

Feb-98

Jun-98

Oct-98

Feb-99

Jun-99

Oct-99

Feb-00Jun-00

Oct-00

Feb-01

Jun-01

Oct-01

Feb-02

Jun-02

Oct-02

Feb-03

Jun-03

The program has undergone several rebaselining and restructuring efforts (indicated by X). 

X

X

X

X

Dollars in 

thousands

Source: GAO analysis of MDA data.
Enclosure I 

Page 18 GAO-04-643R Cost Increases in the Airborne Laser Program

10

Fiscal Year 2003 Cost Performance

Cumulative Cost Variance

($300,000)

($275,000)

($250,000)

($225,000)

($200,000)

($175,000)

($150,000)

($125,000)

($100,000)

($75,000)

($50,000)

($25,000)

$0

Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03

Dollars in 

thousands

Costs increased throughout the fiscal year.

Source: GAO analysis of MDA data.
Enclosure I 

Page 19 GAO-04-643R Cost Increases in the Airborne Laser Program

11

Fiscal Year 2003 Schedule Performance

Cumulative Schedule Variance

($50,000)

($45,000)

($40,000)

($35,000)

($30,000)

($25,000)

($20,000)

($15,000)

($10,000)

($5,000)

$0

Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03

Dollars in 

thousands

Program began to increase staffing in March 2003 to meet schedule objectives.

Source: GAO analysis of MDA data.
Enclosure I 

Page 20 GAO-04-643R Cost Increases in the Airborne Laser Program

Source: GAO analysis of MDA data.

GAO Best Case and Contractor Variance at Completion based on monthly estimates.

GAO Most Likely and Worst Case estimates based on cumulative monthly averages.

Projected Cost Overrun for Contract at 

Completion

Estimated Cost Overrun

($1,000,000)

($800,000)

($600,000)

($400,000)

($200,000)

$0

Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03

GAO Best Case GAO M ost Likely GAO Worst Case Contractor Variance at Completion

Dollars in 

thousands

Fiscal Year 2003 overrun of $242 million

Project overrun of $431 million to $943 million through full demonstration of the ABL system

12
Enclosure I 

Page 21 GAO-04-643R Cost Increases in the Airborne Laser Program

13

Efforts Underway to Develop New Cost 

for Technology Development Contract

• Program officials say they are developing new estimate for 

completing ABL’s primary research and development contract

• Estimate to include the cost of all prime contractor activities planned for 

the technology development phase

• Contract’s cost ceiling will be increased based on the new cost estimate

• Contractor will plan the cost and schedule of the technology 

development phase in approximately 1-year increments

• Expected to result in more reliable estimate of annual funding 

needs

• Successful developers have low confidence in cost and 

schedule estimates made before technology is mature

• Technology development is a period of discovery that can’t be scheduled, 

making highly reliable cost estimates difficult

• MDA faces this knowledge gap as it tries to forecast cost and schedule
Enclosure I 

Page 22 GAO-04-643R Cost Increases in the Airborne Laser Program

14

Tool Available to Quantify Cost and 

Schedule Uncertainty

• Tool available to quantify confidence that can be placed in new 

contract estimate

• Uncertainty analysis randomly generates values for uncertain 

variables to reveal likelihood of a given outcome

• Other DOD programs use uncertainty analyses to understand 

knowledge gaps similar to those ABL faces
Enclosure I 

Page 23 GAO-04-643R Cost Increases in the Airborne Laser Program

15

MDA’s Goal for Completing Technology 

Development

• Goal is to mature ABL’s critical technologies during Block 

2004 (which ends December 31, 2005), according to program 

officials

• Block 2004 cost updated annually in MDA’s Budget Estimate Submission • Current Block 2004 estimate (MDA’s estimate to complete technology 

development) is $1.077 billion 

• Includes costs other than prime contract cost

• Government personnel 

• Infrastructure improvements

• Range costs

• Test facilities

• Targets

• Other support costs

• Program officials told us that cost and schedule goals will 

continue to be adjusted annually

• Technology development effort could extend beyond Block 2004

• Cost could grow beyond $1.077 billion
Enclosure I 

Page 24 GAO-04-643R Cost Increases in the Airborne Laser Program

16

What Is the Military Utility of 

Demonstrator Aircraft?

• The military utility of the ABL aircraft is uncertain

• Program office assessment is that ABL will have 

a capability against most theater and 

intercontinental ballistic missiles

• No flight data to anchor projections

• Assessment based on analyses, models, and 

simulations whose validity is commensurate with 

current technology levels and test environment

• Includes physics-based assessment adequate for 

establishing system parameters, but not 

necessarily for understanding effectiveness of a 

fielded system
Enclosure I 

Page 25 GAO-04-643R Cost Increases in the Airborne Laser Program

17

Military Utility

• Various factors affect military utility

• Power generated by the 6-module laser

• Stand-off range

• Threat type

• Range

• Thickness of motor casing

• Burn-out altitude 

• Scenario—launch point, aimpoint, salvo

• Support infrastructure

• Forward basing

• Support from Edwards Air Force Base

• Number of ABL aircraft

• Near-term assessment focused on NE Asia scenario

• Program office analyses, models, and simulations predict capability against most classes 

of theater missiles

• Exceptions exist

• Capability against Intercontinental Ballistic Missiles also expected

• Motor casing are thinner metal

• Engagement angle is upward and occurs in thinner atmosphere

• Boost motors burn out at higher altitude—more engagement time
Enclosure I 

Page 26 GAO-04-643R Cost Increases in the Airborne Laser Program

18

Military Utility

• Other Considerations:

• Without forward chemical facility, availability is for specific 

missions

• Iron-Man Mission, flown from Edwards AFB, a 42-hour 

mission with 15 hours on station

• Sensor-only mission supports other elements by cueing 

and tracking enemy missiles with 18 hours on station

• Quick turn mission is based out of a forward operating 

location with no chemical replenishment capability 

• Engagement/surveillance mission

• 24/7 coverage not possible with either 1 or 2 aircraft

• ABL is a visible asset—enemy can wait for refueling or 

absence of ABL aircraft to attack
Enclosure I 

Page 27 GAO-04-643R Cost Increases in the Airborne Laser Program

19

Military Utility

• DOD has not determined ABL’s military utility:

• Joint Air and Missile Defense Organization (JTAMDO) 

has no fixed time frame for assessing the ABL’s 

military utility

• No ABL emergency operational capability planned for 

the 2004–2005 time frame

• According to MDA officials, they have not determined 

number of aircraft needed to provide full capability
Enclosure I 

Page 28 GAO-04-643R Cost Increases in the Airborne Laser Program

20

What Support Systems Will the ABL 

Require and What Is the Likely Cost?

• ABL operating and support costs will likely be 

higher than other high value air assets:

• Unique support needed for ABL laser weapon will 

greatly increase its support costs

• Support costs for other high value air assets 

(JSTARS and AWACS) are measurable, but not 

directly comparable because ABL’s unique hardware 

will have additional cost

• ABL program office has not completed assessment of 

support systems
Enclosure I 

Page 29 GAO-04-643R Cost Increases in the Airborne Laser Program

21

Unique Support Systems Required

• Laser fuel production facilities

• Until forward facilities constructed, Edwards AFB will provide 

support

• Possible facility locations include South Korea, Guam, Japan, 

and Diego Garcia, according to program officials

• Maintenance of laser components

• Maintenance of beam control/fire control

• Coatings for windows and mirrors

• Calibration of optics

• Security of the weapon system and chemicals

• Transport of ground support squadron and logistics–C-17s

• Routine maintenance of highly-modified aircraft
Enclosure I 

Page 30 GAO-04-643R Cost Increases in the Airborne Laser Program

22

• FY2003 costs per operating hour for Air Combat Command (ACC) and

Air Mobility Command (AMC) aircraft 

C-17A (AMC) 11,752 4,834

Transport, fighters, & tankers

Rivet Joint RC-135W (ACC) 48,233 35,855

E4-B 747 (ACC) 92,106 61,545

KC-135R (AMC) 11,022 1,624

F-16C (ACC) 12,340 1,941

JSTARS E8-C (ACC) 51,944 5,335

AWACS E3B (ACC) $24,095 $5,418

High value air asset

Aircraft Operating Cost per Hour Support Cost per Hour

Source: GAO analysis of Air Force data.

Note: Operating Cost per Hour equals the sum of costs for mission personnel, unit-level consumption, intermediate 

maintenance, depot maintenance, contractor support, sustaining support, and indirect support. Support cost per hour equals 

the sum of contractor support, sustaining support, and indirect support only.

Operating and Support Costs 

for Other Air Assets
Enclosure I 

Page 31 GAO-04-643R Cost Increases in the Airborne Laser Program

23

ABL Program Office Has Not Completed 

Support Assessment

• Typical support categories for high value air 

assets 

• Escort aircraft for protection

• ABL usually expected to share escort with other highvalue aircraft

• If flown separately, will need dedicated escort

• Logistical and ground support

• ABL program office will address support required 

and associated costs in Block 2006 
Enclosure I 

Page 32 GAO-04-643R Cost Increases in the Airborne Laser Program

24

Have Recent Program Changes Resulted 

in a More Cost-Effective Strategy?

• February 2004 program changes resulted in more 

cost-effective development strategy

• Provides for knowledge-based rather than schedule-driven 

approach

• No longer intend to deliver a contingency sensor capability in 

Block 2004 time frame

• Expects to demonstrate all critical technologies before 

proceeding to the next research and development phase

• Delaying purchase of 2nd aircraft and Iron Bird test facility indefinitely 
Enclosure I 

Page 33 GAO-04-643R Cost Increases in the Airborne Laser Program

25

Conclusions

• MDA made a sound and cost-effective decision to defer 

purchase of second aircraft and Iron Bird 

• Its focus on a more knowledge-based development strategy 

should decrease rework and integration issues

• ABL has had difficulty estimating the cost of its technology 

development effort

• Prime contract is cost driver for the effort

• Re-baselined numerous times

• Schedule for completion is uncertain

• New cost estimate is needed, but decision makers would 

benefit from additional information on confidence that 

should be placed in the estimate
Enclosure I 

Page 34 GAO-04-643R Cost Increases in the Airborne Laser Program

26

Recommendation

• To provide a better framework for making ABL investment 

decisions during the program’s technology development 

phase, we recommend that the Director, MDA:

• complete an uncertainty analysis on the contractor’s new 

cost estimate that quantifies the confidence that may be 

placed in the estimate
Enclosure I 

Page 35 GAO-04-643R Cost Increases in the Airborne Laser Program

27

Scope and Methodology

• Program status

• Reviewed relevant DOD, MDA, and ABL program documents

• Interviewed key DOD, MDA, Air Force, and contractor officials

• Program funding

• Focused on fiscal year 1996-2003 funding

• Assessed all Cost Performance Reports

• Support systems and costs

• Reviewed Air Force Total Ownership Cost (AFTOC) Database

• Limitations

• Did not examine ABL program’s models and simulations or 

attempt to duplicate their output
Enclosure II 

Page 36 GAO-04-643R Cost Increases in the Airborne Laser Program

Comments From the Department of Defense
Enclosure II 

Page 37 GAO-04-643R Cost Increases in the Airborne Laser Program

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