MISSILE DEFENSE

Opportunity to 

Refocus on 

Strengthening 

Acquisition 

Management

Report to Congressional Committees

April 2013

GAO-13-432

United States Government Accountability Office

GAO
 

United States Government Accountability Office

Highlights of GAO-13-432, a report to 

congressional committees

April 2013

MISSILE DEFENSE

Opportunity to Refocus on Strengthening 

Acquisition Management

Why GAO Did This Study

Since 2002 MDA has spent 

approximately $90 billion to provide 

protection from enemy ballistic missiles 

by developing battle management 

systems, sensors that identify incoming 

threats, and missiles to intercept them. 

MDA plans to spend about $8 billion per 

year through 2017. For nearly a decade, 

we have reported on MDA’s progress 

and challenges in developing and fielding 

the Ballistic Missile Defense System. 

GAO is mandated by law to assess the 

extent to which MDA has achieved its

acquisition goals and objectives, as 

reported through acquisition baselines. 

This report examines the agency’s 

progress and remaining challenges in 

(1) selecting new programs in which to 

invest; (2) putting programs on a sound 

development path; (3) establishing 

baselines that support oversight; and 

(4) developing and deploying U.S. missile 

defense in Europe for defense of Europe 

and the United States. To do this, GAO 

examined MDA’s acquisition reports, 

analyzed baselines reported over several 

years to discern progress, and 

interviewed a wide range of DOD and 

MDA officials.

What GAO Recommends

GAO makes four recommendations to

DOD to ensure MDA (1) fully assesses 

alternatives before selecting investments, 

(2) takes steps to reduce the risk that 

unproven target missiles can disrupt key 

tests, (3) reports full program costs, and 

(4) stabilizes acquisition baselines. DOD 

concurred with two recommendations 

and partially concurred with two, stating 

the decision to perform target risk 

reduction flight tests should be weighed 

against other programmatic factors and 

that its current forum for reporting MDA 

program costs should not include nonMDA funding. GAO continues to believe 

the recommendations are valid as 

discussed in this report. 

What GAO Found

Although the Missile Defense Agency (MDA) has made some progress, the new 

MDA Director faces challenges developing and deploying new systems to 

achieve increasingly integrated capabilities as well as supporting and upgrading 

deployed systems while providing decision makers in the Department of Defense 

(DOD) and Congress with key oversight information in an era of fiscal 

constraints.

Challenge: Improve Investment Decisions

Determining the most promising and cost effective new missile defense systems 

to buy—considering technical feasibility and cost—remains a challenge for MDA. 

While MDA has conducted some analyses that consider alternatives in selecting 

which acquisitions to pursue, it has not conducted robust analyses of alternatives 

for two of its new programs. Because of its acquisition flexibilities, MDA is not 

required to do so. Robust analyses, however, could be particularly useful to DOD 

and congressional decision makers as they decide how to manage the portfolio 

of missile defense acquisitions. GAO has reported in the past that without 

analyses of alternatives, programs may not select the best solution for the 

warfighter, are at risk for cost increases, and can face schedule delays.

Challenge: Expand on Steps Taken to Place Investments on a Sound 

Footing

In the past year, MDA gained important knowledge by successfully conducting 

several important tests, including a test to show how well its systems will operate 

together. MDA has also taken steps to lower the acquisition risks of two newer 

programs by adding more development time. However, development issues 

discovered after three programs prematurely committed to production continue to 

disrupt both interceptor production and flight test schedules. In addition, two 

other programs plan to make premature commitments to production before 

testing confirms their designs work as intended. MDA is planning to fly targets for 

the first time in its first operational test using several systems, adding risk that 

key information may not be obtained in this major test. 

Challenge: Ensure Program Baselines Support Oversight

While MDA has made substantial improvements to the clarity of its cost and 

schedule baselines since first reporting them in 2010, they are still not useful for 

decision makers to gauge progress. For example, the information they include is 

not sufficiently comprehensive because they do not include operation and 

support costs from the military services. By not including these costs, the life 

cycle costs for some MDA programs could be significantly understated. 

Challenge: Developing and Deploying U.S. Missile Defense in Europe

DOD declared the first major deployment of U.S. missile defense in Europe 

operational in December 2011, but MDA is faced with resolving some issues to 

provide the full capability and is facing delays to some systems planned in each 

of the next three major deployments. MDA has also struggled for years to 

develop the tools—the models and simulations—to credibly assess operational 

performance of systems before they are deployed. It recently committed to a new

approach to resolve this problem.

View GAO-13-432. For more informationcontact Cristina Chaplain at (202) 512-4841 or 

chaplainc@gao.gov.
Page i GAO-13-432 Missile Defense

Letter 1 

Background 3

Challenge: Improve Investment Decisions 13

Challenge: Expand on Steps Already Taken to Place Investments 

on a Sound Footing 18

Challenge: Ensure Program Baselines Support Oversight 26

Challenge: Developing and Deploying U.S. Missile Defense in 

Europe 35

Conclusions 40

Recommendations for Executive Action 41

Agency Comments and Our Evaluation 42

Appendix I Scope and Methodology 47

Appendix II Aegis Ballistic Missile Defense (BMD) with Standard 

Missile-3 (SM-3) Block IB and Second Generation Weapon 

System Software 52

Appendix III Aegis Ashore with Modernized Weapon System Software 60

Appendix IV Aegis BMD SM-3 Block IIA with Third Generation Aegis 

Weapons System Software 70

Appendix V Aegis BMD SM-3 Block IIB with Third Generation Aegis 

Weapons System Software 73

Appendix VI BMDS Sensors 79

Appendix VII Ground-based Midcourse Defense 85

Contents 
Page ii GAO-13-432 Missile Defense

Appendix VIII Precision Tracking Space System (PTSS) 93

Appendix IX Targets and Countermeasures 100

Appendix X Terminal High Altitude Area Defense (THAAD) 107

Appendix XI Comments from the Department of Defense 115

Appendix XII GAO Contact and Staff Acknowledgments 118

Tables

Table 1: MDA’s Acquisition Life-Cycle Phases for the BMDS 7

Table 2: Description of Selected BMDS Elements 8

Table 3: Estimated Costs to Demonstrate and Fix CE-II Capability 90

Figures

Figure 1: Primary Roles of Selected BMDS Elements against a 

Threat Missile 12

Figure 2: Time Frames and Defensive Capabilities for the U.S. 

Missile Defense in Europe 36

Figure 3: Comparison of 2010 and 2012 BAR Reported SM-3 Block 

IB Unit Costs 57

Figure 4: Schedule Assessment for Selected Aegis BMD SM-3 Block 

IB Activities in the BMDS Accountability Report 58

Figure 5: Comparison of 2010 and 2012 BAR Reported Aegis BMD 

Second Generation Weapon System Software Unit Costs 59

Figure 6: Schedule Assessment for Selected Aegis Ashore Activities 

in the BMDS Accountability Report 66

Figure 7: Comparison of 2010 and 2012 BAR Reported Aegis BMD 

Modernized Weapon System Software Unit Costs 68
Page iii GAO-13-432 Missile Defense

Figure 8: Schedule Assessment for Selected Modernized Aegis 

Weapon System Software Activities in the BMDS 

Accountability Report 69

Figure 9: Schedule Assessment for Selected BMDS Sensor 

Program’s AN/TPY-2 Activities in the BMDS 

Accountability Report 84

Figure 10: Planned Demonstration of CE-II Capability Delayed at 

Least Five and a Half Years 86

Figure 11: Schedule Assessment for Selected GMD Activities in the 

BMDS Accountability Report 92

Figure 12: Comparison of 2011 and 2012 BAR Reported E-LRALT 

Unit Costs 104

Figure 13: Comparison of 2011 and 2012 BAR Reported eMRBM 

Unit Costs 105

Figure 14: Schedule Assessment for Selected Targets and 

Countermeasures eMRBM and E-LRALT Activities in the 

BMDS Accountability Report 106

Figure 15: Comparison of 2010 and 2012 BAR Reported THAAD 

Unit Costs to Develop and Produce Items 111

Figure 16: Comparison of 2010 and 2012 BAR Reported THAAD 

Unit Costs to Produce Items 112

Figure 17: Schedule Assessment for Selected THAAD Activities in 

the BMDS Accountability Report 114
Page iv GAO-13-432 Missile Defense

Abbreviations

Aegis BMD Aegis Ballistic Missile Defense 

AN/TPY-2 Army Navy/Transportable Radar Surveillance and Control 

 Model 2 

AOA analysis of alternatives 

BAR BMDS Accountability Report 

BMDS Ballistic Missile Defense System 

C2BMC Command, Control, Battle Management, and 

 Communications 

CE-I Capability Enhancement-I 

CE-II Capability Enhancement-II 

DOD Department of Defense 

E-LRALT Extended Long-Range Air-Launched Target 

eMRBM Extended Medium-Range Ballistic Missile 

FTG Flight Test GMD 

FTI Flight Test Integrated 

FTM Flight Test Standard Missile 

GMD Ground-based Midcourse Defense 

MDA Missile Defense Agency 

PTSS Precision Tracking Space System 

SBX Sea-Based X-Band 

SM-3 Standard Missile-3 

TDACS Throttleable Divert and Attitude Control System 

THAAD Terminal High Altitude Area Defense

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Page 1 GAO-13-432 Missile Defense

United States Government Accountability Office

Washington, DC 20548

April 26, 2013

Congressional Committees

Since 2002, the Missile Defense Agency (MDA) has been developing and 

deploying the Ballistic Missile Defense System (BMDS) to defend the 

United States, our deployed forces, allies, and friends by destroying 

missiles in flight. MDA has spent approximately $90 billion and plans to 

continue spending around $8 billion per year through 2017 to develop a 

highly complex group of systems comprised of land-, sea-, and spacebased sensors to track missiles, as well as ballistic missile interceptors 

and a battle management system. These systems can be integrated in 

different ways to provide protection in various regions of the world. For 

nearly a decade, we have reported on MDA’s progress and challenges in 

developing and fielding BMDS capabilities as well as other transparency, 

accountability, and oversight issues. Going forward, MDA and the 

Department of Defense (DOD) could continue to face important 

challenges in acquiring the BMDS as they decide how to strengthen their 

investment decisions, improve acquisition management of the BMDS 

effort and U.S. missile defense in Europe, and increase the transparency 

they provide to congressional decision makers.

Since the 2002 National Defense Authorization Act, we have been 

mandated to prepare annual assessments of MDA’s progress toward its 

acquisition goals.1 To date, we have delivered assessments of MDA’s 

progress covering fiscal years 2003 through 2011 and are currently 

mandated to continue through fiscal year 2016. The National Defense 

Authorization Act for Fiscal Year 2012 requires us to report on our 

assessment of the extent to which MDA has achieved its stated 

acquisition goals and objectives, as reported through their acquisition 

baselines, and also to include any other findings and recommendations 

on MDA acquisition programs and accountability as appropriate.2

 

1

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

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

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

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

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

Fiscal Year 2008, Pub. L. No. 110-181, § 225.

2 Pub. L. No. 112-81, § 232 (2011).

 
 

Page 2 GAO-13-432 Missile Defense

With the appointment of a new Director of MDA and the growing scrutiny 

of defense budgets by Congress, our report examines MDA’s investment 

strategy challenges as well as MDA’s challenges in developing and 

fielding the U.S. portions of missile defense in Europe. Specifically, this 

report highlights the agency’s progress as well as any remaining 

challenges that face the new Director, including (1) selecting new 

programs in which to invest; (2) putting programs on a sound 

development path; (3) establishing baselines needed to support 

oversight; and (4) developing and deploying U.S. missile defense in 

Europe for defense of Europe and the United States. In addition, we 

provide detailed information on MDA’s progress acquiring individual 

systems, which MDA refers to as elements of the BMDS, in the individual 

appendices. 

To assess MDA’s progress and related challenges, we examined the 

acquisition accomplishments of individual missile defense programs and 

supporting efforts that MDA is currently developing and fielding.3 For 

programs in the early acquisition stages, we reviewed documentation of 

MDA and DOD reviews that program management officials considered 

similar to an analysis of alternatives, and compared this documentation to 

acquisition best practices for analysis of alternatives and DOD acquisition 

guidance.4 We examined the agency’s Integrated Master Test Plan and

discussed the element- and BMDS-level test programs and test results 

with the BMDS Operational Test Agency and the Department of 

Defense’s Office of the Director of Operational Test and Evaluation as 

well as with element program offices and MDA functional directorates, 

such as the Directorates for Engineering and Testing. We also reviewed 

MDA element acquisition strategies and compared them to our best 

practice criteria.5 We interviewed individual element program offices and 

 

3

This report does not contain an assessment of the Patriot Advanced Capability-3 

because its initial development is complete and it has been transferred to the Army for 

production, operation, and sustainment. MDA is also developing other systems for Israeli 

programs, which are not covered in this report.

4

GAO, Defense Acquisitions: Many Analyses of Alternatives Have Not Provided a Robust 

Assessment of Weapon System Options, GAO-09-665 (Washington, D.C.: Sept. 24, 

2009); and Homeland Security: DHS Requires More Disciplined Investment Management 

to Help Meet Mission Needs, GAO-12-833 (Washington, D.C.: Sept. 18, 2012).

5 GAO, Defense Acquisitions: Assessments of Selected Weapon Programs, 

GAO-12-400SP, (Washington, D.C.: Mar. 29, 2012); and Best Practices: Using a 

Knowledge-Based Approach to Improve Weapon Acquisition, GAO-04-386SP

(Washington, D.C.: January 2004).
 

Page 3 GAO-13-432 Missile Defense

reviewed management briefings and responses to GAO data collection 

instruments which detailed key accomplishments for fiscal year 2012. To 

gauge MDA element cost and schedule progress, we compared the 

resource and schedule baselines as presented in the 2012 BMDS 

Accountability Report (BAR) to the 2010 baselines presented in the June 

2010 BAR. We also met with officials in MDA’s Acquisition Directorate 

and Operations Directorate to discuss how the agency is establishing and 

managing its internal baselines. We met with officials in MDA’s systems 

engineering directorate, independent assessors, and the Northern and 

Strategic Combatant Commands to discuss the progress of the BMDS for 

homeland and regional defense in Europe. In addition, we reviewed 

MDA’s modeling and simulation master plan as well as system-level 

verification and validation plans. We also met with MDA officials at the 

Missile Defense Integration and Operations Center as well as officials 

with the BMDS Operational Test Agency to understand the status of 

MDA’s modeling and simulation program, progress in resolving past 

issues, and future plans. The results of these reviews are presented in 

detail in the appendixes to this report, and are also integrated as 

appropriate in our findings. 

Towards the end of our audit work, in March 2013, the Secretary of 

Defense announced a significant adjustment to existing plans for 

developing and deploying missile defense systems in Europe and the 

United States for the protection of the United States. In addition, DOD 

proposed canceling two MDA programs in April 2013, as reflected in the 

Fiscal Year 2014 President’s Budget Submission. Because the proposed 

cancellations occurred in the last few weeks of our audit, we were not 

able to assess the effects and incorporate this information into our report.

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

We conducted this performance audit from March 2012 to April 2013 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.

The BMDS is designed to counter ballistic missiles of all ranges—short, 

medium, intermediate, and intercontinental. Short-range ballistic missiles 

have a range of less than 621 miles; medium-range ballistic missiles have 

a range from 621 to1,864 miles; intermediate-range ballistic missiles have 

Background 
 

Page 4 GAO-13-432 Missile Defense

a range from 1,864 to 3,418 miles; and intercontinental ballistic missiles 

have a range greater than 3,418 miles. Since ballistic missiles have 

different ranges, speeds, sizes, and performance characteristics, MDA is 

developing a variety of systems that, when integrated, provide multiple 

opportunities to destroy ballistic missiles in flight. The BMDS includes 

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

provides communication links to the sensors and interceptor missiles. 

Once a ballistic missile has been launched, these sensors and 

interceptors are coordinated to track or engage the threat missile during 

its flight.

DOD develops its major defense acquisition systems through an 

acquisition process in which programs move through significant phases in 

their life-cycle.6 DOD programs have

• a materiel solution analysis phase during which DOD analyzes and 

recommends materiel solutions for the identified need;

• a technology development phase, during which DOD reduces 

technology risk and determines the appropriate set of technologies to 

be integrated into the full system;

• a product development phase, formally known as engineering and 

manufacturing development, which represents program initiation, and 

during which the program focuses on integrating the system design, 

developing system capability, and demonstrating the manufacturing 

processes;

• a production and deployment phase for the purpose of achieving an 

operational capability that satisfies the mission need; and

• an operations and support phase, where DOD works to sustain the 

system in the most cost-effective manner.

 

6

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

defined in 10 U.S.C. § 2430 and implemented by DOD in its 5000 series. A major defense 

acquisition program is an acquisition program that is not a highly sensitive classified 

program and is designated as a major defense acquisition program or is estimated to 

require an eventual total expenditure for research, development, test, and evaluation, 

including all planned increments, of more that $365 million in fiscal year 2000 constant 

dollars or, for procurement, including all planned increments, of more than $2.190 billion in 

fiscal year 2000 constant dollars.

MDA’s Flexible Acquisition 

Approach and Past Steps 

Taken to Address 

Transparency
 

Page 5 GAO-13-432 Missile Defense

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

exceptional flexibility to set requirements and manage the acquisition of 

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

defensive capability against ballistic missiles in 2004. This decision 

postponed application of DOD acquisition policy for BMDS elements until 

they were mature enough to begin production and deployment. Because 

BMDS’s entrance into DOD’s acquisition cycle is deferred, MDA is 

exempt from certain laws and policies triggered by the phases of the 

acquisition life-cycle that generally require major defense acquisition 

programs to take steps such as the following:

• Prior to beginning the technology development phase and product 

development phase, conduct an analysis of alternatives to compare 

potential solutions and determine the most cost-effective weapon 

system to acquire.7

• Before the program begins the product development phase, document 

key program performance, cost, and schedule goals in a baseline that 

has been approved by a higher-level DOD official.8 The baseline is 

considered the program’s initial business case—evidence that the 

concept of the program can be developed and produced within 

existing resources. The baseline provides decision makers with the 

program’s total cost for an increment of work, average unit costs for 

systems to be delivered, key dates associated with a capability, and 

the weapon’s intended performance parameters.

• Once a baseline has been approved, measure the program against 

the approved baseline or obtain the approval of a higher-level 

acquisition executive before making changes.

 

7

10 U.S.C. § 2366a and § 2366b.

8

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

acquisition programs before the program enters system development and demonstration 

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

and full-rate production. (Because the BMDS has not yet formally entered the acquisition 

cycle, it has not yet been required to meet these requirements.)
 

Page 6 GAO-13-432 Missile Defense

• Once a baseline has been approved, report certain increases in unit 

cost measured from the original and the current program baseline.9

Unit cost is the cost divided by the quantity produced.

• Prior to beginning the product development and/or production and 

deployment phases of the DOD acquisition cycle, obtain an 

independent life-cycle cost estimate.10

While these flexibilities give MDA latitude to manage the BMDS and 

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

reported that the agency has used these flexibilities to employ acquisition 

strategies with high levels of concurrency (that is, overlapping activities 

such as testing and production) and they have also hampered oversight 

and accountability.

Congress and DOD have taken steps to address concerns over MDA’s 

acquisition management strategy, accountability, and oversight. Although 

MDA is not yet required to establish an acquisition program baseline 

pursuant to 10 U.S.C. § 2435 and related DOD policy because of the 

acquisition flexibilities it has been granted, Congress has enacted 

legislation requiring MDA to establish some baselines. MDA reported 

baselines for several BMDS programs to Congress for the first time in its 

June 2010 BMDS Accountability Report to respond to statutory 

requirements in the National Defense Authorization Act for Fiscal Year 

2008.11 Most recently, the National Defense Authorization Act for Fiscal 

Year 2012 required MDA to establish and maintain baselines for program 

elements or major portions of such program elements.12 The act specified 

information to be included in the baselines such as total quantities and 

quantities by fiscal year, and required an annual report of these baselines 

to Congress.

In 2010, MDA created a new review process in which the agency 

identified five phases of acquisition as seen in table 1.

 

9

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

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

under 10 U.S.C. § 2433.

1010 U.S.C. § 2434.

11Pub. L. No. 110-181, § 223(g), repealed by Pub. L. No. 112-81, § 231(b) (2011).

12Pub. L. No. 112-81, § 231(a) (2011), codified at 10 U.S.C. § 225.
 

Page 7 GAO-13-432 Missile Defense

Table 1: MDA’s Acquisition Life-Cycle Phases for the BMDS

Material solution 

analysis

Technology 

development Product development Initial production Production

An analysis period to 

develop potential 

alternative solutions.

For developing and 

maturing technology 

solutions for a capability 

shortfall.

To further develop the 

potential BMDS component 

to refine and mature the 

design and manufacturing 

issues.

Used primarily to provide 

an initial base for 

production and provide 

articles for continued 

testing.

For producing final 

operational end items to 

satisfy Warfightercapability requirements.

Source: MDA Directive 5010.18; GAO (presentation).

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

the technology development, product development, initial production, and 

production phases. For example, as part of the process, MDA requires a 

program to identify alternatives to meet the mission’s needs before it can 

proceed to MDA’s technology development phase. MDA officials have 

stated in the past that they expect that aligning the development efforts 

with the phases will help to ensure that they obtain the appropriate level 

of knowledge before allowing the acquisitions to move from one phase to 

the next.

One of the most significant new thrusts in BMDS acquisitions is the 

development and deployment of systems to aid in the defense of Europe 

and to augment the current protection of the United States. In September 

2009, the president announced a new approach called the European 

Phased Adaptive Approach, which is structured around Aegis ship and 

Aegis Ashore systems in addition to other various BMDS sensors. The 

BMDS in Europe is planned to be deployed over time as the systems 

become more mature. The final phase of U.S. missile defense in Europe 

is planned to enhance the limited defense of the United States against 

intercontinental ballistic missiles currently provided by the U.S. based 

Ground-based Midcourse Defense (GMD) system. Towards the end of 

our audit work, in March 2013, the Secretary of Defense made an 

announcement that canceled the final phase of U.S. missile defense in 

Europe that had planned to use Aegis BMD SM-3 Block IIB interceptors, 

and announced several other plans including deploying additional ground 

based interceptors in Fort Greely, Alaska, and deploying a second 

AN/TPY-2 radar in Japan. Because this announcement occurred late in 

our audit, we were not able to assess the effects and incorporate this 

information into our report.

The DOD 2010 Ballistic Missile Defense Review stated that other regional 

missile defenses are to be developed, each tailored to a specific region of 

U.S. Missile Defense in 

Europe 
 

Page 8 GAO-13-432 Missile Defense

the world and its particular threats and circumstances.13 The BMDS in 

Europe is the first such approach to missile defense to be developed. We 

reported in January 2011 that DOD was planning for additional regional 

defenses in East Asia and the Middle East.14

Table 2 describes BMDS elements discussed in this report, the defensive 

capabilities each currently provides or plans to provide for a particular 

mission, and their current MDA acquisition phase.

Table 2: Description of Selected BMDS Elements 

BMDS element/ 

supporting effort Description and key components

Planned defensive 

capability 

MDA acquisition phase 

and operational status

Aegis Ballistic Missile 

Defense (Aegis BMD) 

with Standard 

Missile-3 (SM-3) 

Block IA and Aegis 

BMD first generation 

weapon system 

softwarea

Aegis BMD is a sea-based system developed for 

ballistic missile defense and other missions. MDA is 

developing several versions of missiles and associated 

ship-based software and processors.

All sea-based Aegis BMD systems include the shipboard 

SPY-1 radar, Aegis BMD weapon system software, and 

command and control systems, and Standard Missile-3 

(SM-3) interceptors. 

Against short-, 

medium-, and 

intermediate-range 

ballistic missiles in the 

middle part of their 

flight.

In production since 2005. 

Currently operational for 

regional defense in Europe 

as well as other regions. 

Aegis BMD with SM3 Block IB missiles 

and second 

generation weapon 

system software

As a sea-based missile defense system, the SM-3 Block 

IB features additional capabilities over the Block IA to 

identify, discriminate, and track objects during flight. The 

Aegis BMD second generation weapon system software 

also provides increased capabilities with its ability to 

more accurately locate, discriminate, and track more 

sophisticated threat objects as well as uplink that data to 

the SM-3 Block IB faster than the previous version. For 

more details about the Aegis BMD SM-3 Block IB 

program, see appendix II.

Against short-, 

medium-, and 

intermediate-range 

ballistic missiles in the 

middle part of their 

flight.

Being concurrently 

developed and produced. 

Plans to be operational in 

2014 and available for 

regional defense in Europe 

and other regions in 2015.

 

13The Ballistic Missile Defense Review is the end product from a comprehensive review of 

ballistic missile strategy and policy. It was published in February 2010.

14GAO, Ballistic Missile Defense: DOD Needs to Address Planning and Implementation 

Challenges for Future Capabilities in Europe, GAO-11-220 (Washington, D.C.: Jan. 26, 

2011). 

Description of BMDS 

Elements
 

Page 9 GAO-13-432 Missile Defense

BMDS element/ 

supporting effort Description and key components

Planned defensive 

capability 

MDA acquisition phase 

and operational status

Aegis Ashore with 

SM-3 missiles and 

modernized weapon 

system software 

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

using SM-3 Block IB missiles, with plans to use various 

versions of SM-3 missiles and Aegis weapon system 

software as they become available. Aegis Ashore will 

initially be deployed with the upgraded version of the 

third generation Aegis weapons software, which is 

designed to counter more advanced threats.

Key components include SM-3 missiles, a vertical 

launch system, an enclosure that houses the SPY-1 

radar and command and control system, and Aegis 

BMD weapon system software. For more details about 

the Aegis Ashore program, see appendix III.

Initially, Aegis Ashore 

with the SM-3 Block IB 

is planned to defend 

against short-, mediumand intermediate-range 

ballistic missiles in the 

middle part of their 

flight. It will add 

capability as the SM-3 

Block IIA and SM-3 

Block IIB become 

available.

Being concurrently 

developed and produced. 

Plans for initial version to 

be operational for regional 

defense in Europe in 2015.

Aegis BMD SM-3 

Block IIA with third 

generation weapon 

system software

Another SM-3 version to be developed for use on Aegis 

BMD ships as well as with Aegis Ashore. The SM-3 

Block IIA is planned to be larger than the SM-3 Block IB 

and is planned to have increased velocity, range, and 

discrimination capabilities. The third generation software 

also provides increased capabilities to use sensors other 

than its SPY-1 radar to engage a threat. For more 

details about the Aegis BMD SM-3 Block IIA program, 

see appendix IV.

Against medium- and 

intermediate-range 

ballistic missiles in the 

middle part of their 

flight. 

In technology 

development. Plans to be 

operational for regional 

defense in Europe and 

other regions in 2018.

Aegis BMD SM -3 

Block IIB with third 

generation weapon 

system softwareb

A new SM-3 concept is in the early stages of 

development, but, based on current plans, it is planned 

to address different threats and have more advanced 

capabilities than earlier SM-3 versions.

Key components have not been finalized given the early 

stage of the program. For more details about the Aegis 

BMD SM-3 Block IIB program, see appendix V.

Early intercept 

capabilities against 

some intercontinental 

ballistic missiles. 

Defense in the middle 

part of their flight for 

medium- and 

intermediate-range 

ballistic missiles.

In technology 

development. Plans to be 

operational for regional 

defense in Europe in 2022 

at the earliest.

BMDS Sensors MDA has fielded and/or upgraded a variety of sensors 

that support various elements of the BMDS.

Some of the key sensors include, but are not limited to: 

the Army Navy/Transportable Radar Surveillance and 

Control Model 2 (AN/TPY-2) radar in forward-based 

mode to support Aegis BMD and Ground-based 

Midcourse Defense or in the terminal mode used with 

Terminal High Altitude Area Defense; the Sea-Based XBand radar for tracking and discriminating threats; 

upgraded early warning radars and the Cobra Dane 

radar for tracking and classifying objects, and cueing 

other BMDS elements. For more details about the 

BMDS Sensors program, see appendix VI.

These various sensors 

are designed to identify 

and continuously track 

ballistic missiles in all 

phases of flight. 

The Sea-Based X-Band 

radar is in limited test 

support (it remains 

available to be recalled to 

operational status, if 

necessary), while the other 

radars are operational. All 

of the BMDS sensors are 

currently being utilized for 

regional defense and/or 

defense of the United 

States.
 

Page 10 GAO-13-432 Missile Defense

BMDS element/ 

supporting effort Description and key components

Planned defensive 

capability 

MDA acquisition phase 

and operational status

Command, Control, 

Battle Management, 

and Communications 

(C2BMC)a 

C2BMC is a global network that links and integrates 

individual missile defense elements. It also allows users 

to plan ballistic missile defense operations, see the 

battle develop, and manage networked sensors and 

weapon systems to achieve mission objectives. MDA 

has released several versions of the software, known as 

spirals, which continue to improve on the C2BMC’s 

ability to manage information among the BMDS 

elements.

The network also includes some hardware such as highend workstations, servers, and network equipment. 

Supports all of the 

elements to defeat 

ballistic missiles of all 

ranges in all phases of 

flight. 

Software upgrades do not 

enter a production phase. 

The latest operational 

spiral, known as Spiral 6.4, 

has been operational in the 

Pacific Command, 

Northern Command, and 

European Command since 

2011 and in Central 

Command since 2012. The 

next version, Spiral 8.2, is 

in product development 

with plans to be 

operational in 2017.

Ground-based 

Midcourse Defense 

(GMD) 

A ground-based missile defense system designed to 

defend the United States. GMD interceptors are located 

at Fort Greely, Alaska and Vandenberg, California.

Key components include (1) a system to formulate battle 

plans and direct BMDS radars, and (2) the interceptor 

that consists of a 3-stage booster with a kill vehicle on 

top. The kill vehicle uses its sensors and divert 

capabilities to steer itself into the threat missile to 

destroy it. There are currently two versions of the kill 

vehicle: the initial design known as the Capability 

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

as the Capability Enhancement-II (CE-II). For more 

details about the GMD program, see appendix VII.

Against intermediate 

and intercontinental 

ballistic missiles in the 

middle part of their 

flight.

GMD configured with a 

CE-I is operational for the 

defense of the United 

States.

CE-II is being concurrently 

developed and produced.

Precision Tracking 

Space System 

(PTSS)b 

A space-based constellation of nine satellites in orbit at 

the same time along with a ground station. PTSS is 

being designed to provide persistent coverage of 

approximately 70 percent of the earth’s surface while 

tracking more advanced missiles and larger raid sizes 

than current ground or sea-based radar sensors. It is 

being designed to provide high-quality track information 

on threat missiles to other ballistic missile defense 

systems that can use the data to engage the threat. 

PTSS is also planned to improve ballistic missile 

defense by expanding the operating areas for Aegis 

BMD ships. For more details about the PTSS program, 

see appendix VIII.

Designed to track 

medium-, intermediate-, 

and intercontinental 

range ballistic missile 

threats after boost and 

through the middle part 

of their flight.

Plans to begin technology 

development in 2013 and 

be operational for regional 

defense of Europe and 

defense of the United 

States no sooner than 

2023.

Targets and 

Countermeasures 

MDA develops and manufactures highly complex targets 

to present realistic threat scenarios during BMDS flight 

tests.

MDA develops and manufactures a variety of targets for 

short-, medium-, intermediate-, and eventually 

intercontinental ranges. Our report focuses on two 

medium-range air-launched targets being flown for the 

first time in fiscal years 2012 and 2013: the extended 

medium-range ballistic missile target and the extended 

long-range air-launched target. For more details about 

these new targets, see appendix IX.

To aid other BMDS 

elements to hone their 

defensive capabilities, 

the targets are 

designed to emulate 

threat missile ranges 

and capabilities.

Extended medium-range 

ballistic missile target in 

development. First flight 

planned in 2013.

Extended long-range airlaunched target first flight 

in 2012.
 

Page 11 GAO-13-432 Missile Defense

BMDS element/ 

supporting effort Description and key components

Planned defensive 

capability 

MDA acquisition phase 

and operational status

Terminal High 

Altitude Area 

Defense (THAAD) 

THAAD is a mobile, ground-based missile defense 

system.

THAAD is organized as a battery. Key components of a 

THAAD battery include interceptors, launchers, an 

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

system, and other support equipment. For more details 

about the THAAD program, see appendix X.

Against short- and 

medium-range ballistic 

missiles during the late 

middle and end of their 

flight.

In production. Two 

batteries are operational. 

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

a

Details on the acquisition progress of the Aegis BMD SM-3 Block IA and C2BMC elements are not 

covered in this report.

b

In April 2013, DOD proposed canceling the PTSS and Aegis BMD SM-3 Block IIB programs in the 

Fiscal Year 2014 President’s Budget Submission. Because these proposed cancellations occurred in 

the last few weeks of our audit, we were not able to assess the effects and incorporate this 

information into our report. 

Figure 1 depicts the BMDS elements that could be used to engage a 

threat missile during the course of its flight.
 

Page 12 GAO-13-432 Missile Defense

Figure 1: Primary Roles of Selected BMDS Elements against a Threat Missile

Note: The BMDS elements are depicted in their primary defensive role during a threat missile’s phase 

of flight. BMDS elements may provide some defensive capabilities in other phases of flight.
 

Page 13 GAO-13-432 Missile Defense

An engagement scenario using the Aegis BMD element, for example, 

could occur as follows:

• After the launch of a threat missile, the Space Based Infrared System, 

an Air Force system of satellites that detect ballistic missile launches, 

detects the launch and sends a cue to the Command, Control, Battle 

Management, and Communications system.

• The Command, Control, Battle Management, and Communications 

system tells one or more Army Navy/Transportable Radar 

Surveillance and Control Model 2 radars to track the threat missile.

• The radars provide track information to the Command, Control, Battle 

Management, and Communications system which develops system 

track data to support Aegis BMD engagements.

• Relying on data provided by the Army Navy/Transportable Radar 

Surveillance and Control Model 2 radars and its own SPY-1 radar, the 

Aegis BMD ship uses SM-3 missiles to intercept and attempt to 

destroy the threat.

A key challenge DOD and MDA’s new Director face is ensuring that the 

Department is getting the best value for its missile defense investments, 

particularly as MDA faces growing fiscal pressure as it develops new 

programs while supporting and upgrading its existing systems. We have 

frequently reported on the importance of establishing a sound basis 

before committing resources to developing a new product.15 We have also 

reported that part of a sound basis is a full analysis of alternatives 

(AOA).16 An AOA also helps ensure that key DOD and congressional 

decision makers understand why the chosen system was selected in 

order to prioritize limited investment dollars to achieve a balanced BMDS 

portfolio. Because of MDA’s acquisition flexibilities, its programs are not 

required to complete an AOA. While MDA has performed some limited 

 

15GAO, Defense Acquisitions: Sound Business Case Needed to Implement Missile 

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

Defense Acquisitions: Improved Business Case Is Needed for Future Combat System’s 

Successful Outcome, GAO-06-367 (Washington, D.C.: Mar. 14, 2006); and Tactical 

Aircraft: Air Force Still Needs Business Case to Support F/A-22 Quantities and Increased 

Capabilities, GAO-05-304 (Washington, D.C.: Mar. 15, 2005). 

16GAO-09-665 and GAO-12-833. 

Challenge: Improve 

Investment Decisions
 

Page 14 GAO-13-432 Missile Defense

analyses that consider alternatives, it has not conducted a robust AOA for 

its new programs. We have reported that without AOAs, programs may 

not select the best solution for the warfighter, are at risk for cost 

increases, and can face schedule delays.17 However, some progress was 

made in January 2013 when Congress directed DOD to conduct a 

comprehensive assessment of PTSS alternatives.18

An AOA can help establish a sound basis for an acquisition by comparing 

potential solutions and determining the most promising and cost-effective 

weapon system to acquire. As such, major defense acquisition programs 

are generally required by law and DOD’s acquisition policy to conduct an 

AOA before they are approved to enter the technology development 

phase. A robust AOA can provide decision makers with the information 

they need by helping establish a sound basis that is used to assess 

whether a concept can be developed and produced within existing 

resources and if it is the best solution to meet the warfighter’s needs. It 

accomplishes this by providing a foundation for developing and refining 

the program’s requirements, and giving insight into the technical feasibility 

and costs of alternatives.19 Specifically, an AOA should address key 

questions, such as the following:

• Did an AOA occur at the appropriate time?

• What alternatives meet the warfighter’s needs?

• Are the alternatives operationally suitable and effective?

• Can the alternatives be supported?

• What are the programmatic (e.g., cost or schedule), technical, and 

operational risks for each alternative?

• What are the development, production, deployment, and support 

costs for each alternative?

• How do the alternatives compare to one another?

 

17GAO-09-665. 

18Pub. L. No. 112-239, § 224.

19GAO-09-665. 

Limited Analyses of 

Alternatives Put BMDS 

Programs at Risk
 

Page 15 GAO-13-432 Missile Defense

In addition, as we reported in September 2009 and again in September 

2012, AOAs should be completed early enough in the acquisition cycle, 

prior to the start of technology development, to provide time for 

adjustments to requirements before those requirements are finalized.20

Because of the flexibilities that have been granted to MDA, its programs 

are not required to complete an AOA before starting technology 

development. Nevertheless, MDA’s acquisition directive requires 

programs to show they have identified competitive alternative materiel 

solutions before they can proceed to MDA’s technology development 

phase. However, this directive provides no specific guidance on how this 

alternatives analysis should be conducted or what criteria should be used 

to identify and assess alternatives, such as risks and costs. According to 

DOD, the office of the Director for Cost Assessment and Program 

Evaluation develops and approves study guidance for AOAs for other 

major defense acquisition programs. MDA could look to that office for 

support should it decide to undertake more robust analyses of 

alternatives.

While MDA has conducted some analyses that consider alternatives, it 

has not conducted robust AOAs for its new programs—the Aegis BMD 

SM-3 Block IIB and PTSS programs.

• We recently reported the SM-3 Block IIB program did not conduct an 

AOA prior to beginning technology development.21 While the program 

assessed some alternatives that could potentially achieve early 

intercept, it did not include other key aspects of an AOA, such as 

considering a broad range of alternatives and performing a costeffectiveness assessment of the concepts considered. Recent MDA 

technical analysis has led to changes in the initial program 

assumptions about how to use the SM-3 Block IIB and suggests 

additional development and investment by the program will be needed 

to defend the United States. Further, potential missile configurations 

that are under consideration may provide increased capability for the 

SM-3 Block IIB but also pose significant cost and safety risks. To 

some extent, these program issues may have been driven by the 

early decision to narrow solutions without the benefit of an AOA.

 

20GAO-09-665 and GAO-12-833. 

21GAO, Standard Missile-3 Block IIB Analysis of Alternatives, GAO-13-382R, 

(Washington, D.C.: February 2013).
 

Page 16 GAO-13-432 Missile Defense

• Although the PTSS program has conducted a number of studies in the 

past, none can be considered a robust AOA because they either 

assessed too narrow a range of alternatives or did not fully assess 

program and technical risks. Congress included a requirement in the 

National Defense Authorization Act for Fiscal Year 201322 for DOD to 

evaluate PTSS alternatives partially in response to concerns raised by 

the National Academy of Sciences last year about the costs and 

benefits of the PTSS program.23 DOD’s Cost Assessment and 

Program Evaluation office is currently in the process of conducting a 

comprehensive review of PTSS that may include many aspects of an 

AOA, but it is unclear at this point if it will be thorough enough to 

determine the best concept.

By not conducting robust AOAs, these programs are at risk for developing 

weapon systems that may not be the best solution to meet the 

warfighter’s needs and having cost, schedule, and technical problems. It 

also means that key DOD and congressional decision makers may have 

a limited understanding of the reason these systems were selected.

In the past few years, MDA has had declining budgets, some program 

cancellations, and curtailment of other programs partially because of 

affordability concerns. Looking forward, MDA faces important decisions 

about how it will balance and prioritize its portfolio of BMDS investments 

as it increasingly develops new programs while supporting and upgrading 

existing deployed systems. We have previously reported that successful 

organizations follow a disciplined process to assess alternatives to help 

them achieve a balanced portfolio that spreads risk across products, 

aligns with strategic goals and objectives, and maximizes return on 

investment.24 To this end, AOAs help decision-makers prioritize limited 

investment dollars by assessing operational benefits against technical 

and affordability challenges of individual systems before committing 

 

22Pub. L. No. 112-239, § 224.

23National Research Council, Making Sense of Ballistic Missile Defense: An Assessment 

of Concepts and Systems for U.S. Boost-Phase Missile Defense in Comparison to Other 

Alternatives, National Research Council of the National Academies, Washington, D.C., 

2011.

24GAO, Best Practices: An Integrated Portfolio Management Approach to Weapon System 

Investments Could Improve DOD’s Acquisition Outcomes, GAO-07-388 (Washington, 

D.C.: Mar. 30, 2007).

AOAs Could Help MDA 

Balance and Prioritize Its 

Portfolio of Investments
 

Page 17 GAO-13-432 Missile Defense

resources in order to achieve a balanced portfolio that meets strategic 

goals within available resources. AOAs are therefore a key first step in 

establishing a sound basis for acquisitions.

MDA’s annual budget peaked in fiscal year 2007 at $9.4 billion but has 

since trended downwards to a requested $7.8 billion in fiscal year 2013. 

Since fiscal year 2009, DOD canceled three programs because of 

technical issues, schedule delays, and concerns about the costeffectiveness or operational role of the programs. In fiscal year 2009, 

DOD terminated the Kinetic Energy Interceptors program, which was 

developing a high velocity booster rocket designed to intercept missiles in 

the boost and middle phases of flight, and the Multiple Kill Vehicle 

program, which was developing a way to place multiple kill vehicles on an 

interceptor. DOD terminated these programs after spending 

approximately $2.5 billion on their development. In addition, in fiscal year 

2012, DOD canceled the Airborne Laser program, which placed a highenergy chemical laser onboard an airplane designed to intercept missiles, 

after spending over $5 billion on its development.

To improve acquisition outcomes and achieve strategic goals for the 

United States and regional missile defense, MDA faces continuing 

portfolio challenges during this period of continuing fiscal pressure. DOD 

already curtailed several existing BMDS programs in fiscal year 2012 

because of affordability concerns. For example, after approximately $2 

billion had been spent in several years of development, the SBX seabased radar was downgraded from operational status to a limited test 

status because of funding limitations.25 Despite demand for THAAD 

batteries from military commands, MDA reduced the number of such 

purchases from nine to six to meet budget constraints. Partially as a 

result, procurement of the AN/TPY-2, a ground-based radar component of 

the THAAD battery as well as a stand-alone forward-based sensor, was 

also reduced from 18 to 11.

Balancing its portfolio of investments going forward will be a challenge as 

MDA plans to develop a number of new systems, such as PTSS and 

multiple versions of advanced interceptors for the Aegis BMD program, 

during the next few years while at the same time beginning full production 

 

25While in limited test status, the radar can be recalled to active, operational status if 

necessary,
 

Page 18 GAO-13-432 Missile Defense

for several new weapon systems, such as Aegis Ashore and the Aegis 

BMD SM-3 Block IB missile. In addition, it will continue to fund full 

operation and support costs for the GMD element. MDA also plans to 

share some of those costs with the services for other elements that are 

already being produced, such as the AN/TPY-2 radar and THAAD. AOAs 

could play a constructive role as MDA manages its portfolio of 

acquisitions.

MDA gained important knowledge through its test program and took some 

positive steps to reduce acquisition risks for two of its programs. MDA 

increased its understanding of BMDS performance after successfully 

conducting its most complex integrated air and missile defense flight test 

to date as well as other important tests for the THAAD and Aegis BMD 

SM-3 Block IB programs. MDA also reduced the acquisition risk for two 

programs by delaying commitments to development until after the 

programs could demonstrate that the technologies and resources 

available are aligned with requirements. However, the Director of MDA 

faces continuing challenges addressing issues that stem from previous 

premature production commitments and minimizing further use of high 

risk acquisition strategies. We reported in March 2009 that MDA was 

pursuing a concurrent development, manufacturing, and fielding strategy 

in which assets are produced and fielded before they are fully 

demonstrated through testing and modeling.26 We have previously 

reported that committing to production and fielding before development is 

complete is a high risk strategy that often results in performance 

shortfalls, unexpected cost increases, schedule delays, and test 

problems.27 Moreover, best practices of successful organizations include 

a knowledge-based process in which each successive knowledge point 

builds on the preceding one, giving decision makers the knowledge they 

need, when they need it, to make decisions about whether to invest 

significant funds to move forward.28 High levels of acquisition risk 

 

26GAO, Defense Acquisitions: Production and Fielding of Missile Defense Components 

Continue with Less Testing and Validation Than Planned, GAO-09-338 (Washington, 

D.C.: Mar. 13, 2009).

27GAO, Best Practices: Capturing Design and Manufacturing Knowledge Early Improves 

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

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

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

28GAO-02-701. 

Challenge: Expand on 

Steps Already Taken 

to Place Investments 

on a Sound Footing
 

Page 19 GAO-13-432 Missile Defense

continue to be present in many of the elements’ acquisition strategies. For 

example, as we reported last year, MDA’s production problems were 

magnified by high levels of overlap—or concurrency—between product 

development and production.29 Although the stated rationale for this 

overlap is to introduce systems in a timelier manner and to maintain an 

efficient industrial development and production workforce, MDA’s Aegis 

BMD, GMD, and THAAD interceptor production have been significantly 

disrupted during the past few years due to this concurrency, delaying 

planned deliveries to the warfighter, raising costs, and disrupting the 

industrial base. Program plans for the Aegis Ashore and PTSS also 

include high acquisition risks due to planned premature commitments to 

production. In addition, we reported in April 2012 that risk reduction flight 

tests are conducted the first time a system is tested in order to confirm 

that it works before adding other test objectives and that MDA’s flight test 

program had been disrupted by the lack of those risk reduction flight 

tests. Looking forward, the risks for an upcoming complex test involving 

multiple MDA systems are elevated because MDA is planning to use a 

new type of target for the first time in this critical operational test.

MDA conducted the largest integrated air and missile defense flight test to 

date, achieving near simultaneous intercepts of multiple targets by 

various BMDS interceptors. Flight Test Integrated-01, conducted October 

2012, was a combined developmental and operational flight test that for 

the first time utilized warfighters from multiple combatant commands and 

employed multiple missile defense systems including THAAD, Aegis 

BMD, and the Patriot Advanced Capability-3.30 All five targets, three of

which were ballistic missiles and two of which were cruise missiles, were 

launched and performed as expected during this test. This is a significant 

achievement because, as we have reported in the past, troubles with 

target performance in prior years have hindered MDA’s ability to conduct 

flight testing and achieve planned objectives. In addition, during this test, 

THAAD achieved its objectives by intercepting a medium-range target for 

the first time and an Aegis ship conducted another successful standard 

 

29GAO, Missile Defense: Opportunity Exists to Strengthen Acquisitions by Reducing 

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

30Patriot Advanced Capability-3 is a missile designed to destroy its target in the terminal 

phase, however, this report does not contain an assessment of the Patriot Advanced 

Capability-3 because its initial development is complete and it has been transferred to the 

Army for production, operation, and sustainment. 

MDA Increased Its 

Understanding of BMDS 

Performance by 

Successfully Conducting 

Several Key Flight Tests
 

Page 20 GAO-13-432 Missile Defense

missile-2 engagement against a cruise missile.31 The SM-3 Block IA failed 

to intercept its target during the BMD portion of the event. This test also 

provided valuable data to evaluate interoperability and integration 

between THAAD, Aegis BMD, Patriot Advanced Capability-3, C2BMC, 

and various sensors during a live engagement.

In May and June 2012, the Aegis BMD program successfully completed 

intercepts using the new SM-3 Block IB missile which demonstrated 

increased capability for some of the system’s components. In May 2012, 

the program intercepted a short-range target with its Block IB missile for 

the first time. The test demonstrated, among other things, the missile’s 

improved capability to track and identify objects in space. In June 2012, 

the Aegis BMD SM-3 Block IB program completed another successful 

intercept test. During this test the missile intercepted a separating target 

and provided more insight into the missile’s enhanced ability to 

discriminate the target from other objects during an engagement.

THAAD successfully conducted its first operational flight test in October 

2011 before entering full-rate production.32 This was also the first time 

Army and DOD test and evaluation organizations were involved to 

confirm that the test and the test results were representative of the fielded 

system. During the test, the THAAD system fired two interceptors and 

successfully—and nearly simultaneously—intercepted two short-range 

targets. The test demonstrated THAAD’s ability to perform under 

operationally realistic conditions (within the constraints of test range 

safety), from initial stages of mission planning through the completion of 

the engagement. Additionally, this test incorporated fixes to a required 

safety device and supported the resumption of interceptor manufacturing. 

The Army also used this test as support for accepting the first two THAAD 

batteries for use by the warfighter.

 

31During the test, Aegis was able to successfully intercept a cruise missile with its 

standard missile-2 Block IIIA interceptor. The standard missile-2 Block IIIA interceptor is 

designed to intercept short-range ballistic missiles in the end part of their flight. 

32Pursuant to MDA’s acquisition flexibilities, once an element enters the production and 

deployment phase, the element enters the formal DOD acquisition system. Consequently, 

10 U.S.C. § 2366 requires completion of realistic survivability testing of a weapon system 

before a program can begin full-rate production.
 

Page 21 GAO-13-432 Missile Defense

MDA has taken steps to reduce acquisition risk by decreasing the overlap 

between technology development and product development for two of its 

programs—the Aegis BMD SM-3 Block IIA and the SM-3 Block IIB 

programs. Reconciling gaps between requirements and available 

resources before product development begins makes it more likely that a 

program will meet cost, schedule, and performance targets.

• The Aegis BMD SM-3 Block IIA program added time and money to 

the program to extend development. Following significant technology 

development problems with four components, MDA delayed the 

system preliminary design review—during which a program 

demonstrates that the technologies and resources available are 

aligned with requirements—for more than 1 year, thereby reducing its 

acquisition risk.33 As a result, in March 2012, following additional 

development of the four components, the program was able to 

successfully complete the review.

• The Aegis BMD SM-3 Block IIB program responded to our April 2012 

recommendation to reduce acquisition concurrency by delaying the 

start of product development until after its preliminary design review 

was complete.34 By delaying the start of product development, the 

program increased the amount of technical knowledge it plans to 

achieve prior to committing to development. Additionally, the program 

is leveraging competition among contractors during the technology 

development phase, which we reported in April 2012 increases 

technical innovation.35 Program management officials stated they 

have already seen benefits from this competition. For example, they 

stated they have a better understanding of the program’s progress, 

performance possibilities for the missile, and risks associated with 

those possibilities.

 

33GAO-12-486. 

34GAO-12-486. 

35GAO-12-486. 

MDA Reduced the 

Acquisition Risk in the 

Aegis BMD SM-3 Block IIA 

and Block IIB Programs
 

Page 22 GAO-13-432 Missile Defense

Despite significant cost and schedule disruptions resulting from elevated 

acquisition risks in the Aegis BMD SM-3 Block IB, GMD, and THAAD 

programs, MDA continues to follow high risk acquisition strategies for its 

Aegis Ashore, PTSS, and Targets and Countermeasures programs. We 

reported in April 2012 that the Aegis BMD SM-3 Block IB, GMD, and 

THAAD programs discovered problems during developmental testing—

and after production had begun—which delayed planned deliveries to the 

warfighter, increased costs, and affected MDA’s supplier base.36 In 

addition, for the Aegis BMD SM-3 Block IB and GMD programs, these 

issues also affected the performance of delivered missiles and created 

pressure to keep producing to avoid work stoppages even when problems 

were discovered in testing. In fiscal year 2012, the SM-3 Block IB and 

GMD programs continued to work on the issues that disrupted their 

production, but the THAAD program was able to overcome most of its 

issues. The Aegis Ashore and PTSS programs are also undertaking high 

risk acquisition strategies that include premature commitments to 

production that could result in schedule delays, cost increases, and 

performance shortfalls. Additionally, the Targets and Countermeasures 

acquisition strategy is adding risk to an upcoming major operational flight 

test because it is planning to use undemonstrated targets in this complex 

and costly test involving multiple MDA systems.

In 2012, the Aegis BMD SM-3 Block IB was able to partially overcome the 

production and testing issues exacerbated by its concurrent development 

and production strategy. MDA prematurely began purchasing SM-3 Block 

IB missiles beyond the number needed for developmental testing in 2010. 

In 2011, developmental issues arose when the program experienced a 

failure in its first developmental flight test and an anomaly in a separate 

SM-3 Block IA flight test, in a component common with the SM-3 Block 

IB. As a result, production was disrupted when MDA slowed production of 

the SM-3 Block IB interceptors and reduced planned quantities from 46 to 

14. In 2012, the program was able to successfully conduct two flight tests 

which allowed the program to address some of the production issues by 

demonstrating a fix made to address one of the 2011 flight test issues. 

However, development issues continue to delay the program’s fiscal year 

2012 schedule and production. For example, MDA experienced further 

difficulties completing testing of a new maneuvering component—

contributing to delays for a third flight test needed to validate the SM-3 

 

36GAO-12-486. 

MDA Continues Risky 

Acquisition Strategies for 

Six Other Programs, Some 

Already Resulting in Cost 

and Schedule Disruptions

Aegis BMD SM-3 Block IB’s 

Premature Commitment to 

Production Continues to 

Disrupt the Schedule
 

Page 23 GAO-13-432 Missile Defense

Block IB capability and also subsequently delaying a production decision

for certain components from December 2012 to February 2013.

In order to avoid further disruptions to the production line, the program 

plans to award the next production contract for some missile components 

needed for the next order of 29 SM-3 Block IB missiles in February 

2013—before the third flight test can verify the most recent software 

modifications. The program then plans to award the contract to complete 

this order upon conducting a successful flight test planned for the third 

quarter of fiscal year 2013.The program is at risk for costly retrofits, 

additional delays and further production disruptions if issues are 

discovered during this flight test.

The GMD program continues to have production delays and cost 

increases intensified by its concurrent development and production 

strategy. In order to meet a presidential directive to field a limited 

capability to defend the United States, MDA simultaneously developed, 

produced and fielded the GMD system. In 2004, the agency fielded five 

GMD interceptors configured with the program’s initial kill vehicle design 

referred to as the Capability Enhancement-I (CE-I) prior to completing 

development and testing. Although MDA had not yet fully completed 

development or demonstrated the full capability of these initial 

interceptors, in 2004 it committed to another highly concurrent acquisition 

strategy to develop, produce, and field additional interceptors with an 

upgraded kill vehicle known as the Capability Enhancement-II (CE-II). 

MDA proceeded to concurrently develop, manufacture and deliver 12 of 

these interceptors before halting manufacturing and delivery of 

interceptors due to a second flight test failure in December 2010.37 To 

address the causes of the failure, the program redesigned a component 

in the kill vehicle’s guidance system and is also planning to implement 

some changes to the firmware associated with it.38 MDA planned to 

conduct two flight tests in 2012 to demonstrate the new design and 

resume manufacturing the interceptors. While the program was unable to 

conduct either test as planned, MDA conducted the first resolution test in 

January 2013, a non-intercept test, known as Control Test Vehicle-01. 

 

37MDA’s first flight test with the CE-II configuration failed in January 2010 because of an 

assembly process quality issue.

38Firmware is software that is permanently placed on a hardware device.

GMD Continues to Work to 

Overcome Developmental 

Issues, Restart Production, and 

Develop a Path Forward to Fix 

Already Manufactured Missiles
 

Page 24 GAO-13-432 Missile Defense

While initial indications are that all components worked as intended, at 

the time of this review, analysis was ongoing.

We reported in April 2012 that the discovery of the design problem while 

production was already under way increased MDA costs to demonstrate 

and fix CE-II capability from approximately $236 million to over $1.2 

billion.39 This cost increase was due to the added costs of additional flight 

tests including the costs of the target and test-range, investigating the 

failure, developing failure resolutions, and fixing the already delivered CEII missiles. Costs continue to grow because MDA has had to further delay 

the next CE-II intercept test originally planned for fiscal year 2012. 

Moreover, at the time of this review, the next CE-II intercept test date is 

yet to be determined as MDA is considering various options, including 

adding another flight test.

As we reported in April 2012, problems encountered while THAAD was 

concurrently designing and producing interceptors led to slower delivery 

rates of interceptors for the first and second THAAD batteries. During 

fiscal year 2011 after several years’ delay, 11 of the expected 50 

operational interceptors were delivered. In fiscal year 2012, after a 15-

month delay and increased costs, the program was able to deliver the 

remainder of the interceptors needed for the first two batteries after 

completing necessary testing of a safety device.

The Aegis Ashore program, as we reported in April 2012, initiated product 

development and established cost, schedule, and performance baselines 

prior to completing the preliminary design review.40 Further, we reported 

that this sequencing increased technical risks and the possibility of cost 

growth by committing to product development with less technical 

knowledge than recommended by acquisition best practices and without 

ensuring that requirements were defined, feasible, and achievable within 

cost and schedule constraints. In addition, the program committed to buy 

components necessary for manufacturing prior to conducting flight tests 

to confirm the system worked as intended. As a result, any design 

modifications identified through testing would need to be retrofitted to 

produced items at additional cost. However, the MDA Director stated in 

March 2012 that the Aegis Ashore development is low risk because of its 

 

39GAO-12-486. 

40GAO-12-486. 

THAAD Overcame Past 

Production Issues after 

Extensive Delays and Increased 

Costs

Aegis Ashore, PTSS, and 

Targets and Countermeasures 

Are Pursuing Acquisition 

Strategies with High Levels of 

Risk
 

Page 25 GAO-13-432 Missile Defense

similarity to the sea-based Aegis BMD.41 Nonetheless, this concurrent 

acquisition plan means that knowledge gained from flight tests cannot be 

used to guide the construction of Aegis Ashore installations or the 

procurement of components for operational use.

The PTSS program approved its third acquisition strategy in October 

2012, and continues to include several important aspects of sound 

acquisition practices, such as competition and short development time 

frames. However, it also contains overlap between development and 

production. The PTSS program plans to finalize the satellite design, 

select a manufacturer, and commit to producing components for the next 

two operational satellites—all while a laboratory team develops and 

manufactures the first two satellites. This approach will not enable 

decision makers to fully benefit from the knowledge about the design to 

be gained from on-orbit testing of the laboratory-built satellites before 

committing to the next industry-built satellites. Also, these first four 

satellites will be operational satellites, forming part of the operational nine 

satellite constellation until they are replaced between 2025 and 2027. As 

a result, if on-orbit testing reveals the need for hardware changes, the 

program may face cost increases to implement changes, and the 

operational constellation may face performance shortfalls as it will not 

fully benefit from those changes until the initial four satellites are 

replaced.

MDA’s first use of a new target in its upcoming major operational flight 

test is adding risk to that test. This flight test, called Flight Test 

Operational-01, is planned to be one of the most complex tests MDA has 

attempted. This test will demonstrate the ability of multiple BMDS 

elements to defeat a raid of up to five near-simultaneous regional threats 

including two new air-launched extended medium-range ballistic missile 

targets, a short-range ballistic missile target, and two cruise missiles. The 

risk of this test is higher than it would otherwise be because MDA is using 

newly designed medium-range targets for the first time instead of first 

demonstrating them in a less complex and expensive scenario. Using 

these new targets puts this major test at risk of not being able to obtain 

key information should the targets not perform as expected. 

Developmental issues with this new medium-range target as well as 

 

41In March 2012, the MDA Director was Lieutenant General Patrick O’Reilly. At the 

present time, the MDA Director is Vice Admiral James Syring.
 

Page 26 GAO-13-432 Missile Defense

identification of new software requirements have already contributed to 

delaying the test, which was originally planned for the fourth quarter of 

fiscal year 2012 and is now planned for the fourth quarter of fiscal year 

2013.

While MDA made substantial improvements to the clarity of its reported 

cost and schedule baselines in fiscal year 2012, the information 

underlying these baselines is not yet sufficiently reliable. In addition, 

MDA’s estimates are not comprehensive because they do not include 

costs from military services in reported life cycle costs for its programs. 

Instability in the form of MDA’s frequent adjustments to its acquisition 

baselines makes assessing progress over time extremely difficult and, in 

many cases, impossible. Since we began annual reporting on missile 

defense in 2004, we have made a number of recommendations—and 

Congress has passed a number of laws—directing MDA to establish 

baselines for the expected cost, schedule, and performance of the BMDS 

and report deviations from the baseline as the programs progress. These 

recommendations and laws have offered a number of approaches to 

provide necessary information while preserving the MDA Director’s 

acquisition flexibility. However, despite some positive steps forward since 

2004, issues remain that limit the ability to meaningfully assess BMDS 

cost and schedule progress.

Most major defense acquisition programs are required to establish 

baselines prior to beginning product development. These baselines, as 

implemented by DOD, include key performance, cost, and schedule 

goals. Decision makers can compare the current estimates for 

performance, cost, and schedule goals against a baseline in order to 

measure and monitor progress. Identifying and reporting deviations from

the baseline in cost, schedule, or performance as a program proceeds 

provides valuable information for oversight by identifying areas of 

program risk and its causes to decision makers. Baselines also help 

ensure that the full financial commitment is considered before embarking 

on major development efforts.

MDA, in response to statutory requirements, reported detailed baselines 

for several BMDS program elements, or portions of those program 

elements, for the first time in its June 2010 BMDS Accountability Report 

Challenge: Ensure 

Program Baselines 

Support Oversight

Although MDA Improved 

the Clarity of Its Reported 

Baselines, They Are Not 

Sufficiently Reliable or 

Comprehensive to Support 

Oversight
 

Page 27 GAO-13-432 Missile Defense

(BAR).42 These baselines are not like the baselines reported for other 

major defense acquisition programs. MDA established resource, 

schedule, test, operational capacity, technical, and contract baselines.43

They were established for BMDS elements that, according to MDA, have 

entered product development but are not yet mature enough to enter the 

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

MDA’s baselines reported in the BAR are updated annually. Only the 

resource and schedule baselines have measureable goals and separately 

report and explain when the current program cost and schedule estimates 

have deviated to a certain extent from the baseline set in the prior year’s 

BAR. For that reason, we focus our assessment on these two baselines.

The baselines reported in the 2012 BAR are for BMDS elements or major 

portions of those elements. For example, a major portion of an element 

may include an individual software version of the C2BMC element or an 

initial capability for GMD homeland defense. The 2012 BAR resource and 

schedule baselines we reviewed are

• Aegis BMD SM-3 Block IB with second generation weapon system 

software;

• Aegis BMD modernized weapon system software;

• Aegis Ashore;

• AN/TPY-2 increment 1—enables multiple radars to be managed and 

provides improved track accuracy, among other improvements;

• GMD initial homeland defense for a fundamental capability against 

intermediate- and long-range ballistic missile threats;

• THAAD 1.0 for a fundamental capability against short- and mediumrange ballistic missiles; and

 

42Pub. L. No. 110-181, § 223(g) (2008).

43The operational capacity baselines, as defined in the 2012 BAR, present information on 

the fielding plans, capabilities and limitations, and supporting activities for operational 

capability deliveries. The technical baseline presented in the BAR is comprised of a list of 

capability needs derived from the warfighters’ prioritized capabilities, enduring capabilities, 

current and future capabilities, and knowledge points which together define the way points 

the program must achieve to proceed successfully through development. The contract 

baseline presented in the BAR is a timeline for a set of MDA contracts designed to deliver 

integrated BMDS capabilities from request for proposals through proposal receipt, 

negotiations complete, contract award, and contract execution.
 

Page 28 GAO-13-432 Missile Defense

• Targets and Countermeasures intermediate-, medium-, and shortrange ballistic missiles.44

MDA’s 2012 resource baselines report costs for all the categories of the 

life-cycle—research and development, procurement, military construction, 

operations and support, and disposal costs.45 The 2012 BAR also reports 

unit costs, which are usually reported in two ways:

(1) average procurement unit cost—the average cost to produce one 

unit, and

(2) program acquisition unit cost—the average cost to develop and 

produce one unit.46

According to the 2012 BAR, MDA separately reported and explained unit 

costs that increased by more than 5 percent from the prior year’s 

baseline.

The schedule baseline includes key milestones and tasks, such as 

important decision points, significant increases in performance 

knowledge, modeling and simulation events, and development efforts. 

Some schedule baselines also show time frames for flight and ground 

tests, as well as for fielding and events to support fielding. According to 

 

44MDA established new baselines for common components for re-entry vehicles and 

associated objects for its different targets classes which are not covered in our 

assessment. In addition, MDA reported baselines for its command, control, battle 

management, and communications program as well as for other systems it is developing 

for Israeli programs which are not covered in this report.

45Research and development costs include development and design costs for system 

engineering and design, test and evaluation, and other costs for system design features. 

Procurement costs include total production and deployment costs (e.g., site activation, 

training) of the prime system and its related support equipment and facilities. Military 

construction costs include costs for major construction such as bases and buildings. 

Operations and support costs include costs of operating and supporting the fielded 

system, including all direct and indirect costs incurred in using the system, (e.g., 

personnel, maintenance, and sustaining investment). Disposal, or inactivation, costs 

include the costs of disposing of the prime equipment after its useful life.

4610 U.S.C. § 2432 defines, with respect to a major defense acquisition program, 

procurement unit cost as the amount equal to (1) the total of all funds programmed to be 

available for obligation for procurement for the program divided by (2) the number of fully 

configured end items to be procured. In addition, program acquisition unit cost is defined 

as the amount equal to (1) the total cost for development and procurement of, and 

system-specific military construction for, the acquisition program divided by (2) the number 

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

Page 29 GAO-13-432 Missile Defense

the 2012 BAR, MDA also separately reported and explained events 

delayed three months or more from the prior year baseline.

In its 2012 BAR, MDA made several useful changes to its reported 

resource and schedule baselines in response to our concerns and 

congressional direction. We reported in March 2011 that MDA’s schedule 

and resource baselines had several issues with clarity that limited their 

usefulness for oversight such as only reporting portions of life cycle 

costs.47 In that report, we recommended that MDA provide more detailed 

explanations and definitions of information included in the resource 

baselines, label cost estimates to reflect the content reported and explain 

any exclusions, and include all sunk costs in all of its cost estimates and 

baselines. MDA concurred with two of these recommendations but stated 

that it did not intend to include sunk costs into its unit costs for Targets 

and Countermeasures because, based on the extensive reuse of 

previous missile components in the targets program, including all sunk 

costs would not reflect MDA program costs accurately. Congress, in the 

National Defense Authorization Act for Fiscal Year 2012, added more 

detailed requirements for the contents of MDA’s acquisition baselines.

MDA addressed many issues affecting the clarity, consistency, and 

completeness of information reported in its BAR baselines by

• reporting the full range of life cycle costs borne by MDA in the 2012 

BAR resource baselines;

• defining more clearly what costs are presented in the resource 

baselines and also noting and explaining when costs were excluded 

from the estimates; and

• including costs already incurred in the unit cost for Targets and

Countermeasures so they were more complete.

In its 2012 BAR, MDA also addressed issues with its schedule baseline 

identified in our March 2011 report. For example, we found the BAR 

lacked a comprehensive list of planned deliveries and did not report major

changes in planned dates for deliveries. Further, we recommended that 

the Secretary of Defense should ensure that MDA, as part of its 

acquisition baseline, include (1) a comprehensive list of actual versus 

planned quantities of assets that are or were to be delivered each fiscal 

 

47GAO, Missile Defense; Actions Needed to Improve Transparency and Accountability, 

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

MDA Improved the Clarity of 

Its Reported Cost and Schedule 

Baselines in Fiscal Year 2012 
 

Page 30 GAO-13-432 Missile Defense

year and (2) a report on variances of these quantities by fiscal year and 

the reasons for these differences.48 As a new addition to its 2012 BAR, 

MDA addressed this first recommendation by adding a separate delivery 

table that provides more detailed information on deliveries and 

inventories. However, we are not yet able to assess significant changes 

to all of the planned delivery dates reported in the 2012 BAR because this 

was the first year that the information was reported in this format.

To provide further insight into its reported baselines, MDA also added a 

list of significant decisions made or events that occurred in the past 

year—either internal or external to the program—that affected program 

progress or baseline reporting. The agency also explained how these 

decisions or events affected each program. For example, DOD reduced 

AN/TPY-2 radar quantities which shortened the time to complete radar 

deliveries. These changes are reflected in the schedule baseline and the 

increase in unit costs. Understanding the effect of these decisions and 

events provides a valuable source of information for understanding why 

current estimates for unit costs or scheduled activities may differ from 

those reported either in the original or prior year’s baseline.

While MDA has made some progress improving the clarity of its baseline 

reports, the agency has not yet addressed the underlying reliability issues 

with the cost estimates and schedules used to develop these baselines. 

One of the issues with the reliability of these estimates is that they are not 

comprehensive because they do not include costs from military services 

in reported life cycle costs for its programs. Until MDA’s baselines are 

based on reliable information and are comprehensive, they will not be 

useful for decision makers to understand progress.

Although MDA has plans in place, it has made little progress improving 

the quality of its cost estimates that support its resource baseline since 

we made a recommendation to improve these estimates in our March 

2011 report. In that report, we assessed MDA’s life cycle cost estimates 

using the GAO Cost Estimating and Assessment Guide. This guide is 

based on best practices in cost estimating and identifies key criteria for 

establishing high quality cost estimates. Our review found that the 

estimates we assessed were not comprehensive, lacked documentation, 

were not completely accurate, or were not sufficiently credible. For 

 

48GAO-11-372. 

Resource and Schedule 

Baselines Are Insufficiently 

Reliable or Comprehensive to 

Gauge Progress 
 

Page 31 GAO-13-432 Missile Defense

example, the MDA documentation lacked sufficient evidence to be 

considered a high-quality cost estimate.

In June 2012, MDA completed an internal Cost Estimating Handbook, 

largely based on our guide, which, if implemented, could help address 

nearly all the shortfalls we identified in 2011. According to MDA’s Director 

of Operations, the agency is also assembling an independent cost group 

to carry out the processes outlined in its handbook. Because the 

handbook was only recently completed, it is too early to assess whether 

the quality of MDA’s cost estimates has improved.

According to our guide, completing and documenting an independent cost 

assessment is a key criteria for establishing reliable cost estimates. While 

DOD major defense acquisition programs must obtain an independent 

cost estimate before advancing through certain major milestones,49 MDA 

has been exempted from these requirements. Nevertheless, DOD has 

conducted independent cost estimates for early versions of the Aegis 

BMD program, and for portions of the Space Tracking and Surveillance 

System, GMD, and THAAD programs. In addition, the Office of the 

Director for Cost Assessment and Program Evaluation is currently 

completing an independent cost estimate for PTSS that is planned to be 

released in the spring of 2013. According to officials from the Office of the 

Director for Cost Assessment and Program Evaluation, assessments 

have also been completed for the Aegis BMD program elements as part 

of a cost estimate for U.S. missile defense in Europe that has not yet 

been released. Once these estimates are released, we will review the 

Cost Assessment and Program Evaluation Office’s findings related to 

them. Independent cost estimates for additional MDA elements will further 

improve the credibility of MDA’s estimates.

In addition, according to our guide, the cost estimate should be 

comprehensive. Comprehensive estimates include both government and 

contractor costs of the program over its full life cycle, from inception of the 

program through design, development, deployment, and operation and 

support to retirement. The agency made improvements to its resource 

 

4910 U.S.C. § 2434 requires an independent cost estimate of the full life-cycle cost of the 

program before a major defense acquisition program can advance into system 

development and demonstration (now known as engineering and manufacturing 

development) or production and deployment. The full life-cycle cost must be provided to 

the decision maker for consideration. 
 

Page 32 GAO-13-432 Missile Defense

baselines to include all of the life cycle costs funded by MDA from 

development through retirement of the program. However, the baselines 

do not include the operation and support costs funded by the individual 

military services. MDA officials told us in 2011 that they do not consider 

military service operation and sustainment funds to be part of a baseline 

because the services—not MDA—execute the funds. We recognize that 

the services execute these funds; however, they are part of the program’s 

life cycle costs. It is unclear what percentage these costs are in the case 

of MDA elements because these estimates have not been reported, 

however for other programs outside of MDA they can be significant. By 

not including military service costs, the life cycle costs for some MDA 

programs could be significantly understated.

Similarly, in our July 2012 report, we used our Schedule Assessment 

Guide to assess five MDA program element schedules that support the 

baselines. We reported that none fully met the best practices identified in 

the guide.50 Some schedules had major deficiencies. While our analysis 

of these five programs cannot be generalized to apply to all MDA 

programs, these results are nevertheless significant because a reliable 

schedule is one key factor that indicates a program is likely to achieve its 

planned outcomes. The Department of Defense concurred with our 

recommendations and MDA programs have taken some actions to

improve their schedules. However, MDA has not yet had time to fully 

address our recommendations. We plan to continue to monitor their 

progress because establishing sound and reliable schedules is 

fundamental to creating realistic schedule and cost baselines.

In order for baselines to be useful for managing and overseeing a 

program, they need to be stable over time so progress can be measured 

and so that decision makers can determine how best to allocate limited 

resources.51 However, MDA only reports annual progress by comparing 

its current estimates for unit cost and scheduled activities against the 

prior year’s estimates. As a result, MDA’s baseline reports are not useful 

for tracking longer term progress. In contrast, DOD reports longer term 

 

50GAO, Schedule Best Practices Provide Opportunity to Enhance Missile Defense Agency 

Accountability and Program Execution, GAO-12-720R (Washington, D.C.: July 19, 2012).

51GAO, GAO Cost Estimating and Assessment Guide, GAO-09-3SP (Washington, D.C.: 

March 2009).

Instability in the Content 

of Reported Baselines 

Makes Assessing Progress 

Difficult or Impossible
 

Page 33 GAO-13-432 Missile Defense

progress for its other major defense acquisition programs. When we 

sought to make a longer-term comparison of the latest 2012 unit cost and 

schedule estimates against the original baselines set in 2010, we found 

that such a calculation could not be made in many instances because the 

content of the baselines had been adjusted from year to year in such a 

way that the baselines were no longer comparable. For example, a 

substantial amount of new program activities and costs were added to the 

reported baseline or work activities and costs were moved out of the cost 

or schedule baseline and placed into other baselines. In addition, there 

were instances where calculating a one-year change provided no insight 

into program progress because of these baseline adjustments. Specifics 

follow on Aegis Ashore, GMD, and Targets and Countermeasures.

As we reported in April 2012, the instability of content in the Aegis Ashore 

program’s resource baseline obscures our assessment of the program’s 

progress.52 MDA prematurely set the baseline before program 

requirements were understood and before the acquisition strategy was 

firm. The program established its baseline for product development for 

the Romania and Hawaii facilities in June 2010 with a total cost estimate 

of $813 million. However 3 days later, when the program submitted this 

baseline to Congress in the 2010 BAR, it increased the total cost estimate 

by 19 percent, to $966 million. Since that time, the program has added a 

significant amount of content to the resource baseline to respond to 

acquisition strategy changes and requirements that were added after the 

baseline was set. Because of these adjustments, from the time the total 

estimated cost for Aegis Ashore in Romania and Hawaii was first 

approved in June 2010 at $813 million, it has nearly doubled to its 

estimate of $1.6 billion reported in the February 2012 BAR. These major 

adjustments in program content made it impossible to understand annual 

or longer-term program progress.

These adjustments also affected the schedule baseline for Aegis Ashore. 

For example, many new activities were added to the baseline in 2012. In 

addition, comparing the estimated dates for scheduled activities listed in 

the 2012 BAR to the dates baselined in the 2010 BAR is impossible in 

some cases because activities from the 2010 BAR were split into multiple 

events, renamed, or eliminated all together in the 2012 BAR. MDA also 

redistributed planned activities from the Aegis Ashore schedule baselines 

 

52GAO-12-486. 

Aegis Ashore
 

Page 34 GAO-13-432 Missile Defense

into several other Aegis BMD schedule baselines. For example, activities 

related to software for Aegis Ashore were moved from the Aegis Ashore 

baseline and were split up and added to two other baselines for the 

second generation and modernized Aegis weapon systems software. 

Rearranging content made tracking the progress of these activities 

against the prior year and original baseline very difficult and in some 

cases impossible. As a result, appendix III contains a limited schedule 

assessment of near-term and long-term progress based on activities we 

were able to track in the BAR.

GMD is moving activities and costs from a currently reported baseline to 

one that will be reported in the future, thereby obscuring cost growth. The 

GMD program’s current baseline represents activities and associated 

costs needed to achieve an initial defense of the United States. Although 

the program planned to report a new baseline in the 2013 BAR for its next 

set of capabilities, it has delayed reporting this baseline by at least one 

year.

Despite significant technical problems, production disruptions and the 

addition of previously unplanned and costly work in its current efforts, the 

GMD total cost estimate as reported in the resource baseline has 

decreased from 2010 to 2012. We reported last year that GMD had a 

flight test failure in 2010 which revealed design problems, halted 

production, and increased costs to demonstrate the CE-II from $236 

million to about $1.2 billion. This cost increase includes retrofit costs to 

already-delivered CE-II interceptors. Instead of increasing, the total costs 

reported in the BAR resource baseline have decreased because the 

program moved activities from out of its reported baseline. By moving 

these activities, MDA used the funds that were freed up for failure 

resolution efforts instead.53 In addition, because the baseline for its next 

set of capabilities will be defined after these activities have already been 

added to it, the additional cost for these activities will not be identifiable. 

The full extent of actual cost growth may never be determined or visible 

for decision makers for either baseline because of this adjustment.

MDA removed activities and costs from its Targets and Countermeasures 

resource baselines, making it impossible to assess longer term progress. 

 

53The GMD program deferred activities for addressing obsolescence in GMD’s ground 

systems, upgrading communication infrastructure at Fort Greely, Alaska, and performing 

CE-I interceptor upgrades and flight tests through fiscal year 2017.

GMD

Targets and Countermeasures 
 

Page 35 GAO-13-432 Missile Defense

For example, costs for common target components, such as re-entry 

vehicles and associated objects, which were previously included in the 

baselines for medium-range and intermediate-range targets, were 

removed and redirected into a separate, newly created baseline for 

common components. In addition, the agency also changed the way it 

calculated its targets baselines by removing support costs and adding 

costs incurred in previous years. While the agency adjusted the 

accounting rules retroactively for the 2011 BAR to enable direct cost 

comparisons with the 2012 BAR, it is not possible to compare the 2012 

BAR baselines with the original baselines set in the 2010 BAR for any of 

the targets.

Developing and deploying new missile defense systems in Europe to aid 

in defense of Europe and the United States is a highly complex effort. We 

reported last year that several of the individual systems that comprise the 

current U.S. approach to missile defense in Europe—called the European 

Phased Adaptive Approach—have schedules that are highly concurrent. 

Concurrency entails proceeding into product development before 

technologies are mature or into production before a significant amount of 

independent testing has confirmed that the product works as intended. 

Such schedules can lead to premature purchases of systems that impair 

operational readiness and may result in problems that require extensive 

retrofits, redesigns, and cost increases. A key challenge, therefore, facing 

DOD is managing individual system acquisitions to keep them 

synchronized with the planned time frames of the overall U.S. missile 

defense capability planned in Europe. MDA still needs to deliver some of 

the capability planned for the first phase of the U.S. missile defense in 

Europe and is grappling with delays to some systems and/or capabilities 

planned in each of the next three major deployments. MDA also is 

challenged by the need to develop the tools, the models and simulations, 

to understand the capabilities and limitations of the individual systems 

before they are deployed. Because of technical limitations in the current 

approach to modeling missile defense performance, MDA recently chose 

to undertake a major new effort that it expects will overcome these 

limitations. However, MDA and the warfighters will not benefit from this 

new approach until at least half of the four planned phases have 

deployed. 

Towards the end of our audit work, in March 2013, the Secretary of 

Defense altered the plans for developing and deploying missile defense 

systems in Europe and the United States for the protection of the United 

States. Specifically, the announcement canceled Phase 4 which planned 

Challenge: Developing 

and Deploying U.S. 

Missile Defense in 

Europe 
 

Page 36 GAO-13-432 Missile Defense

to use Aegis BMD SM-3 Block IIB interceptors, and announced several 

other plans, including deploying additional ground based interceptors in 

Fort Greely, Alaska, and deploying a second AN/TPY-2 radar in Japan. In 

April 2013, DOD proposed canceling the PTSS and Aegis BMD SM-3 

Block IIB programs in the Fiscal Year 2014 President’s Budget 

Submission. Because the proposed cancellations occurred in the last few 

weeks of our audit, we were not able to assess the effects and 

incorporate this information into our report.

U.S. missile defense in Europe is a four-phase effort that relies on 

increasingly capable missiles, sensors, and command and control 

systems to defend Europe and the United States. The presidential 

announcement in September 2009 associated each phase with a specific 

time frame as shown in figure 2.

Figure 2: Time Frames and Defensive Capabilities for the U.S. Missile Defense in 

Europe

The first phase became operational in December 2011 and provides 

defense of Europe against short- and some medium-range ballistic 

missiles. MDA identified both the systems and the capabilities that the 

systems should have to enable defense of Europe against these threats. 

For example, C2BMC is needed and should be able to transmit data at a 

certain rate to an Aegis BMD ship during an engagement. The second 

phase plans a more robust defense against short- and medium-range 
 

Page 37 GAO-13-432 Missile Defense

ballistic missiles with the development of SM-3 Block IB missiles, and 

upgraded Aegis Weapons System software both at sea on Aegis BMD 

ships and on land at an Aegis Ashore site in Romania. The third phase is 

intended to add defense against intermediate -range ballistic missiles 

using the SM-3 Block IIA and an Aegis Ashore site in Poland. The fourth 

phase is expected to add an additional layer for defense of the United 

States against some intercontinental ballistic missiles using the SM-3 

Block IIB as well as expand regional defense.

As we reported in December 2010, the U.S. missile defense approach in 

Europe commits MDA to delivering systems and associated capabilities 

on a schedule that requires concurrency among technology, design, 

testing, and other development activities.54 We reported in April 2012 that 

deployment dates were a key factor in the elevated levels of schedule 

concurrency for several programs. We also reported at that time that 

concurrent acquisition strategies can affect the operational readiness of 

our forces and risk delays and cost increases.55

DOD declared Phase 1 operational in December 2011, but the systems 

delivered do not yet provide the full capability planned for the phase. MDA 

deployed, and the warfighter accepted, Phase 1 with the delivery of an 

AN/TPY-2 radar, an Aegis BMD ship with SM-3 Block IA missiles, an 

upgrade to C2BMC, and the existing space-based sensors. Given the 

limited time between the September 2009 announcement of the U.S. 

missile defense in Europe and the planned deployment of the first phase 

in 2011, that first phase was largely defined by existing systems that 

could be quickly deployed. MDA planned to deploy the first phase in two 

stages—the systems described above by December 2011 and upgrades 

to those systems in 2014. Although the agency originally planned to 

deliver the remaining capabilities of the first phase in 2014, an MDA 

official told us that MDA now considers these capabilities to be part of the 

second phase and these capabilities may not be available until 2015.

In addition, independent organizations determined that some of the 

capabilities that were delivered did not work as intended. For example, 

 

54GAO, Missile Defense: European Phased Adaptive Approach Acquisitions Face 

Synchronization, Transparency, and Accountability Challenges, GAO-11-179R

(Washington, D.C.: Dec. 21, 2010).

55GAO-12-486. 

Capability Delays 
 

Page 38 GAO-13-432 Missile Defense

the Director, Operational Test and Evaluation reported that there were 

some interoperability and command and control deficiencies. This 

organization also reported that MDA is currently investigating these 

deficiencies.

According to MDA documentation, systems and associated capabilities 

for the next phases are facing delays, either in development or in 

integration and testing.

• For Phase 2, some capabilities, such as an Aegis weapon system 

software upgrade, may not be available. MDA officials stated they are 

working to resolve this issue.

• For Phase 3, some battle management and Aegis capabilities are 

currently projected to be delayed and the initial launch of a planned 

satellite sensor system—PTSS—is delayed.

• For Phase 4, deployment of the SM-3 Block IIB missile is delayed 

from 2020 to 2022, and full operational capability of PTSS is delayed 

to no sooner than 2023.

A key challenge for both the Director of MDA and the warfighter is 

understanding the capabilities and the limitations of the systems MDA is 

deploying before they are deployed, particularly given the rapid pace of 

development. A critical step in this effort is to have the tools—which are 

the models and simulations—to perform these integrated and complex 

assessments.56 According to MDA’s Fiscal Year 2012 President’s Budget 

Submission, models and simulations are critical to understanding BMDS 

operational performance because assessing performance through flight 

tests alone is prohibitively expensive and can be affected by safety and 

test range constraints. Models and simulations, on the other hand, can be 

much less costly and are inherently not subject to the same safety and 

test range constraints. However, we have previously reported that MDA 

has struggled to develop these tools.

 

56A model is a representation of an actual system that involves computer simulations that 

can be used to predict how the system might perform or survive under various conditions 

or in a range of hostile environments. A simulation is a method for implementing a model. 

It is the process of conducting experiments with a model for the purpose of understanding 

the behavior of the system modeled under selected conditions or of evaluating various 

strategies for the operation of the system within the limits imposed by developmental or 

operational criteria. Simulation may include the use of digital devices, laboratory models, 

or “test bed” sites. 

Modeling and Simulation 

Limitations
 

Page 39 GAO-13-432 Missile Defense

In August 2009, U.S. Strategic Command and the BMDS Operational 

Test Agency jointly informed MDA of a number of system-level limitations 

in MDA’s modeling and simulation program that adversely affected their 

ability to assess BMDS performance. Since that time, we have reported 

that MDA has had difficulty developing its models and simulations to the 

point where it can assess operational performance. Over the past few 

years, the agency adopted different approaches to try to resolve issues 

with its modeling and simulation.

MDA continues to have difficulty credibly assessing operational 

performance using models and simulations. MDA declared the first phase 

of U.S. missile defense in Europe operational in December 2011, but did 

so without the benefit of all planned supporting data because of problems 

with a key modeling and simulation event. MDA officials and officials from 

the Operational Test Agency determined that there were too many issues 

with the models and simulations in the event for it to be useful for 

determining operational effectiveness for the planned configuration.

57

More broadly, in their independent 2012 assessments, both the Director, 

Operational Test and Evaluation and the BMDS Operational Test Agency 

reported a lack of confidence in MDA’s ability to completely and credibly 

model BMDS performance using existing models. Once a model or 

simulation is deemed credible, it can be used to explore the various 

operational conditions and reveal both the capabilities and limitations of 

the actual system. Without a full understanding of the capabilities and 

limitations of the first phase of U.S. missile defense in Europe, it is difficult 

for the warfighter and MDA to understand how the system will work in a 

real event or to develop solutions to problems that may arise with the 

systems and capabilities that have been delivered.

MDA recently committed to a new approach in its modeling and 

simulation program that officials stated could put them on a path to 

credibly model individual programs and system-level BMDS performance 

by 2017. To accomplish this, MDA is replacing the two existing simulation 

frameworks used for ground testing and performance assessments with 

one framework. By using one framework, the agency anticipates data 

quality improvements through consistent representations of the threat, the 

 

57 Phase I declaration was supported by several ground tests conducted prior to the 

modeling and simulation event.
 

Page 40 GAO-13-432 Missile Defense

environment, and communications at the system level. Without 

implementing these changes, MDA officials told us their ability to credibly 

model BMDS performance by the 2017 time frame, in time to assess the 

third phase of U.S. missile defense in Europe, is not possible.

MDA program officials told us that the next major assessment of U.S. 

missile defense in Europe for the 2015 deployment will continue to have 

many of the existing shortfalls. As a result, MDA is pursuing initiatives to 

improve confidence in the realism of its models in the near term. One of 

the agency’s new initiatives involves identifying more areas in the models 

where credibility can be certified by the BMDS Operational Test Agency. 

A second initiative is focused on resolving the limitations identified jointly 

by the Operational Test Agency and U.S. Strategic Command. Lastly, 

MDA officials told us they are refining the process used to digitally 

recreate system-level flight tests in order to increase confidence in the 

models.

The new MDA Director faces long-standing acquisition management 

challenges that hamper the agency’s ability to make wise investment 

choices, to develop and deliver cutting edge, integrated technologies 

within budget and time constraints, and to meet the President’s goals for 

U.S. missile defense in Europe. At the same time, for over a decade, 

MDA has provided Congress with very limited insight into cost and 

schedule growth for individual elements. While baseline reporting is more 

complete and comprehensive, the fact remains there is no way to track 

cost and schedule growth over time using those baselines. This makes it 

difficult for Congress to hold MDA accountable and to consider the 

wisdom of continuing high risk efforts. Since its inception, MDA has been 

operating in an environment of working under tight time frames for 

delivering capabilities—first with a presidential directive in 2002 and then 

with a presidential announcement in 2009 on U.S. missile defense in 

Europe. Although pressure remains to develop and field systems to meet 

set time frames and increased threats, we have also reached a critical 

juncture in our nation’s ability to afford spending limited funds to fix 

problems created by a high risk acquisition strategy.

GAO has made recommendations over the years aimed at addressing 

many of these challenges. We have noted several in this report that have 

not yet been acted on. As the new MDA Director works to address the 

challenges we have identified, fully implementing two prior 

recommendations in particular could prove beneficial. First, our 2009 

recommendation to reconsider the testing and validation schedules of 

Conclusions 
 

Page 41 GAO-13-432 Missile Defense

ballistic missile defense systems and ensure they are synchronized with 

the development, manufacturing and fielding schedules so that items are 

not manufactured for fielding before their performance has been validated 

through testing could help reduce the risk of production disruptions. 

Second, our 2012 recommendation to make adjustments to acquisition 

schedules to reduce concurrency could help reduce the acquisition risks 

in the U.S. missile defense in Europe.

Going forward, as Congress and DOD decide in which new missile 

defense programs to invest, they may lack a full understanding of the 

cost, technical feasibility, and operational requirements for those 

proposed new programs. Performing a robust analysis of alternatives, 

while not required of MDA, could be a proactive and beneficial step to 

laying a sound basis for determining which systems to pursue. Similarly, 

as MDA delivers increasingly complex missile defense systems, it is 

critical that it successfully conduct upcoming complex operational flight 

tests and gather necessary performance data. Reducing the risks tied to 

the first use of new types of targets in less critical tests before they are 

used in a major test could help put these programs on a better path to 

succeed. Finally, until MDA’s baselines have comprehensive cost 

information and are stabilized, the progress of MDA’s individual 

acquisitions cannot be assessed.

In order to strengthen investment decisions, place the chosen 

investments on a sound acquisition footing, provide a better means of 

tracking investment progress, and improve the management and 

transparency of the U.S. missile defense approach in Europe, we 

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

take the following four actions:

1. Undertake robust alternatives analyses for new major missile defense 

efforts currently underway, including the SM-3 Block IIB, and before 

embarking on any other major new missile defense programs. In 

particular, such analyses should consider a broad range of 

alternatives.

2. Add risk reduction non-intercept flight tests for each new type of target 

missiles developed.

3. Include in its resource baseline cost estimates all life cycle costs, 

specifically the operations and support costs, from the military 

services in order to provide decision makers with the full costs of 

ballistic missile defense systems.

Recommendations for 

Executive Action
 

Page 42 GAO-13-432 Missile Defense

4. Stabilize the acquisition baselines, so that meaningful comparisons 

can be made over time that support oversight of those acquisitions.

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

comments are reprinted in appendix XI. DOD also provided technical 

comments, which were incorporated as appropriate.

DOD concurred with two of our four recommendations and partially 

concurred with the remaining two. DOD concurred with our first 

recommendation to undertake robust alternatives analyses for new major 

missile defense efforts currently underway and before embarking on any 

other major new missile defense programs. However, in its response, 

DOD stated that MDA currently performs studies and reviews that provide 

outcomes similar to analyses of alternatives formally conducted by other 

agencies. While we recognize in our report that MDA performed some 

limited analyses that considered alternatives for its newer programs, we 

also found that these reviews cannot be considered robust analyses of 

alternatives, in part, because the range of alternatives considered were 

too narrow. Without a sufficient comparison of alternatives and focus on 

technical and other risks, alternatives analyses may identify solutions that 

are not feasible and decision makers may approve programs based on 

limited knowledge. While many factors can affect cost and schedule 

outcomes, we reported in September 2009 that programs that had a 

limited assessment of alternatives tended to have poorer outcomes than 

those that had more robust analyses of alternatives.58 A robust analysis of 

alternatives can also help ensure that key DOD and congressional 

decision makers understand why the chosen system was selected in 

order to prioritize limited investment dollars to achieve a balanced BMDS 

portfolio. As MDA conducts additional alternatives analyses for new 

programs, it is important that they be robust, comparing the costs, 

performance, effectiveness, and risks of a broad range of alternatives.

DOD partially concurred with our second recommendation to conduct risk 

reduction non-intercept flight tests for each new type of target missile 

developed. In its response, DOD agreed that non-intercept flight tests 

may be conducted for each new type of target--but not necessarily on 

each individual target developed. DOD stated that the decision to perform 

a non-intercept target test must be balanced against cost, schedule, and 

 

58 GAO-09-665. 

Agency Comments 

and Our Evaluation
 

Page 43 GAO-13-432 Missile Defense

programmatic impacts. In addition, DOD stated that MDA’s qualification 

tests for key target components and proven quality control processes 

gave the confidence necessary for the agency to plan for and launch 

targets for the first time as part of a system-level flight test. However, 

while there may be exceptions that would need to occur when there is a 

critical warfighter need, in general, we remain concerned about the use of 

undemonstrated targets during complex, expensive tests. These tests 

remain critical to both MDA’s development efforts and to independent 

assessors of missile defense performance because they are needed to 

demonstrate critical BMDS functions. Whenever possible, we believe 

MDA should avoid using undemonstrated targets, particularly for costly 

and complex major operational tests, because they add significant risks to 

those tests. 

DOD partially concurred with our third recommendation for MDA to 

include in its BMDS Accountability Report baselines the full program life 

cycle costs, including operations and support costs from military services. 

While DOD agreed that decision makers should have insight into the full 

life cycle costs of DOD programs, it did not identify how the full life-cycle 

costs could be reported to decision makers. DOD further stated that the 

BMDS Accountability Report should only include content for which MDA 

is responsible and that it did not consider the BMDS Accountability Report 

an appropriate forum for including military services operation and support 

costs for BMDS elements. However, good budgeting requires that the full 

costs of a project be considered when making decisions to provide 

resources and, therefore, both DOD and Congress would benefit from a 

comprehensive understanding of the full costs of MDA’s acquisition 

programs. DOD has reported full operation and support costs to 

Congress for major defense acquisition programs where one military 

service is leading the development of an acquisition planned to be 

operated by many military services. Limiting the baseline reporting for 

MDA acquisition programs to only MDA reported costs therefore 

precludes a full understanding of DOD’s acquisition commitments, 

particularly the resource demands on the military services that will 

operate and maintain the planned missile defense weapon systems. 

Because MDA already reports the estimated acquisition costs and some 

of the operation and support costs for the acquisitions in the annual 

BMDS Accountability Report, we believe that annual document to be the 

most appropriate way to report the full costs to Congress. We also 

continue to believe that including these costs in that report will aid both 

departmental and congressional decision makers as they make difficult 

choices of where to invest limited resources. 
 

Page 44 GAO-13-432 Missile Defense

DOD also concurred with our fourth recommendation to stabilize MDA’s 

acquisition baselines so that meaningful comparisons can be made over 

time. DOD stated in its response that MDA’s 2013 BMDS Accountability 

Report would contain both a one-year comparison between the current 

program baselines and the previously reported baselines as well as 

provide a longer-term comparison to the initial program baselines, when 

appropriate. DOD further stated that it is necessary to recognize that 

BMDS baselines change to respond to evolving requirements provided by 

other organizations and leaders, from the warfighters to the President, to 

counter changing threats. Finally, DOD stated that the MDA Director has 

authority to make these adjustments, within departmental guidelines. Our 

recommendation is not designed to limit the authority of the MDA Director 

to adjust baselines or prevent adjusting baselines when appropriate. As 

we reported in March 2005, a new baseline serves an important 

management control purpose when program goals are no longer 

achievable, because it presents an important perspective on the 

programs current status and acquisition strategy.59 Our recommendation 

to stabilize acquisition baselines is designed to address the issues we 

found that are within MDA’s control, such as prematurely setting 

baselines and decisions to move reported content between various 

program baselines. In order for MDA to effectively report longer-term 

progress of its acquisitions and provide necessary transparency to 

Congress, it will be critical for MDA to address these issues.

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

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

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

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

me at (202) 512-4841 or chaplainc@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

 

59GAO, Defense Acquisitions: Information for Congress on Performance of Major 

Programs Can Be More Complete, Timely, and Accessible, GAO-05-182 (Washington 

D.C.: Mar 28, 2005).
 

Page 45 GAO-13-432 Missile Defense

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix XII.

Cristina Chaplain

Director

Acquisition and Sourcing Management
 

Page 46 GAO-13-432 Missile Defense

List of Committees

The Honorable Carl Levin

Chairman

The Honorable James Inhofe

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Richard Durbin

Chairman

The Honorable Thad Cochran

Ranking Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Howard McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable C.W. Bill Young

Chairman

The Honorable Pete Visclosky

Ranking Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives
Appendix I: Scope and Methodology

Page 47 GAO-13-432 Missile Defense

To assess any progress and any remaining challenges of selecting new 

Ballistic Missile Defense System (BMDS) programs in which to invest, we 

identified two Missile defense Agency (MDA) programs that were in the 

initial acquisition stages, the Precision Tracking and Space System 

(PTSS) and the SM-3 Block IIB. For these programs, we reviewed 

documentation of Missile Defense Agency (MDA) and Department of 

Defense (DOD) reviews that program management officials considered 

similar to an analysis of alternatives, and compared this documentation to 

acquisition best practices for analysis of alternatives and DOD acquisition 

guidance.1 In addition, we examined recent legislation about a statutorily 

directed assessment of the PTSS and compared criteria written in the 

legislation to acquisition best practices for an analysis of alternatives.2

Finally, we interviewed MDA and DOD officials about any reviews 

conducted that were relevant to an analysis of alternatives.3

To assess any progress and any remaining challenges MDA faces in 

putting missile defense acquisitions on a sound development path, we 

reviewed MDA element acquisition strategies and compared them to our 

best practice criteria.

4 To assess the extent to which MDA achieved 

stated acquisition goals and objectives, we reviewed the 

accomplishments for several Ballistic Missile Defense System elements 

and supporting efforts that MDA is currently developing and fielding: the 

Aegis Ballistic Missile Defense (Aegis BMD) with Standard Missile-3 (SM3) Block IB; Aegis Ashore; Aegis BMD SM-3 Block IIA; Aegis BMD SM-3 

Block IIB; BMDS Sensors; Ground-based Midcourse Defense (GMD); 

PTSS; Targets and Countermeasures; and Terminal High Altitude Area 

Defense (THAAD). We reviewed data collection instruments that we 

submitted to several elements’ program offices. These instruments 

collected detailed information on schedule, cost, contracts, testing and 

 

1

GAO, Defense Acquisitions: Many Analyses of Alternatives Have Not Provided a Robust 

Assessment of Weapon System Options, GAO-09-665 (Washington, D.C.: September 

2009); and Homeland Security: DHS Requires More Disciplined Investment Management 

to Help Meet Mission Needs, GAO-12-833 (Washington, D.C.: Sept. 18, 2012).

2

Pub. L. No. 112-239, § 224. Also see GAO-09-665 and GAO-12-833. 

3

We did not assess the reviews beyond whether they included information relevant for an 

analysis of alternatives.

4

GAO, Defense Acquisitions: Assessments of Selected Weapon Programs, 

GAO-12-400SP (Washington, D.C.: Mar. 29, 2012); and Best Practices: Using a 

Knowledge-Based Approach to Improve Weapon Acquisition, GAO-04-386SP

(Washington, D.C.: January 2004).

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 48 GAO-13-432 Missile Defense

performance, and noteworthy progress during the fiscal year. In addition, 

we examined Baseline and Program Execution Reviews, test schedules 

and reports, and production plans, where appropriate. We also discussed 

element- and BMDS-level testing plans and progress by meeting with 

officials within element program offices and MDA functional directorates, 

such as the Directorates for Engineering and Testing. We also examined 

the agency’s Integrated Master Test Plan and discussed the elements’ 

test programs and test results with the BMDS Operational Test Agency 

and DOD’s Office of the Director of Operational Test and Evaluation.

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

faces in establishing program baselines that support oversight, we 

examined MDA’s reported baselines in the 2010, 2011, and 2012 BMDS 

Accountability Reports (BAR). We interviewed officials in MDA’s 

Acquisitions Directorate about how the agency is establishing and 

managing its internal baselines. We also met with MDA officials in the 

Operations Directorate to discuss their progress in adopting cost 

estimating best practices based on our Cost Guide.5 We reviewed 

findings from our July 2012 report, which compared MDA program 

schedules to best practices in schedule development.6 In addition, we 

examined DOD acquisition policy to discern how other major defense 

acquisition programs are required to report baselines and measure 

program progress. To gauge MDA element cost and schedule progress, 

we compared the resource and schedule baselines as presented in the 

2012 BAR to the 2010 baselines presented in the June 2010 BAR. In 

order to present consistent cost comparisons for unit costs calculated in 

different years, there were instances where it was necessary to convert 

unit costs from base year 2010 dollars to base year 2011 dollars.7 We 

performed these conversions using indexes published by the Office of the 

Secretary of Defense (Comptroller) in the National Defense Budget 

Estimates for Fiscal Year 2011, commonly referred to as the “Green 

Book.” The results of our reviews are presented in detail in the element 

appendixes of this report and are also integrated into our findings, as 

appropriate. We did not present BAR schedule and cost analysis for the 

 

5

GAO-09-3SP. 

6

GAO-12-720R and GAO, GAO Schedule Assessment Guide: Best Practices for Project 

Schedules, GAO-12-120G (Washington, D.C.: May 2012).

7

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

changes in these dollar amounts were not due to inflation. 
Appendix I: Scope and Methodology

Page 49 GAO-13-432 Missile Defense

Aegis BMD SM-3 Block IIA, Aegis BMD SM-3 Block IIB, or PTSS 

programs because these programs have not yet begun MDA’s product 

development phase and, subsequently, do not yet present baselines in 

the BAR. In addition, we narrowed our assessment of the Targets and 

Countermeasures baselines down to two medium-range targets, the 

extended medium-range ballistic missile and the extended long-range airlaunched target because they were originally planned to be launched for 

the first time in 2012.

To assess any acquisition progress and any remaining challenges 

developing and deploying ballistic missile defense systems for the 

European Phased Adaptive Approach, we reviewed relevant policy and 

acquisition documents. In addition, we examined MDA’s Integrated 

Master Assessment Plan; Integrated Master Test Plan; and Master 

Integration Plan to determine how MDA intended to test and assess its 

progress in developing and fielding BMDS capabilities. We also 

interviewed officials within MDA’s System Assessment Office to discuss 

how the agency planned to assess BMDS capabilities once they had 

completed development. We reviewed ground and flight test reports to 

determine the extent to which those capabilities were meeting 

performance expectations. Additionally, we examined Combatant 

Command, BMDS Operational Test Agency, and Office of the Director, 

Operational Test and Evaluation assessments of the first phase of U.S. 

missile defense in Europe. We also interviewed officials with U.S. 

Strategic Command’s Joint Functional Component Command for 

Integrated Missile Defense and U.S. Northern Command as well as MDA 

program offices and MDA functional directorates about MDA’s progress in 

developing and deploying ballistic missile defense systems needed for 

the defense of Europe and the United States. We also discussed BMDS 

capabilities demonstrated through testing with officials in the BMDS 

Operational Test Agency and Office of the Director, Operational Test and 

Evaluation.

To assess any progress and any remaining challenges in developing its 

models and simulations, we reviewed MDA’s Modeling and Simulation 

Master Plan as well as system-level verification and validation plan. We 

also met with MDA officials at the Missile Defense Integration and 

Operations Center as well as officials with the BMDS Operational Test 

Agency to understand the status of MDA’s modeling and simulation 

program, progress in resolving past issues, and future plans.

Towards the end of our audit work, in March 2013, the Secretary of 

Defense altered the existing plans for developing and deploying missile 
Appendix I: Scope and Methodology

Page 50 GAO-13-432 Missile Defense

defense systems in Europe and the United States for the protection of the 

United States. Specifically, the announcement canceled Phase 4 which 

planned to use Aegis BMD SM-3 Block IIB interceptors, and announced 

several other plans, including deploying additional ground based 

interceptors in Fort Greely, Alaska, and deploying a second AN/TPY-2 

radar in Japan. In April 2013, DOD proposed canceling the PTSS and 

Aegis BMD SM-3 Block IIB programs in the Fiscal Year 2014 President’s 

Budget Submission. Because the proposed cancellations and the release 

of the president’s budget occurred in the last few weeks of our audit, we 

were not able to assess and incorporate either the proposed cancellations 

or the latest budget information into our report. 

Our work was performed at MDA locations including their headquarters in 

Fort Belvoir, Virginia; various program offices in Dahlgren, Virginia, Falls 

Church, Virginia, and Huntsville, Alabama; the GMD element in Ft. 

Greely, Alaska; and MDA’s Integration and Operations center in Colorado 

Springs, Colorado. In Fort Belvoir, Virginia, we met with officials from 

MDA’s System Engineering Assessment Directorate. In Dahlgren, 

Virginia, we spoke with officials from the Aegis BMD program office, the 

Aegis Ashore program office, and the Aegis SM-3 Block IIA program 

office. In Falls Church, Virginia, we met with officials from the PTSS 

program office. In Huntsville, we interviewed program officials for the 

BMDS Sensors, GMD; Global Deployment, THAAD; and the Targets and 

Countermeasures program office. At that location, we also met with 

officials in MDA’s Acquisition, Engineering, Test, and Cost Directorates as 

well as with officials in MDA’s Advanced Technology Directorate who 

manage the Aegis BMD SM-3 Block IIB program.

We visited contractor facilities that we determined, based on MDA 

acquisition documentation, were working to address technical issues. 

These facilities are located in Huntsville, Alabama; Tucson, Arizona; 

Moorestown, New Jersey; and Salt Lake City, Utah. We discussed the 

latest GMD program test plans following flight test failures with Boeing 

officials in Huntsville. In addition, we met with Raytheon and Defense 

Contract Management Agency officials in Tucson to discuss the 

manufacturing of the Exoatmospheric Kill Vehicle and schedule issues for 

GMD, respectively. We also interviewed Raytheon officials in Tucson 

about various topics concerning the SM-3 Block IA, Block IB, and Block 

IIA programs. In Moorestown, we met with officials from Lockheed Martin 

to discuss the Aegis Ashore element with its SPY-1 radar. In Salt Lake 

City, we met with officials from Northrop Grumman to discuss their 

progress in addressing GMD flight test failures and their development of 

the new guidance system design.
Appendix I: Scope and Methodology

Page 51 GAO-13-432 Missile Defense

We also met with Combatant Commands and independent testing 

agencies in Colorado Springs, Colorado; Huntsville, Alabama; and 

Alexandria, Virginia. In Colorado Springs, we spoke with officials from 

U.S. Northern Command and the U.S. Strategic Command’s Joint 

Functional Component Command for Integrated Missile Defense. We 

interviewed officials from the BMDS Operational Test Agency in 

Huntsville to discuss MDA’s performance assessment, as well as its 

models and simulations. In Alexandria, Virginia, we met with the Director, 

Operational Test and Evaluation to discuss MDA’s test plans and results 

from recent testing.

We conducted this performance audit from March 2012 to April 2013 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Aegis Ballistic Missile Defense 

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

and Second Generation Weapon System 

Software

Page 52 GAO-13-432 Missile Defense

Recent Events

• First successful flight test intercept in May 2012. 

• Demonstrated improved discrimination capability in a 

June 2012 flight test. 

• Initial production decision delayed about two years to 

September 2013. 

• DOD approved upgrading Aegis ships to the second 

generation of aegis BMD weapon system software in 

March 2012. 

• Completion of maneuvering component qualification 

further delayed from third quarter fiscal year 2011 to the 

second quarter of fiscal year 2013. 

Overview

 MDA rectified many issues discovered during 2011 flight tests. 

 Concurrency continues to disrupt production and flight tests. 

 The program is planning improvements to software and missiles to 

counter more advanced threats. 

 Changes in funding, quantities as well as test issues affected cost 

and schedule baselines for the missile. 

 Second generation weapon system software: costs increased but 

schedule activities completed as planned. 

Aegis BMD SM-3 Block IB with second generation Aegis weapon system 

software is a sea-based missile defense system designed to intercept 

ballistic missiles during the middle part of their flight. Key components 

include the Aegis Weapons System software, SPY-1 radar, battle 

management and command and control systems, and SM-3 missiles.1

The Missile Defense Agency (MDA) is developing Aegis BMD in 

successive combinations of upgraded ship-based weapon system 

software and new versions of SM-3 missiles to improve defense against 

threat missiles with increased range and numbers. With the SM-3 Block 

IB and associated ship-based upgrades, the Navy anticipates expanding 

its defense capabilities against short-range ballistic missiles and mediumrange ballistic missiles, as well as some intermediate-range ballistic 

missiles. MDA expects to operationally deploy the SM-3 Block IB in 2014 

and make it available for use in defense of Europe in 2015.

The SM-3 Block IB missile features improvements over the Block IA with 

additional capabilities to identify, discriminate, and track objects during 

flight through an enhanced seeker and attitude control system for 

adjusting course. For example, the SM-3 Block IB seeker—a device used 

in missiles that locates a target by detecting light, heat, or other radiation 

 

1

Aegis BMD SM-3 Block IB missiles will also be deployed on land as part of the Aegis 

Ashore in the 2015 time frame for phase two of the European Phased Adaptive Approach.

Appendix II: Aegis Ballistic Missile Defense 

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

and Second Generation Weapon System Software

Background and Overview
Appendix II: Aegis Ballistic Missile Defense 

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

and Second Generation Weapon System 

Software

Page 53 GAO-13-432 Missile Defense

waves—senses information in two distinct types of radiation waves 

instead of one, improving its ability to identify multiple objects associated 

with a ballistic missile that are close together. The SM-3 Block IB also 

incorporates a new maneuver component, the Throttleable Divert and 

Attitude Control System (TDACS). The TDACS improves the ability of the 

missile to maneuver to its target. The Aegis BMD second generation 

weapon system software more accurately locates, discriminates, and 

tracks the threat objects and sends more refined data to the SM-3 Block 

IB in real time compared to the first generation weapon system software.

MDA slowed production of its SM-3 Block IA and Block IB in order to 

redesign components and incorporate fixes to address both a failure in 

the program’s first developmental flight test in September 2011 and a 

separate flight test anomaly in April 2011. In June 2012, the program 

executed the second of three intercept flight tests planned for fiscal your 

2012, that are needed to validate SM-3 Block IB capability. In October 

2012, the program was able to resume accepting deliveries. Some of the 

fixes to the issues from the September 2011 failed test are planned to be 

demonstrated in the next flight test planned during fiscal year 2013.

In the past year, the program identified the root cause of the September 

2011 flight test failure and incorporated fixes. The failure review team 

traced the cause of the failure to an abnormal performance of the third 

stage rocket motor during thrust pulses, which control the final maneuvers 

of the missile. To address this issue, the program developed a new 

version of the second generation Aegis weapons system to control the 

amount of time between the pulses. According to the Aegis program 

office, these changes will have minimal consequences on missile 

performance and ship operations. Although the program successfully reconducted the failed flight test in May 2012, it did so prior to implementing 

the software modifications and altered the scenario to avoid the 

malfunction. The program tested the modification in a February 2013 

flight test. While the intercept was successful, a thorough assessment of 

the test has not yet been issued. 

The program also determined the root cause of the anomaly in the April 

2011 SM-3 Block IA flight test. MDA determined that it was caused by a 

component of the third stage rocket motor that is common to both the SM3 Block IA and SM-3 Block IB missiles. After performing a redesign of the 

component that caused the anomaly, the program was able to 

successfully flight test this new design in June 2012.

MDA Rectified Many 

Issues Discovered During 

2011 Flight Tests
Appendix II: Aegis Ballistic Missile Defense 

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

and Second Generation Weapon System 

Software

Page 54 GAO-13-432 Missile Defense

In addition to verifying these fixes, the program demonstrated important 

new capabilities during its two successful fiscal year 2012 SM-3 Block IB 

flight tests. Its May 2012 flight test was the first intercept of a short-range 

ballistic missile target by the SM-3 Block IB with the second-generation 

Aegis BMD weapon system software. The test successfully demonstrated 

the capability to assess the success or failure of the intercept in real time, 

and gave the program additional insight into the improved capability of the 

missile to track and identify objects in space. During its June 2012 test, 

the missile intercepted a separating target when surrounded by debris. 

This test provided more insight into the missile’s enhanced ability to 

distinguish the lethal object from other objects.

The program’s continuing concurrency has disrupted production and 

testing over the past 3 years. The concurrency arose because MDA 

prematurely ordered more SM-3 Block IB missiles than needed for 

development before completing developmental qualification of a key 

component and before confirming the missile worked as intended in flight 

testing. Qualification is a step in development in which a component’s 

performance is tested in a variety of expected conditions it may 

operationally encounter. Qualification of components is normally 

completed prior to conducting developmental flight tests and before 

beginning production of missiles beyond the number needed for 

developmental testing. We made a recommendation in our February 2010 

report intended to address this concurrency risk.

Since that report, as developmental issues arose, MDA had to restructure 

both its production and test plans. For example, MDA was forced to 

reduce planned SM-3 Block IB quantities from 34 to 25 in fiscal year 

2011, to free up funding needed to redesign the TDACS. Then, following 

the failure of the first SM-3 Block IB flight test in 2011, MDA established a 

new program baseline, and requested an additional $149 million, in part 

to investigate the failure, and to implement and assess necessary 

modifications. MDA also reduced the 2012 procurement from 46 to 14 

missiles, delayed key production milestones by a year or more, and 

slowed delivery of SM-3 Block IB missiles already in production, 

accepting only missiles necessary for testing until modifications were 

validated. While this decision reduced the effects of the ongoing 

development issues, MDA’s premature commitment to quantities beyond 

those needed for testing had other consequences. Slowing down the 

acceptance of SM-3 Block IB deliveries and reducing near-term 

production resulted in the need for additional investments to sustain 

suppliers of various SM-3 Block IB components. Additionally, once again 

Concurrency Continues to 

Disrupt Production and 

Flight Tests
Appendix II: Aegis Ballistic Missile Defense 

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

and Second Generation Weapon System 

Software

Page 55 GAO-13-432 Missile Defense

the agency needed to extend the production of SM-3 Block IA missiles by 

purchasing 14 additional SM-3 Block IAs (a missile that shares many 

components with the SM-3 Block IB). MDA originally planned to end the 

production of SM-3 Block IAs in 2009 as production of the SM-3 Block IB 

began. However, it has needed to extend production three times in 2010, 

2011 and 2012 in order to bridge the production gaps. To date, MDA has 

contracted for 55 more SM-3 Block IA missiles than originally planned.

The TDACS qualification was completed in February 2013 after many 

delays and additional cost. As we reported in April 2012, MDA only 

partially completed qualification testing of this component before 

conducting the first unsuccessful SM-3 Block IB developmental flight test 

in September 2011. During 2012, the program experienced multiple 

issues completing TDACS qualification tests, including a failure in 

October. MDA is still determining the cause of the failure. According to 

program documentation, this investigation is expected to cost $27.5 

million. Although completion of qualification testing had previously been 

delayed over a year to the fourth quarter of fiscal year 2012, the recent 

issues further delayed the completion to February 2013.

These qualification issues are contributing to further cost growth, delays 

to the third flight test and preventing completion of the manufacturing 

readiness review. After the 2011 flight test failure occurred, MDA 

originally committed to completing three flight tests and a manufacturing 

readiness review prior to making a long lead production decision. The 

long lead decision begins the purchase of materials and components that 

must be procured earlier in order to maintain a planned production 

schedule. While the agency successfully completed two of those flight 

tests in 2012, it postponed the third, called FTM-19, to the third quarter of 

fiscal year 2013. The program estimates that this delay will cost the 

program an additional $16.7 million. MDA also held its manufacturing 

readiness review for the next procurement request in May 2012. This 

review demonstrated that the manufacturing processes were mature for 

most of the SM-3 Block IB components and demonstrated readiness for a 

manufacturing rate of two missiles per month. However, the program 

could not complete the review due to delays with the TDACS qualification. 

TDACS qualification issues have also contributed to delays for a long 

lead materiel production decision from December 2012 to February 2013, 

at an additional $19 million.

In order to avoid further disruptions to the production line, MDA plans to 

award the next production contract for some components of 29 additional 

missiles in February 2013—before the third flight test can verify the most 
Appendix II: Aegis Ballistic Missile Defense 

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

and Second Generation Weapon System 

Software

Page 56 GAO-13-432 Missile Defense

recent software modifications. According to program documentation, 

delaying this decision further until after the next flight test—currently 

slated for the third quarter of fiscal year 2013—could result in a 

production gap, requiring additional funding to maintain the industrial line. 

The program plans to award the contract for up to 29 whole missiles after 

the successful performance in the third quarter of fiscal year 2013 flight 

test. The program is at risk for costly retrofits, additional delays and 

further production disruptions if issues are discovered during this flight 

test.

The Aegis program officials are planning to make further improvements to 

the second generation Aegis weapon system software and to develop an 

enhanced capability SM-3 Block IB (upgraded SM-3 Block IB) to counter 

advanced threats expected after 2015. The program plans to complete 

the necessary software and firmware upgrades in July 2014, flight test it 

in fiscal year 2014, and field it by the 2015 time frame. Program officials 

project the effort to cost an estimated $86.6 million over the course of five 

years.

MDA’s Director approved a new baseline for the Aegis BMD SM-3 Block 

IB program in June 2011 and reported it in the 2012 BMDS Accountability 

Report (BAR). The new baseline addresses changes caused by the 

design modification of the TDACS.

MDA reported that the average cost to produce one Aegis BMD SM-3 

Block IB missile increased by 10 percent from the 2010 to the 2012 BAR 

because the program changed the way it funded initial spares. The 

program began funding initial spares and production engineering with 

procurement funds instead of development money. Because procurement 

funds are used for the production of operational assets, this accounting 

change increased the reported unit cost. Although this change was above 

the 5 percent reporting threshold that MDA established in its 2012 BAR, 

the $1 million dollar change in the average cost to produce a missile was 

not separately reported because the agency attributed this increase to an 

accounting change and not to real cost growth.

The 2012 reported average cost to develop and produce one Aegis BMD 

SM-3 Block IB missile decreased by approximately 30 percent from the 

2010 baseline because the total number of missiles planned increased by 

The Program Is Planning 

Improvements to Software 

and Missiles to Counter 

More Advanced Threats

Changes in Funding, 

Quantities As Well As Test 

Issues Affected Cost and 

Schedule Baselines for the 

Missile

Funding Changes and 

Increased Quantities Affected 

Aegis BMD SM-3 Block IB Unit 

Costs
Appendix II: Aegis Ballistic Missile Defense 

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

and Second Generation Weapon System 

Software

Page 57 GAO-13-432 Missile Defense

219 percent. The cost decreased because of efficiencies gained by 

producing more each year. Figure 3 shows the unit costs as reported in 

the 2010 and 2012 BMDS Accountability Reports.

Figure 3: Comparison of 2010 and 2012 BAR Reported SM-3 Block IB Unit Costs

The Aegis BMD SM-3 Block IB had a number of schedule delays caused 

by issues discovered in 2011 flight tests and issues discovered during 

qualification tests in 2012. The 2011 issues (1) contributed to delays to 

the program’s manufacturing readiness review and (2) affected the flight 

test schedule by adding one flight test in 2012 and delaying two others. 

Additionally, the missile’s maneuvering component failed a qualification 

test in 2012, which delayed the completion of its qualification program. 

The qualification delays coupled with the 2011 flight test issues have 

delayed the next flight test and the long lead production decision by over 

a year and delayed the initial production by two years. Figure 4 shows 

schedule changes made.

Test Issues Are Causing 

Schedule Delays 
Appendix II: Aegis Ballistic Missile Defense 

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

and Second Generation Weapon System 

Software

Page 58 GAO-13-432 Missile Defense

Figure 4: Schedule Assessment for Selected Aegis BMD SM-3 Block IB Activities in 

the BMDS Accountability Report

Note: All original dates for activities are based on baselines in the 2010 BAR unless noted otherwise.

a

Originally baselined in 2011 BAR.

Unit costs increased for the Aegis BMD second generation weapon 

system software because of decreased quantities and the inclusion of 

costs previously excluded. According to program officials, unit costs to 

upgrade to this new version of the software include installation of the 

software as well as hardware, such as computers and displays, to Aegis 

ships. The reported unit cost to upgrade to the Aegis BMD second 

generation weapon system software increased by over 50 percent from 

the originally anticipated unit cost reported in the 2010 BAR. In addition, 

the unit cost to both develop and upgrade to the second generation 

weapon system software increased by 10 percent from the reported 2010 

BAR cost. The majority of these cost increases occurred between 2010 

and 2011. MDA explained in 2011 that the increases to these unit costs 

were due to government costs, which were erroneously excluded from the 

2010 unit cost calculations but were included in the 2011 BAR unit costs. 

In addition, the unit cost to both develop and upgrade to the second 

generation software increased in part because of a decrease in the 

number of ships receiving the installations. Figure 5 shows the unit costs 

as reported in the 2010 and 2012 BMDS Accountability Reports.

Second Generation 

Weapon System Software: 

Costs Increased but 

Scheduled Activities 

Completed As Planned.
Appendix II: Aegis Ballistic Missile Defense 

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

and Second Generation Weapon System 

Software

Page 59 GAO-13-432 Missile Defense

Figure 5: Comparison of 2010 and 2012 BAR Reported Aegis BMD Second 

Generation Weapon System Software Unit Costs

MDA began installing the second generation Aegis Weapons System 

software as planned for two ships in fiscal year 2012 with only a minor 

schedule slip in the planned installation for a third Aegis BMD ship. After 

installations are complete, there will be four second generation Aegis 

capable ships in the fleet.
Appendix III: Aegis Ashore with Modernized 

Weapon System Software

Page 60 GAO-13-432 Missile Defense

Recent Events

• Awarded deckhouse construction contract.

• Started construction of Romania facility.

• Completed system critical design review.

• Established baseline for the Poland Aegis Ashore 

facility.

• Requested radio-frequency spectrum allocation for the 

Romania Aegis Ashore facility.

Overview

 Aegis Ashore made design and construction progress in fiscal year 

2012.

 Aegis Ashore schedule remains challenging.

 Concurrent development and production has increased.

 Aegis Ashore faces continued challenges related to radio-frequency 

spectrum.

 Total estimated costs have increased from $813 million to $1.6 

billion, but progress cannot be assessed because of baseline 

instability.

 MDA established new baselines for its Poland site. 

 Large adjustments to schedule baseline limited insight into program 

progress.

Aegis Ashore is planned to be a land-based, or ashore, version of the 

ship-based Aegis BMD. Aegis Ashore is to track and intercept ballistic 

missiles in the middle of their flight using SM-3 interceptors. Key 

components include a vertical launching system with SM-3 missiles and 

an enclosure, referred to as a deckhouse, that contains the SPY-1 radar 

and command and control system. Aegis Ashore will share many 

components with the sea-based Aegis BMD and will use future versions 

of the Aegis weapon system that are still in development. MDA plans to 

equip Aegis Ashore with a modified version of the Aegis weapon system 

software developed jointly with the Navy as part of its modernization 

program. The new software is to integrate Aegis ship anti-air defense with 

ballistic missile defense, expanding the number of Aegis ships that are 

capable of ballistic missile defense. The modified version of the Aegis 

weapon system software that is planned for Aegis Ashore is to retain the 

ballistic missile defense capabilities being developed and suppress or 

otherwise disable the other capabilities. DOD plans to deploy Aegis 

Ashore in Romania with the SM-3 Block IB in the 2015 time frame and in 

Poland in the 2018 time frame.

A total of three Aegis Ashore facilities are planned. The program is 

currently constructing two of these facilities—an operational facility 

planned for Romania and a second facility for developmental testing in 

Hawaii. The Romanian facility is to be constructed and undergo Aegis 

radar testing in New Jersey before being shipped to Romania. The 

Hawaiian test facility is to begin construction after the Romanian 

Appendix III: Aegis Ashore with Modernized 

Weapon System Software

Background and Overview
Appendix III: Aegis Ashore with Modernized 

Weapon System Software

Page 61 GAO-13-432 Missile Defense

operational deckhouse construction is underway. The construction plans 

for the Poland Aegis Ashore site have not been finalized, but the 

construction could potentially begin in fiscal year 2015.

Included in this appendix are analyses of the cost and schedule baselines 

for the Aegis weapon system modernization effort, which, while it will be 

used by Aegis Ashore, will also be used by Aegis BMD ships.

Aegis Ashore completed key engineering design reviews in fiscal year 

2012, determining that the design meets program requirements as well as 

cost, schedule, and reliability targets. The program successfully 

completed its system critical design review in December 2011. In 

addition, the deckhouse design was 100 percent completed in February 

2012 indicating that the design may be stable and could meet 

requirements.

In fiscal year 2012, the program began construction in New Jersey for the 

Romanian Aegis Ashore facility. The program had to design the facility so 

that it could be reconstituted—or disassembled and ready for transport to 

another location within 120 days. As a result, the program is using 

skids—which are flat surfaces on which deckhouse equipment is secured 

and slid into place. During fiscal year 2012, the program built the skids 

and started loading the equipment. Officials for the contractor told us that 

as of October 2012, the majority of the skids had been completed. In 

addition, in early fiscal year 2013 the program received congressional 

authorization to exchange equipment originally planned for one of the 

Navy’s Aegis BMD destroyers with equipment planned for Romania. 

Without this approval, the equipment needed for the Romanian facility 

would not have been ready in time.

The program also awarded a contract for the Hawaiian test site in June 

2012 and began site preparation and construction.

While the program made significant progress in fiscal year 2012, its 

schedule is difficult because of extremely limited time between events. 

Further, according to program documentation the greatest risk to the 

program is meeting the established schedule particularly (1) integration 

testing in Hawaii and New Jersey, (2) potential shipping or transportation 

delays, and (3) construction delays for the operational and test facilities.

Aegis Ashore Made Design 

and Construction Progress 

in Fiscal Year 2012

Aegis Ashore Schedule 

Remains Challenging
Appendix III: Aegis Ashore with Modernized 

Weapon System Software

Page 62 GAO-13-432 Missile Defense

Program management officials stated they are confident that they will 

meet the commitment to field the Romania facility by 2015. In addition, 

officials for the contractor stated that while they previously had concerns 

about the schedule, the progress made during fiscal year 2012 and the 

current pace of the work underway had relieved these concerns.

However, there were delays in fiscal year 2012 that may affect the 

schedule. There was a delay in the contract award for deckhouse 

construction that postponed the first risk reduction flight test by one 

quarter to the third quarter of fiscal year 2014. The Aegis Ashore 

schedule contains more risk before this flight test and less risk between 

that test and the planned fielding in Romania. Program management 

officials told us they organized the schedule in this way to increase the 

amount of time to resolve any issues that emerge from the flight test. With 

the delay in the test flight, the time available to resolve issues, however, 

has been reduced.

The Aegis Ashore program continues to follow a concurrent acquisition 

strategy with elevated levels of acquisition risk. We reported in April 2012 

that given the plan to field Aegis Ashore by the 2015 time frame, the 

program’s schedule contains a high level of concurrency—buying weapon 

systems before they demonstrate, through testing, that they perform as 

required.1 Further, under such a strategy, problems are more likely to be 

discovered in production, when it is too late or very costly to correct them. 

The MDA Director stated in March 2012 that Aegis Ashore development 

is low risk because of its similarity to the sea-based Aegis BMD.2

However, we reported in April 2012 that the short amount of time for 

integrating and fielding Aegis Ashore could magnify the effects of any 

problems that arise.3

MDA recently increased the concurrency for the remaining effort. We 

reported in April 2012 that the first intercept test would not occur until the 

second half of fiscal year 2014, at which point two of the three 

deckhouses would already be completed, and Aegis Ashore site 

 

1

GAO-12-486. 

2

In March 2012, the MDA Director was Lieutenant General Patrick O’Reilly. At the present 

time, the MDA Director is Vice Admiral James Syring.

3

GAO-12-486. 

Concurrent Development 

and Production Has 

Increased
Appendix III: Aegis Ashore with Modernized 

Weapon System Software

Page 63 GAO-13-432 Missile Defense

construction and interceptor production well under way.4 MDA now plans 

to order long-lead materials for the final Aegis Ashore site in Poland in 

January 2014—prior to conducting any of the developmental flight tests. 

Although the program is to procure materiel already used by the seabased Aegis, committing to all three planned Aegis Ashore facilities prior 

to demonstrating that the system works as intended puts the program at 

risk for costly rework should issues be discovered during testing.

Radio-frequency spectrum is used to operate both the SPY-1 radar used 

by Aegis BMD, as well as provide an array of wireless communication 

services to the civilian community, such as mobile voice and data 

services, radio and television broadcasting, and satellite-based services. 

According to guidance on spectrum management from the International 

Telecommunication Union, because of the potential overlap and 

interference between these different uses, radio-frequency is regulated by 

countries.5 In particular, given that it is a shared resource, national 

governments monitor and manage frequencies to prevent and eliminate 

harmful interference. According to the guidance, in the European Union, 

national standards reflect European standards and national policy is to 

implement European policy. In March 2011 and April 2012, we raised that 

Aegis Ashore faces two issues related to radio-frequency spectrum: (1) 

the possibility that the SPY-1 radar might interfere with host nation 

wireless usage; and (2) the program and the relevant host nation 

authorities must work together to ensure that host nations approve use of 

the operating frequency needed for the SPY-1 radar.

Program management officials told us that they are analyzing whether or 

not the SPY-1 radar’s frequency usage would interfere with wireless 

usage in Romania. They expect to conclude this analysis in 2013. 

Although program management officials stated that the program could 

address potential frequency interference, they also stated that some 

potential adjustments could be costly and would have unknown effects on 

the radar’s operational capability. In addition, a program management 

 

4

GAO-12-486. 

5

The International Telecommunication Union is an international organization within the 

United Nations System where governments and the private sector coordinate global 

telecom networks and services. The guidance mentioned is International 

Telecommunication Union Report ITU-R SM.2093-1 (09/2010) Guidance on the 

Regulatory Framework for National Spectrum Management.

Aegis Ashore Faces 

Continued Challenges 

Related to RadioFrequency Spectrum
Appendix III: Aegis Ashore with Modernized 

Weapon System Software

Page 64 GAO-13-432 Missile Defense

official stated a preference to not make changes to Aegis Ashore or its 

operating frequency, both because of the cost of such changes and a 

desire to ensure limited differences between Aegis Ashore and Aegis 

BMD ships.

The program has requested the use of the SPY-1 operating frequency in 

Romania. The program has identified this request as a top issue for Aegis 

Ashore.

Instability in the Aegis Ashore program’s resource baseline makes it 

impossible to understand annual or longer-term progress by comparing 

the latest reported estimates to the prior year baseline or the original 

baseline. In order for baselines to be useful for managing and overseeing 

a program, they need to be stable over time so progress can be 

measured and so that decision makers can determine how best to 

allocate limited resources. The total estimated costs for an Aegis Ashore 

in Romania and Hawaii have increased from $813 million to $1.6 billion 

from the time the program first established baselines to the estimate 

reported in the February 2012 BMDS Accountability Report (BAR).

As we reported in April 2012, MDA prematurely set the Aegis Ashore 

baseline in 2010 before program requirements were understood and 

before the acquisition strategy was firm.6 The program established its 

baseline for product development in June 2010 with a total cost estimate 

of $813 million. However 3 days later, when the program submitted this 

baseline to Congress in the 2010 BAR, it increased the total cost estimate 

by 19 percent to $966 million. The program attributed these changes to 

refined program requirements and a review of earlier estimates.

Since that time, the program has repeatedly added and moved a 

significant amount of content to both its resource and schedule baselines 

to respond to acquisition strategy changes and requirements that were 

added after the baseline was set. For example, in the 2012 BAR, the cost 

to complete these efforts increased to $1.6 billion because the program 

added costs that were previously accounted for under another program 

and added costs that were a part of the program but had not been 

included in prior BAR baselines. In addition, the program’s unit cost 

 

6

GAO-12-486. 

Total Estimated Costs 

Have Increased from $813 

million to $1.6 billion, but 

Progress Cannot Be 

Assessed Because of 

Baseline Instability
Appendix III: Aegis Ashore with Modernized 

Weapon System Software

Page 65 GAO-13-432 Missile Defense

baselines were significantly affected by new requirements for the program 

to pay for its deckhouse construction costs with development money 

instead of military construction funds. However, despite these changes, 

the resource baseline still does not include all costs associated with Aegis 

Ashore—such as for the Aegis Ashore adjustments needed to the Aegis 

BMD modernized weapon system software.

The Aegis Ashore program rebaselined its estimates for the Romania and 

Hawaii facilities in June 2012, which resulted in a minor increase to its 

total cost estimate. A program management official stated that program 

costs will continue to change as future contracts, most of which are Navy 

contracts outside of the control of the program, are negotiated. However, 

the official stated that the 2013 BAR should report more concrete costs as 

more contracts will have been negotiated.

In July 2012, MDA established a resource baseline for the Poland Aegis 

Ashore facility. The Poland baseline, with a total estimated cost to 

develop and procure the facility of $746 million, includes MDA operations 

and support, disposal, global deployment, military construction, and 

production and deployment costs. Based on these new baselines, the 

MDA reported costs of all three Aegis Ashore facilities is $2.3 billion. It 

remains unclear what if any costs would be borne by other DOD 

organizations, such as the Navy, to operate and maintain these facilities 

over time.

MDA’s many adjustments to the Aegis Ashore schedule baseline content 

affected our ability to assess progress. Many new activities were added in 

2012. In addition, comparing the estimated dates for scheduled activities 

listed in the 2012 BAR to the dates baselined in the 2010 BAR is 

impossible in some cases because activities from the 2010 BAR were 

split into multiple events, renamed, or eliminated all together in the 2012 

BAR. MDA also redistributed planned activities from the Aegis Ashore 

schedule baselines into several other Aegis BMD schedule baselines. For 

example, activities related to software for Aegis Ashore were moved from 

the Aegis Ashore baseline and were split up and added to two other 

baselines for the Aegis second generation and modernized weapon 

system software. Rearranging content made it impossible to track the 

progress of some of these activities against the prior year and original 

baselines. While we were not able to track all of the scheduled events 

from prior years, there were a selected number of activities we were able 

to track, for which we provide an assessment below.

MDA Established New 

Baselines for Its Poland 

Site 

Large Adjustments to 

Schedule Baseline Limited 

Insight into Program 

Progress
Appendix III: Aegis Ashore with Modernized 

Weapon System Software

Page 66 GAO-13-432 Missile Defense

Due to schedule pressures experienced in 2011, the program adopted a 

new deckhouse acquisition strategy in fiscal year 2011, in which the test 

deckhouse and first operational deckhouse are constructed concurrently, 

that changed the previous schedule for many activities. While the 

program was able to hold the system-level critical design review with only 

a quarter slip, many of the key events that were planned in fiscal years 

2012 and 2013 were delayed a year or more. For example, confirmation 

of the deckhouse design was delayed by a year and a half to the third 

quarter of fiscal year 2013, and demonstrating the Aegis Ashore 

capability integrated in the deckhouse slipped one year to the fourth 

quarter of fiscal year 2013. In addition, the planned date to demonstrate 

Aegis Ashore’s ability to be moved to a new location and reconstituted 

has been delayed approximately 2.5 years to the fourth quarter of fiscal 

year 2015 as seen in figure 6.

Figure 6: Schedule Assessment for Selected Aegis Ashore Activities in the BMDS Accountability Report

Note: All original dates for activities are based on baselines in the 2010 BAR unless noted otherwise.

a

Originally baselined in 2012 BAR.
Appendix III: Aegis Ashore with Modernized 

Weapon System Software

Page 67 GAO-13-432 Missile Defense

The Navy and MDA are developing a modernized version of the Aegis 

weapon system software for fleet wide use and use with Aegis Ashore. 

The Aegis modernized weapon system software is being developed in 

two versions: the first integrates the Aegis BMD second generation 

weapon system software with Aegis ship anti-air defense capabilities, 

while the second contains a Capability Upgrade to improve on the types 

and the numbers of ballistic missiles this system can engage. The 

Capability Upgrade version of the software was added to the baseline for 

the first time in the February 2012 BAR. Aegis Ashore is planned to 

initially be deployed with the Capability Upgrade version.

Between the 2010 and 2012 BAR, the reported unit costs for the 

modernized weapon system software increased significantly, as seen in 

figure 7, because the estimates now include additional funds for a new 

software version and other efforts needed to adapt it for the Aegis 

Ashore. For example, the unit cost to upgrade to the modernized software 

increased by 29 percent and the unit cost to develop and upgrade to the 

modernized software increased by 33 percent from the baselines 

originally reported in the 2010 BAR. These unit costs increased because 

the total estimated development costs for the Aegis BMD modernized 

weapon system software increased by 30 percent to include costs for an 

Aegis Ashore computer program as well as the new Capability Upgrade 

version of the software. Although these unit cost changes were above the 

5 percent reporting threshold that MDA established, they were not 

separately reported because the agency attributed these increases to 

expanded program content and not to real cost growth.

Addition of Activities for 

Aegis Ashore and New 

Software Version 

Increased Unit Costs for 

Modernized Weapon 

System Software and 

Rearranged Schedule 

Baselines

Unit Costs Increased after 

Adding a New Software Version 

and Activities to Adapt It to 

Aegis Ashore
Appendix III: Aegis Ashore with Modernized 

Weapon System Software

Page 68 GAO-13-432 Missile Defense

Figure 7: Comparison of 2010 and 2012 BAR Reported Aegis BMD Modernized 

Weapon System Software Unit Costs

In 2012, MDA consolidated the existing baseline for modernized Aegis 

software with activities required to adapt it to operate on land in Aegis 

Ashore. In addition, the original baseline was expanded to include 

activities for the development of the capability upgrade version of the 

software. Because of these changes, it was impossible to track the 

progress for all previously baselined activities. Selected activities we were 

able to track are discussed below.

The modernized Aegis weapon system software program met many of its 

schedule goals in fiscal year 2012 and early 2013, with only small delays. 

For example, the program delivered the modernized weapon system 

software for installation on a Navy destroyer in the third quarter of fiscal 

year 2012, after a minor delay. The most significant delay was in the 

demonstration of ballistic missile defense capabilities for the system 

software which was delayed by almost two fiscal quarters. Specifically, 

the program encountered challenges with integrating the multi-mission 

Consolidating Existing 

Schedules with New Efforts 

Obscures Schedule Progress 
Appendix III: Aegis Ashore with Modernized 

Weapon System Software

Page 69 GAO-13-432 Missile Defense

signal processor—a key component responsible for integrating ballistic 

missile defense and anti-air defense capabilities so they can be executed 

simultaneously. The program demonstrated a full system integration of 

anti-air defense and ballistic missile defense capability in the first quarter 

of fiscal year 2013, as seen in figure 8.

Figure 8: Schedule Assessment for Selected Modernized Aegis Weapon System 

Software Activities in the BMDS Accountability Report

Note: All original dates for activities are based on baselines in the 2010 BAR unless noted otherwise.

a

Originally baselined in 2012 BAR.
Appendix IV: Aegis BMD SM-3 Block IIA with 

Third Generation Aegis Weapons System 

Software

Page 70 GAO-13-432 Missile Defense

Recent Events

• Completed a key engineering review—the system-level 

preliminary design review.

• Signed a contract for the remainder of the cooperative 

development program.

• Started component critical design reviews.

Overview

 Program successfully completed its preliminary design review.

 Program faces technology development challenges.

 Program faces key decisions on plans for the SM-3 Block IIA 

following the completion of the cooperative development program.

The SM-3 Block IIA is the third SM-3 version to be developed for use with 

the sea-based and future land-based Aegis BMD. Most of the SM-3 Block 

IIA components will differ from the versions used in the SM-3 Block IB, so 

technology has to be developed for the majority of the SM-3 Block IIA 

components. The SM-3 Block IIA will be configured with a kill vehicle on 

top of three stages of rocket motors. The first two rocket motors will 

propel the missile and then the third stage rocket motor will lift the missile 

out of the atmosphere and direct the kinetic kill vehicle into its intended 

target. The kill vehicle will have a throttleable divert and attitude control 

system that is used to adjust its course as it nears the threat. The kill 

vehicle will also be enclosed by a nosecone covering the top of the 

missile. This missile is planned to have increased range compared to 

earlier SM-3s. The SM-3 Block IIA is also planned to have more sensitive 

seeker technology and an advanced kill vehicle compared to the SM-3 

Block IB. The SM-3 Block IIA is expected to defend against medium- and 

intermediate-range ballistic missiles.

Initiated in 2006 as a cooperative development program with Japan, the 

SM-3 Block IIA is planned to be fielded with the third generation Aegis 

weapon system software by the 2018 time frame as part of the third 

phase of the U.S. missile defense in Europe. Because the program is in 

the technology development phase, the SM-3 Block IIA does not have 

cost, schedule, or performance baselines.

In March 2012, the program held and successfully completed the system 

preliminary design review, meaning the program was able to demonstrate 

that the technologies and resources available for the SM-3 Block IIA 

could result in a product that matched its requirements. The program 

completed this review after delaying it for more than one year to address 

technology development problems with four of its components. Although 

adjustments made in 2011 to recover from issues with these components 

Appendix IV: Aegis BMD SM-3 Block IIA with 

Third Generation Aegis Weapons System 

Software 

Background and Overview

Program Successfully 

Completed Its System 

Preliminary Design Review
Appendix IV: Aegis BMD SM-3 Block IIA with 

Third Generation Aegis Weapons System 

Software

Page 71 GAO-13-432 Missile Defense

increased estimated program development costs by $296 million, we 

reported in April 2012 that these adjustments may reduce future cost 

growth and reduce acquisition risk.1

Because the SM-3 Block IIA program is currently in MDA’s technology 

development phase, its efforts are primarily focused on developing and 

maturing its technology. During the program’s preliminary design review, 

several important technical issues were identified that may affect program 

progress and those issues increased in significance after the review. 

These technology challenges could lead to delays to the program’s critical 

design review schedule. They affect key components such as the 

nosecone and second and third stage rocket motors. For these issues, 

the program has either identified the cause, redesigned some 

components which it will need to test to ensure they work as intended, or 

determined the path to resolve the issue.

In addition, the program experienced some problems in fiscal year 2012 

developing the new throttleable divert and attitude control system, which 

has historically been a challenge for SM-3 development—particularly for 

the SM-3 Block IB. During fiscal year 2012, the program experienced 

delays obtaining a part needed for this system from one of its suppliers. 

Because the part has no substitute or alternate supplier, concerns were 

raised about the delays affecting the program schedule. However, the 

contractor and program are working to ensure the throttleable divert and 

attitude control system and its components do not affect the program 

schedule. Program management officials told us they are applying SM-3 

Block IB program lessons learned.

SM-3 Block IIA program is preparing for key decisions on integration, 

testing, and production after the initial cooperative development project is 

completed, currently scheduled for fiscal year 2017. Any decisions it 

makes will affect the overall program cost and timing. For example, 

program officials have stated that the program has not yet determined the 

number of development and production rounds to be produced after the 

first 22 development and 12 initial production rounds have been 

delivered. In addition, any decisions on future production plans will 

 

1

GAO-12-486. 

Program Faces Technology 

Development Challenges

Program Faces Key 

Decisions on Plans for the 

SM-3 Block IIA Following 

the Completion of the 

Cooperative Development 

Program
Appendix IV: Aegis BMD SM-3 Block IIA with 

Third Generation Aegis Weapons System 

Software

Page 72 GAO-13-432 Missile Defense

require negotiations with Japan since many key components on the 

missile are developed there.
Appendix V: Aegis BMD SM-3 Block IIB with 

Third Generation Aegis Weapons System

Software

Page 73 GAO-13-432 Missile Defense

Recent Events

• In April 2013, the Department of Defense (DOD) 

proposed canceling the Aegis BMD SM-3 Block IIB 

program. 

• MDA redirected some fiscal year 2012 funds to the 

program to address a significant fiscal year 2012 

funding reduction. 

• Navy approved the consideration of liquid propellants 

for the SM-3 Block IIB during early program stages.

Overview

 MDA revised the schedule due to fiscal year 2012 budget 

reductions. 

 Program plans to reduce concurrency and is benefiting from 

competition. 

 Navy decision to consider liquid propellants enables MDA to 

consider missile design options with varying capabilities and risks.

 Program did not conduct an analysis of alternatives—a key step to 

ensuring a sound basis for a new program.

 

The SM-3 Block IIB is a planned Aegis BMD interceptor intended to 

contribute to the defense of the United States by providing the first tier of 

a layered defense against some intercontinental ballistic missiles. It is 

also expected to contribute to regional defense against medium- and 

intermediate-range ballistic missiles. The SM-3 Block IIB program began 

in June 2010 and entered the technology development phase in July 

2011. Given its early stage of development, the SM-3 Block IIB does not 

have cost, schedule or performance baselines and is not managed within 

the Aegis BMD program office. Instead, this program has a tentative 

schedule and is being managed within MDA’s Advanced Technology 

office. It is gradually transitioning management to the Aegis BMD program 

office, a transfer that is planned to be completed by fiscal year 2015. The 

SM-3 Block IIB is planned to be fielded by 2022 at the earliest as part of 

the fourth phase of U.S. missile defense in Europe.

The SM-3 Block IIB plans to use a third generation version of the Aegis 

Weapon System software that is still in development.

Towards the end of our audit work, DOD proposed canceling of the Aegis 

BMD SM-3 Block IIB program in April 2013, in the Fiscal Year 2014 

President’s Budget Submission. Because the proposed cancellation 

occurred in the last few weeks of our audit, we were not able to assess 

the effects of the program’s proposed cancellation and incorporate this 

information into our report.

The fiscal year 2012 budget reduced SM-3 Block IIB funding by nearly 90 

percent, from $123 million to $13 million. DOD reduced the budget in 

response to congressional concerns about concurrency in the program’s 

schedule and other concerns about the mission of the program. In order 

to maintain some program activities, including the work of three 

Appendix V: Aegis BMD SM-3 Block IIB with 

Third Generation Aegis Weapons System 

Software 

Background and Overview

MDA Revised the Schedule 

Due To Fiscal Year 2012 

Budget Reductions
Appendix V: Aegis BMD SM-3 Block IIB with 

Third Generation Aegis Weapons System 

Software

Page 74 GAO-13-432 Missile Defense

contractors that are developing possible concepts for the missile, the 

agency redirected $15 million in funds originally intended for other 

programs. However, to manage the program within the new budget, the 

program revised its schedule to delay key events—most notably, the 

planned initial capability of the SM-3 Block IIB, which slipped from 2020 to 

2021. Program management officials stated that the initial capability has 

been delayed further—to 2022—due to the continuing resolution enacted 

in fiscal year 2012.

In fiscal year 2012, the program planned to reduce concurrency by 

delaying product development until after a key design review is held. We 

reported in April 2012 that the program planned to award the contract for 

product development prior to holding its preliminary design review.1 This 

sequence would have committed the program to developing a product 

with less technical knowledge than our prior work on acquisition best 

practices has shown is needed, and without fully ensuring that 

requirements are defined, feasible, and achievable within cost, schedule, 

and other system constraints. DOD concurred with a recommendation we 

made in our April 2012 report to address this concurrency risk. The 

program does not yet have a final acquisition strategy, but, based on its 

current tentative plans, the concurrency in the program schedule has 

decreased. MDA adjusted the program’s tentative schedule to delay the 

start of product development until after the preliminary design review, a 

sequencing that will increase technical knowledge prior to committing to 

development. Further, the revised tentative schedule postpones the start 

of product development until fiscal year 2017, which allows the program 

additional time to mature key technologies.

In addition, the program continues risk reduction activities—although it 

has had to limit its efforts to focus on key components because of fiscal 

year 2012 funding limitations. We reported last year that the program was 

using risk reduction contracts to develop technologies that could cut 

across versions of the SM-3. During fiscal year 2012 the program 

reported several significant developments related to risk reduction for the 

focal plane array, which is a component that helps the missile identify 

targets, as well as the divert and attitude control system, which 

maneuvers the warhead toward the target. For example, the program 

 

1

GAO-12-486. 

Program Plans to Reduce 

Concurrency and Is 

Benefitting from 

Competition 
Appendix V: Aegis BMD SM-3 Block IIB with 

Third Generation Aegis Weapons System 

Software

Page 75 GAO-13-432 Missile Defense

completed development, fabrication, and testing of the first focal plane 

arrays. In addition, it completed a design prototype for a third stage rocket 

motor that meets key SM-3 Block IIB requirements.2 We reported in April 

2012 that these risk-reduction efforts may improve performance across 

the SM-3 variants.3

In fiscal year 2012, the program also reported benefits from competition 

among contractors through a better understanding of the program’s 

progress, possibilities for the missile, and risks associated with those 

possibilities. The program continues to utilize three contractors to develop 

concepts during the technology development phase. In April 2012, we 

reported on the benefits of competition among contractors, particularly the 

increase in technical innovation.4

The SM-3 Block IIB is being designed for deployment on both Aegis BMD 

ships and on land. The SM-3 Block IIB program has been considering 

missile concepts with two options for the diameter of the interceptors—

either 27 or 22 inches—and two options for propellants for a maneuvering 

component—either liquid or solid. To be ship compatible means that the 

program must consider Navy needs and requirements when developing 

the specifications of the SM-3 Block IIB. While recent Navy decisions 

have allowed the program to consider a variety of options for the SM-3 

Block IIB, there are associated cost and schedule risks associated with 

each of these missile configurations.

In 2012, the Navy decided that the program could consider liquid 

propellants. The Navy banned the use of liquid propellants on ships in 

1988 due to the potential for substantial ship damage, crew injury and 

loss of life from unintended explosive incidents with liquid propellants. In 

the summer of 2012 the Navy reaffirmed this position in regards to the 

SM-3 Block IIB. However, in October 2012 the Navy determined it would 

allow the program to develop concepts for the SM-3 Block IIB that use 

liquid propellants. While the Navy memo allowed these concepts to be 

explored in the early stages of the program, the memo was not a final 

 

2

The third stage rocket motor is used to lift the missile out of the atmosphere and direct 

the kinetic warhead to the target.

3

GAO-12-486. 

4

GAO-12-486. 

Navy Decision to Consider 

Liquid Propellants Enables 

MDA to Consider Missile 

Design Options with 

Varying Capabilities and 

Risks 
Appendix V: Aegis BMD SM-3 Block IIB with 

Third Generation Aegis Weapons System 

Software

Page 76 GAO-13-432 Missile Defense

decision to allow the use of liquid propellants on ships. Liquid propellants 

can provide performance increases, more speed and range, compared to 

solid propellants but at a greater safety risk. However, the Navy also 

stated in its summer 2012 memo, that if the program decided to use liquid 

propellants on a ship, an expensive and lengthy development effort would 

be needed to reduce the safety risks of having liquid propellants on a ship 

to an acceptable level. In addition, because of the technology issues 

associated with undertaking this effort, there would be no assurance the 

outcome would be successful. Further, many ship modifications will be 

required across multiple ship classes.

In addition, the October memo stated that the Navy was open to 

accepting modifications to its vertical launch system, which is a missile 

launching system that is already installed on Aegis ships and will be used 

at Aegis Ashore facilities. The 27-inch diameter missile would provide 

more capabilities over the 22-inch diameter missile. However, it would 

require at least some modifications to the vertical launch system, because 

of its larger diameter than other missiles used by the system, which could 

increase costs. A smaller, 22-inch diameter missile would not require 

such modifications.

Concept and technology development are still ongoing, and the program 

has not decided the diameter or type of propellant. Although the smaller 

22-inch diameter missile with solid propellant would likely be a lower risk 

and cost option, both the Navy and MDA have noted that the capability 

limitations are significant. However, pursuing a larger, 27-inch diameter 

missile with liquid propellant, while it could provide many of the needed 

capabilities, might also introduce significant cost and schedule risks for 

the program, in part due to the safety risks associated with liquid 

propellants on ships. The program tentatively plans to select a 

configuration for its SM-3 Block IIB in fiscal year 2015.
Appendix V: Aegis BMD SM-3 Block IIB with 

Third Generation Aegis Weapons System 

Software

Page 77 GAO-13-432 Missile Defense

We have previously reported that the SM-3 Block IIB program did not 

conduct a formal analysis of alternatives (AOA) prior to beginning 

technology development. We were requested in 2012 to assess the 

extent to which an AOA was conducted for the program.5 AOAs provide 

insight into the technical feasibility and costs of alternatives by 

determining if a concept can be developed and produced within existing 

resources. Although MDA is not required to do an AOA for its programs 

because of its acquisition flexibilities, we have previously reported that an 

AOA can be a key step to ensure that new programs have a sound 

acquisition basis.6

While program management officials identified two reviews that they 

consider similar to an AOA, the reviews were not intended to be AOAs, 

and they did not address all of the key questions that would normally be 

included as part of an AOA. For example, the reviews did not consider the 

life-cycle costs for each alternative or the programmatic risks of the 

alternatives. Further, while the reviews did consider alternatives that 

could provide validated capabilities, the range of alternatives considered 

did not include non-Aegis missile options that could provide an additional 

layer defense of the United States. This narrow range of alternatives is 

particularly problematic because it limits the quality of the answers that 

can be provided for other key questions.

As the program has progressed, additional analysis has led to changes in 

the initial program assumptions and results that suggest additional 

development and investment will be needed by the program to defend the 

U.S. homeland. MDA initially assumed that SM-3 Block IIB interceptors 

would be based on land at host nation facilities in Romania and Poland.7

However, subsequent MDA analyses demonstrated that

• the Romania site was not a good location from a flight path standpoint 

for defending the United States with the SM-3 Block IIB; and

 

5

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

D.C.: Feb. 11, 2013).

6

GAO-09-665. 

7

These locations are planned to provide both regional and U.S. homeland defense. We 

did not assess these locations for regional defense purposes.

Program Did Not Conduct 

an Analysis of 

Alternatives—a Key Step 

to Ensuring a Sound Basis 

for a New Program
Appendix V: Aegis BMD SM-3 Block IIB with 

Third Generation Aegis Weapons System 

Software

Page 78 GAO-13-432 Missile Defense

• the Poland site may require the development of the ability to launch 

the interceptor earlier—during the boost phase of the threat missile—

to be useful for defense of the United States.8

MDA technical analysis in 2012 concluded that a ship-based SM-3 Block 

IIB in the North Sea is a better location for U.S. homeland defense and it 

does not require launch during boost capabilities.9 While MDA’s initial 

assumption was the missile was to be land-based, the program is now 

requiring the SM-3 Block IIB to be ship and land compatible.

To some extent, this progression has been driven by the early decision to 

narrow solutions to an Aegis-based missile without the benefit of a robust 

analysis of other alternatives. While this does not mean the SM-3 Block 

IIB is not a viable choice, we have previously reported that without fully 

exploring alternatives, programs may not achieve an optimal concept for 

the war fighter, are at risk for cost increases, and can face schedule 

delays or technology maturity challenges.10

 

8

With launch during boost, the missile launches during the boost phase of the threat 

missile. It intercepts the threat after the boost phase.

9

According to DOD, additional operational analysis of this location would be needed.

10 GAO-09-665. 
Appendix VI: BMDS Sensors

Page 79 GAO-13-432 Missile Defense

Recent Events

• An Army Navy/Transportable Radar Surveillance and 

Control Model 2 (AN/TPY-2) radar was delivered to U.S. 

Central Command in fiscal year 2012.

• Awarded contract to upgrade Early Warning Radars at 

Clear, Alaska and Cape Cod, Massachusetts.

• BMDS Sensors participated in ground and flight tests 

with other elements, including Aegis Ballistic Missile 

Defense (BMD) and MDA’s first system-level integrated 

flight test.

Overview

 MDA downgraded the Sea-Based X-Band radar to a limited test 

support status primarily due to budget concerns.

 DOD faces challenges addressing Cobra Dane sustainability 

concerns as well as confirming new capabilities.

 Despite high demand for AN/TPY-2 radars, MDA is procuring fewer 

than previously planned.

 AN/TPY-2 Cost Baselines Are Relatively Stable and Progress 

Against Schedule Baselines Is Mixed. 

The current generation of Ballistic Missile Defense System (BMDS) 

sensors includes the following:

Sea Based X-Band (SBX) is a sea-based radar capable of 

tracking, discriminating, and assessing the flight of ballistic 

missiles. SBX primarily supports the Ground-based Midcourse 

Defense (GMD) system for defense of the U.S. and is considered 

a critical sensor for GMD, in part because it is able to provide 

tracking information to the GMD interceptor as it targets an 

incoming threat missile. SBX is docked near Hawaii when not in 

testing or operational status.

Upgraded Early Warning Radars are U.S. Air Force early 

warning radars that are upgraded and integrated into the BMDS to

provide sensor coverage for critical early warning, tracking, object 

classification, and cueing data. Upgraded Early Warning Radars 

are located in Beale, California; Fylingdales, United Kingdom; and 

Thule, Greenland. MDA awarded a contract to upgrade the early 

warning radars in Clear, Alaska and at Cape Cod, Massachusetts. 

The upgrades to the Clear and Cape Cod Early Warning Radar 

sites are joint MDA / Air Force projects. Both organizations are 

contributing funding to these sites.

Cobra Dane radar is a U.S. Air Force radar located in Shemya, 

Alaska that has been upgraded and integrated into the BMDS to 

provide missile acquisition, tracking, object classification, and 

cueing data. Cobra Dane supports GMD for homeland defense.

Appendix VI: BMDS Sensors

Background and Overview
Appendix VI: BMDS Sensors

Page 80 GAO-13-432 Missile Defense

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

capable of tracking all classes of ballistic missiles. AN/TPY-2 in 

the forward-based mode is capable of detecting and tracking 

missiles in all stages of flight to support Aegis BMD and GMD 

engagements and provides threat missile data to C2BMC. 

AN/TPY-2 in the terminal mode can track missiles in the later 

stages of flight to support THAAD engagements. Four AN/TPY-2 

radars for use in forward-based mode are deployed to support 

regional defense with two in U.S. European Command, one in 

U.S. Pacific Command, and one in U.S. Central Command.

MDA removed the SBX radar from operational status and placed it into a 

limited test support status beginning in 2012 due to budget concerns. 

Limited test support status means SBX will support BMDS flight and 

ground tests as appropriate, but can be recalled to active, operational 

status when warnings indicate a need to do so. MDA officials stated that 

cuts by the Office of the Secretary of Defense to MDA’s fiscal year 2013 

budget required the agency to find approximately $2 billion in overall 

reductions. By transitioning SBX to a limited test support status, MDA 

officials expect to save almost $670 million in operation and maintenance 

costs for fiscal years 2013 through 2018.

Because SBX is primarily used to support GMD’s defense of the United 

States, removing SBX from operational status also changes how the 

BMDS operates. However, MDA officials told us that SBX was developed 

to assist in countering a threat that has not yet manifested and therefore, 

from an operational standpoint, the radar is not currently needed. An 

official with U.S. Northern Command, which is concerned with defense of 

the United States, told us that the command has developed alternatives 

for conducting engagements without the SBX. However, U.S. Northern 

Command’s 2011 assessment of the BMDS notes there is a difference in 

how the BMDS operates without SBX, the details of which are classified.

MDA Downgraded the SBX 

Radar to a Limited Test 

Support Status Primarily 

Due to Budget Concerns
Appendix VI: BMDS Sensors

Page 81 GAO-13-432 Missile Defense

According to MDA officials, to continue operating Cobra Dane beyond 

2015, when sustainment funding is schedule to end, the Air Force, with 

input from MDA, will need to determine whether to proceed with a service 

life extension plan to address sustainability concerns.1 Cobra Dane is a 

vital sensor for GMD—especially with the limited availability of SBX. MDA 

officials stated the Air Force and MDA would likely share the cost of this 

extension. However, they told us that it is unclear how many years it 

would extend the service life of Cobra Dane and that the agency is 

exploring other long-term solutions. One option is to replace Cobra Dane 

with a new radar although doing so is likely to be costly. One contractorfunded study estimated the life-cycle cost of a Cobra Dane replacement 

at approximately $1 billion. MDA officials told us for BMDS purposes, their 

preferred long-term solution is to replace the functions currently 

performed by the Cobra Dane radar with the Precision Tracking Space 

System (PTSS) which the agency currently expects to become fully 

operational in 2023.

Although DOD has upgraded the Cobra Dane radar in the past, it has not 

yet confirmed those upgrades work in an intercept flight test. The radar’s 

capabilities were last demonstrated during a fly-by flight test in September 

2005. The Director, Operational Test & Evaluation has reported that, due 

to Cobra Dane’s location and field-of view, the upgrades have been 

constrained to ground testing using models and simulations, and these 

tests were limited by the continuing lack of credibility that the models 

used accurately portray BMDS performance. The Director, Operational 

Test and Evaluation further stated that MDA would conduct a flight test in 

Cobra Dane’s field of view to confirm that the upgrades work as intended. 

MDA had originally played to complete this flight test in late fiscal year 

2010, but has delayed it until fiscal year 2015.

 

1

In addition to providing ballistic missile defense capability, Cobra Dane is also used by 

the Air Force for space surveillance.

DOD Faces Challenges 

Addressing Cobra Dane 

Sustainability Concerns, as 

well as Confirming New 

Capabilities
Appendix VI: BMDS Sensors

Page 82 GAO-13-432 Missile Defense

MDA is planning to procure fewer AN/TPY-2 radars than previously 

planned even though the recent increased focus on regional—in addition 

to homeland—defense makes them in high demand from various 

combatant commands.2 MDA reduced the number of AN/TPY-2 radars 

from 18 planned in the fiscal year 2012 budget down to 11 in the fiscal 

year 2013 budget. The agency decided to procure 7 fewer AN/TPY-2 

radars because fewer THAAD batteries that utilize the radars are being 

procured, and because of budget cuts in its fiscal year 2013 budget.

Currently, the last AN/TPY-2 procurement is scheduled for fiscal year 

2013 and production will end in fiscal year 2015. Officials told us, 

however, that the agency may have some opportunities for the U.S. to 

procure additional AN/TPY-2 radars if additional radars are produced for 

sales to foreign governments in the interim.

The only baselines reported for BMDS Sensors in the 2012 BMDS 

Accountability Report (BAR) are for the AN/TPY-2.

Since the 2010 BAR baselines were established, the AN/TPY-2 program 

entered the initial production phase for its ninth and tenth radars and 

established a new baseline. However, the AN/TPY-2 reported unit costs 

have increased by less than 5 percent from the 2010 BAR to the 2012 

BAR. The reported average cost in the 2012 BAR for MDA to produce 

one AN/TPY-2 is $187 million and the reported average cost to develop 

and produce one AN/TPY-2 is $226 million.3 According to its 2012 BAR, 

MDA did not separately report or explain cost increases that were less 

than the agency’s established threshold of 5 percent since the prior year 

reported unit cost.

 

2

Regional defense is focused on protecting deployed forces and allies against regional 

threats. Homeland defense focuses on protecting the United States from intercontinental 

ballistic missile threats. 

3

These unit costs are in base year 2011 dollars. Expressing estimates in base year dollars 

eliminates the effects of inflation when analyzing cost changes.

Despite High Demand for 

AN/TPY-2 Radars, MDA Is 

Buying Fewer than 

Previously Planned

AN/TPY-2 Cost Baselines 

Are Relatively Stable and 

Progress against Schedule 

Baselines Is Mixed

Reported Unit Costs for 

AN/TPY-2 Have Remained 

Relatively Stable Since 2010
Appendix VI: BMDS Sensors

Page 83 GAO-13-432 Missile Defense

The AN/TPY-2 radar had some success in meeting 2012 BAR schedule 

goals, however, some milestones—including the assessment of a key 

capability—were delayed. Specifically, confirming the radar’s advanced 

capability to distinguish incoming threats while in terminal mode was 

delayed until the fourth quarter of fiscal year 2015, about four years later 

than originally planned. The delay was driven by revisions to MDA’s 

ground and flight test program and a slip of a key THAAD test designed to 

assess the capability in an operational environment. In addition, the 

program delayed Production Readiness Risk Assessments—formal 

assessments used to determine if production commitments can be made 

without incurring unacceptable risks to schedule, performance, cost, or 

other established criteria—for future deliveries of AN/TPY-2 radars by 2 

years. The delay was due to an obsolete radar processor and difficulty in 

establishing a replacement for it. During fiscal year 2012, the program 

successfully deployed a radar to Turkey as part of the BMDS for regional 

defense in Europe. Also during the fiscal year, MDA reduced the total 

number of AN/TPY-2 radars being procured. In response to this 

reduction, the program accelerated the delivery schedule for two of the 

three AN/TPY-2 radars already in production. MDA delivered its eighth 

radar after a short delay and projected the next three radars to be 

delivered on time or ahead of schedule as seen in figure 9.

Mixed Schedule Progress for 

AN/TPY-2 Program 
Appendix VI: BMDS Sensors

Page 84 GAO-13-432 Missile Defense

Figure 9: Schedule Assessment for Selected BMDS Sensor Program’s AN/TPY-2 Activities in the BMDS Accountability Report

Note: All original dates for activities are based on baselines in the 2010 BAR unless noted otherwise.

a

Originally baselined in 2012 BAR.
Appendix VII: Ground-based Midcourse 

Defense

Page 85 GAO-13-432 Missile Defense

Recent Events

• The program continued its extensive effort to resolve 

the CE-II flight test failure.

• GMD was unable to conduct either of its planned flight 

tests in fiscal year 2012.

• The program continued to refurbish and retrofit fielded 

CE-I interceptors.

• The program completed the construction of a second

missile field at Fort Greely, Alaska.

• In January 2013, MDA conducted a flight test designed 

to gather performance data in a flight environment.

• In March 2013, the Secretary of Defense announced 

the deployment of additional ground-based interceptors 

to enhance the protection of the United States. 

Overview

 GMD’s failure resolution effort is rigorous.

 Concurrency disruptions to interceptor production continued in 

2012.

 The costs to demonstrate and fix the CE-II continue to increase.

 Instability of GMD resource baselines prevents insight into cost 

progress. 

 Return to intercept activities are causing schedule delays.

The Ground-based Midcourse Defense (GMD) enables combatant 

commanders from the U.S. Northern Command to defend the United 

States against a limited attack from intermediate- and intercontinentalrange ballistic missiles during the middle part of their flight. Through fiscal 

year 2012, about $36.5 billion has been spent on GMD and MDA is 

planning on spending another $4.5 billion between fiscal years 2013-

2017. GMD is expected to remain in service until at least 2032.

GMD consists of a ground-based interceptor—a booster with an 

exoatmospheric kill vehicle on top—and a fire control system that uses 

information from Ballistic Missile Defense System sensors to formulate a 

battle plan. The kill vehicle is designed to hit an enemy’s missile warhead 

while it is above the atmosphere. DOD has emplaced two versions of the 

kill vehicle and has fielded its entire planned inventory. Development, 

however, continues.

• The first version of the kill vehicle, fielded since 2004, is known as the 

Capability Enhancement I (CE-I), and

• The second version of the kill vehicle, currently in development and 

production, is called the Capability Enhancement II (CE-II).

The CE-II has not yet been demonstrated to work as intended through 

flight testing, failing in its only two attempts to intercept a target. MDA 

originally planned to confirm the CE-II design worked as intended in an 

intercept test in fiscal year 2008. However, as a consequence of 

Appendix VII: Ground-based Midcourse 

Defense 

Background and Overview
Appendix VII: Ground-based Midcourse 

Defense

Page 86 GAO-13-432 Missile Defense

developmental challenges, flight test failures, failure review boards, and 

return to intercept activities, confirmation that the design works as 

intended has been delayed by at least five and a half years as shown in 

figure 10 below.1

 

Figure 10: Planned Demonstration of CE-II Capability Delayed at Least Five and a Half Years

The first intercept attempt in January 2010 failed due to a quality control 

issue2 and the second intercept attempt failed in December 2010 due to 

the effects of vibration on the kill vehicle’s guidance system. The 

December 2010 failure had serious consequences for GMD. For 

example, MDA halted the final integration and deliveries of the remaining 

CE-II kill vehicles until the failure investigation was completed and testing 

 

1 As we reported in 2009, MDA had originally planned to assess CE-II capability in fiscal 

year 2008. However, early ground test failures in the inertial measurement unit caused 

delivery delays and resulted in a redesign of the component. Consequently, the program 

had to delay the test. See GAO-09-338. 

2 The failure review investigation concluded that the failure was due to a quality control 

issue. Corrective actions include design enhancements to improve vehicle processing, 

which according to MDA, mitigates the risk of a reoccurrence.
Appendix VII: Ground-based Midcourse 

Defense

Page 87 GAO-13-432 Missile Defense

demonstrates that a resolution to the issue has been confirmed. MDAs 

plan to return the program to flight testing involved:

(1) Determining the cause of the failure,

(2) Developing hardware and software solutions,

(3) Demonstrating the new hardware and software have resolved the 

cause of the failure in a non-intercept flight test, and

(4) Confirming the new design works as intended by successfully 

conducting an intercept flight test.

The two planned flight tests, known as Control Test Vehicle-01 and Flight 

Test Ground-06b (FTG-06b), were originally planned to occur in the fourth 

quarter of fiscal year 2011 and the third quarter of fiscal year 2012 

respectively.

Towards the end of our audit work, in March 2013, the Secretary of 

Defense announced a significant adjustment to existing plans for the 

protection of the United States including deploying additional ground 

based interceptors in Fort Greely, Alaska. Because this announcement 

occurred late in our audit, we were not able to assess the effects and 

incorporate this information into our report.

The GMD program’s failure investigation and return to intercept effort has 

been rigorous. MDA convened a failure review board composed of 

independent experts to conduct an extensive investigation into the cause 

of the failure and perform modeling and testing to confirm the failure 

conditions. During the investigation, a series of ground tests were 

conducted to recreate and confirm the cause of failure, characterize the 

environment, and test materials, components and systems. According to 

a GMD program official, the program conducted over 50 component and 

subcomponent failure investigation and resolution tests. These tests 

focused on two primary areas of the kill vehicle—the thrusters and the 

guidance system. While initial ground testing could not replicate the 

environment in which the kill vehicle operates, the program did develop 

new test equipment that provided conditions similar to flight and recreated 

and confirmed the failure. In August 2011, the investigation attributed the 

failure to a guidance system fault that happened while in space that 

caused the kill vehicle to fail in the final seconds of the test. The 

investigation concluded that the guidance system required redesign and 

further development.

GMD’s Failure Resolution 

Effort is Rigorous
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Defense

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The program’s continuing concurrent acquisition practices have disrupted 

development, testing, and production since 2010, thus delaying deliveries 

to the warfighter. Simultaneous with the failure investigation, MDA and its 

contractors undertook an effort to develop hardware and firmware 

solutions to return the program to intercept flight tests. 3 These solutions 

were then planned to be assessed in two flight tests to determine whether 

they successfully addressed the shocks and vibrations the kill vehicle 

experiences during flight. Because the initial design solutions were 

developed concurrently and prior to the full understanding of the cause of 

failure, when developmental issues then arose, the flight tests had to be 

delayed and their objectives modified. As originally planned, the first nonintercept flight test was designed to demonstrate the effectiveness of the 

resolution efforts by testing both the new hardware and firmware in order 

to support a decision to resume manufacturing of kill vehicles.4 The test 

was originally scheduled for the fourth quarter of fiscal year 2011, but was 

not conducted until January 2013. This delay was due to difficulties 

developing the new firmware and concerns about the device that 

detonates in order to release the kill vehicle from the booster. MDA chose 

to modify the objectives of this test in order to prevent further delays. For 

example, the kill vehicle tested the new guidance system, but did not 

have the new firmware as originally planned. Additionally, the test was no 

longer designed to demonstrate that the CE-II works as intended in order 

to resume manufacturing. However, the test was a significant diagnostic 

flight test to gather data on the operational environment not achievable in 

ground tests. According to MDA officials, the test also included certain 

other components that have undergone design changes to address 

issues discovered in prior flight tests. MDA’s final evaluation of the 

January 2013 test was not available in time for our review for this report.

The next planned CE-II intercept test, designed to demonstrate its 

capability, has been delayed from the third quarter of fiscal year 2012 by 

development issues. At the conclusion of our review, the exact timing and 

 

3

Firmware is software that is permanently placed on a hardware device. 

4

GAO recommended in 2012 that the Secretary of Defense direct the MDA to 

demonstrate that the CE-II design works as intended through a successful intercept flight 

test in the operational environment—FTG-06b—prior to making the commitment to restart 

integration and production efforts. DOD concurred with our recommendation and in 

response, DOD stated that the program plans to restart CE-II manufacturing upon 

successful completion of the FTG-06b flight test.

Concurrency Disruptions 

to Interceptor Production 

Continued in 2012
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Defense

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sequence of further GMD flight tests is to be determined because the 

flight test schedule continues to change.

5

 

The December 2010 failure also delayed MDA’s broader GMD 

developmental flight testing. Because MDA inserted two flight tests to 

show that the causes of failure had been resolved, MDA had to 

reschedule its test plan, moving a flight test from fiscal year 2013 to 2016, 

and delaying a planned operational test from fiscal year 2015 until 2016. 

MDA also delayed completing developmental flight testing from 2021 to at 

least the fourth quarter of fiscal year 2022, well after the scheduled 

completion of CE-II manufacturing.

In continuing to follow a concurrent acquisition strategy, DOD is accepting 

the risk that later flight tests may find issues requiring costly design 

changes and retrofit programs to resolve. Prior to the December 2010 

flight test failure, MDA planned to complete delivery of the CE-II 

interceptors by the fourth quarter of fiscal year 2012. However, due to the 

delay in conducting the intercept test necessary to resume deliveries, the 

completion date has not yet been determined but, as of May 2012, they 

had expected to complete deliveries by 2015. According to the GMD 

program manager, the program will resume integration of certain kill 

vehicle components they have determined are not related to the failure 

prior to the next intercept test.

GMD’s recent program disruptions are tied to the initial adoption of 

concurrent acquisition practices and the continuation of these practices 

as developmental problems occurred. In 2004, MDA committed to a 

highly concurrent development, production, and fielding strategy for the 

new interceptor,6 approving production before completing development of 

the prior version or completing development or flight testing of the new 

components.7 MDA proceeded to concurrently develop, manufacture, and 

deliver, starting in 2008, 12 of these interceptors even though they had 

 

5 MDA has inserted a Capability Enhancement I intercept test in fiscal year 2013 to 

validate reliability improvements made over the last several years. 

6

GAO-12-386. 

7

The CE-II kill vehicle was not originally a reliability upgrade or a performance upgrade 

program. Its initial priority was replacing obsolete components. However, updating certain 

components is expected to result in increased performance. 
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Defense

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not yet been successfully tested, ultimately resulting in significant delays 

and cost growth.

The cost to demonstrate the new CE-II kill vehicle through flight testing 

and fix the CE-IIs already produced continues to increase. MDA planned 

to demonstrate the CE-II capability in January 2010 for approximately 

$236 million with one flight test. In April 2012 we reported that the cost 

had increased to $1.2 billion According to MDA, the cost growth was, in 

part, due to reconducting flight tests (which includes the cost of planning, 

test execution and range support, the target, and post-test analysis), as 

well as conducting failure investigations and fixing already delivered CE-II 

interceptors as noted in table 3.

Table 3: Estimated Costs to Demonstrate and Fix CE-II Capability

Dollars in millions

Activity Cost

FTG-06 $236.3

FTG-06a 238.9

Control Test Vehicle-01 Costs as of August 2012 171.5 

FTG-06b Costs as of August 2012 227.9

FTG-06a Failure Review as of August 2012 119.3

CE-II Retrofit as of August 2012a 180.0

Total as of August 2012 $1,173.9

Source: MDA (data); GAO presentation.

a

10 CE-II interceptors will have to be retrofit at an estimated total cost of $18 million per interceptor for 

a total cost of $180.0 million.

This estimate does not include the costs already expended during 

development of the interceptor and the target. For example, the costs of 

the flight tests do not include nonrecurring development costs, such as 

those for systems engineering and test and evaluation, among others. 

Often these costs were incurred many years before flight tests are 

conducted. Consequently, including nonrecurring development costs for 

both the CE-II and the targets would substantially increase the costs by 

hundreds of millions of dollars for each flight test and increase the overall 

cost outlined in table 3.

The cost to demonstrate the new CE-II kill vehicle continues to grow due 

to the delays in conducting the next intercept test. According to the GMD 

program manager, although the total cost is not determined, delays in 

The Costs to Demonstrate 

and Fix the CE-II Continue 

to Increase
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Defense

Page 91 GAO-13-432 Missile Defense

conducting the intercept test are estimated to cost about $3 million per 

month.

According to the Department of Defense’s Report to Congress on 

Ground-based Midcourse Defense December 2010 Flight Test Failure 

and Correction Plan, MDA will fund the resolution efforts within the 

existing budget appropriations. The significant costs of the flight tests 

needed to demonstrate the failure resolution, according to this report, will 

be offset in large part by realigning the resources already allocated to 

planned testing that has not occurred. MDA will also delay new 

interceptor manufacturing and interceptor upgrades that were dependent 

on the redesigned CE-II kill vehicle.

The GMD program’s reported baseline in the 2012 BMDS Accountability 

Report (BAR) represents activities and associated costs needed to 

achieve an initial defense of the United States. Although the program 

planned to report a new baseline in the 2013 BAR for other activities and 

associated costs needed for its next set of capabilities, it recently delayed 

this effort.

Adjustments to the content of the GMD program’s resource baseline in 

2012 have obscured cost progress to the extent that we are unable to 

assess longer-term or near-term progress. Although we have reported 

over the past few years that the program has experienced (1) significant 

technical problems, (2) production disruptions and (3) the addition of 

previously unplanned and costly work, the GMD total cost estimate as 

reported in the resource baseline has decreased from 2010 to 2012. The 

reported costs have decreased because the program moved activities 

from its initial baseline to its next undefined effort to enhance defense of 

the United States. By moving these activities, MDA used the funds that 

were freed up for failure resolution efforts instead.8 In addition, because 

the next baseline won’t be defined until after these activities have already 

been added to it, the additional cost for conducting these activities in the 

next baseline will not be identifiable. The full extent of actual cost growth 

may never be determined or visible for decision makers for either 

baseline because of these adjustments.

 

8

The GMD program deferred activities for addressing obsolescence in GMD’s ground 

systems, upgrading communication infrastructure at Fort Greely Alaska, and performing 

CE-I interceptor upgrades and flight tests through fiscal year 2017.

Instability of GMD 

Resource Baseline 

Prevents Insight into Cost 

Progress
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Defense

Page 92 GAO-13-432 Missile Defense

While GMD has been able to complete some of it schedule and delivery 

goals, the program continued to experience challenges with its return to 

intercept activities, which delayed key developmental events and planned 

interceptor deliveries. For example, in the first quarter of fiscal year 2013, 

MDA completed the construction of a new power plant in Fort Greely, 

Alaska as seen in figure 11. The delivery was completed following a 

nearly two year schedule delay driven by failures identified during 

contractor integration testing which necessitated corrective action and 

additional testing. This power plant is important as it will provide an 

independent power source to the GMD missile fields at Fort Greely.

Figure 11: Schedule Assessment for Selected GMD Activities in the BMDS 

Accountability Report

Note: All original dates for activities are based on baselines in the 2010 BAR unless noted otherwise.

a

Originally baselined in 2011 BAR.

Return to Intercept 

Activities Are Causing 

Schedule Delays
Appendix VIII: Precision Tracking Space 

System (PTSS)

Page 93 GAO-13-432 Missile Defense

Recent Events

• DOD proposed canceling the PTSS program in April 

2013. 

• Launch of the first two developmental satellites delayed 

from September 2017 to March 2018 because of the 

fiscal year 2013 continuing resolution.

• Completed a major review to begin the technology 

development phase in September 2012, still awaiting 

final approval.

• In February 2013, the Aegis BMD successfully 

intercepted a target using data from the Space Tracking 

and Surveillance System, a program that is informing 

PTSS development.

Overview

 In 2012, MDA determined that PTSS requires nine satellites on orbit 

at the same time, full cost has not been determined. 

 MDA has not conducted a robust Analysis of Alternatives; Congress 

is requiring DOD to evaluate PTSS alternatives.

 PTSS program faces technical and operational challenges, primarily 

from high radiation environment.

 PTSS program revised its acquisition strategy but elevated 

acquisition risks remain.. 

PTSS is a space-based infrared sensor system designed to track ballistic 

missiles after boost and through the middle part of their flight. The 

operational satellite system will include a constellation of nine satellites in 

orbit at the same time around the earth’s equator. These satellites 

communicate with one another and a ground station to provide interceptquality tracks of enemy missiles to other BMDS elements for 

engagement. The system is expected to expand the BMDS’s ability to 

track ballistic missiles by providing persistent coverage of approximately 

70 percent of the earth’s surface while handling more advanced missiles 

and larger raid sizes than current ground and sea-based radar sensors. 

The PTSS program is preceded by a prior MDA demonstration effort for 

space-based missile tracking, the Space Tracking and Surveillance 

System, which continues to inform PTSS development. Since the PTSS 

program is in the very early stages, it does not have cost, schedule or 

performance baselines. The program will set baselines when it begins 

product development, which is scheduled for fiscal year 2014.

The PTSS program is designing the acquisition to allow future 

adjustments, such as an increase to constellation size or changes to how 

the satellites communicate with the rest of the BMDS. This flexibility 

would permit the system to adjust to changes in the threat. The program 

also plans to upgrade its capabilities from tracking objects to 

discriminating among the objects it tracks.

DOD proposed canceling the PTSS program in April 2013 in the Fiscal 

Year 2014 President’s Budget Submission. Because the proposed 

Appendix VIII: Precision Tracking Space 

System (PTSS)

Background and Overview
Appendix VIII: Precision Tracking Space 

System (PTSS)

Page 94 GAO-13-432 Missile Defense

cancellation occurred in the last few weeks of our audit, we were not able 

to assess the effects of the program’s proposed cancellation and 

incorporate this information into our report.

In August 2012, MDA formally defined the PTSS operational constellation 

as 9 satellites in orbit at the same time and established the planned 

launch schedule for the life of the program. The program plans to launch 

two laboratory-built developmental satellites in March 2018, then four 

industry-built satellites to achieve an initial operational capability of 6 

satellites in December 2021, and finally achieve full operational capability 

with a 9-satellite constellation in December 2023. As part of this plan, the 

program expects the two laboratory-built developmental satellites to be 

part of the operational constellation until December 2025 when it will 

begin launching replacement satellites. From initial launch in 2018 to the 

program’s projected completion in 2040, the program plans to procure a 

total of 26 satellites.

A recent study by the National Academy of Sciences estimated the PTSS 

life-cycle cost to range between $18.2 billion and $37 billion based on 

configurations for a 9-satellite and 12-satellite constellation.1 DOD’s Cost 

Assessment and Program Evaluation office is currently conducting an 

independent cost estimate for PTSS and plans to finish the assessment in 

April 2013. It is unclear if the independent cost estimate will include costs 

for additional upgrades the program could add in the future, such as 

improving the satellite’s discrimination capabilities or optimizing the 

program for observation of space objects.

An Analysis of Alternatives (AOA) is an analytical study that compares the 

operational effectiveness, cost and risks of alternative potential solutions 

to address valid needs and shortfalls in operational capability. We 

previously reported that a robust AOA addresses some key questions, 

such as determining which alternatives provide validated capabilities, 

assessing the technical, operational, and programmatic risks for each 

 

1

National Research Council, Making Sense of Ballistic Missile Defense: An Assessment of 

Concepts and Systems for U.S. Boost-Phase Missile Defense in Comparison to Other 

Alternatives, National Research Council of the National Academies, (Washington, D.C.: 

2012).

In 2012, MDA Determined 

That PTSS Requires Nine 

Satellites on Orbit at the 

Same Time, Full Cost Has 

Not Been Determined

MDA Has Not Conducted a 

Robust Analysis of 

Alternatives; Congress Is 

Requiring DOD to Evaluate 

PTSS Alternatives
Appendix VIII: Precision Tracking Space 

System (PTSS)

Page 95 GAO-13-432 Missile Defense

alternative, determining the life-cycle cost for each alternative, and 

comparing the alternatives to one another.2

Although MDA is not required to complete an AOA for its programs 

because of its acquisition flexibilities, it has conducted a number of 

studies in the past related to PTSS to compare alternatives. None of 

these studies can be considered robust AOAs primarily because the 

studies considered too narrow a range of alternatives. For example, in 

October 2011, the U.S. Strategic Command, at the direction of the Under 

Secretary of Defense for Acquisition, Technology, and Logistics, 

conducted an assessment that compared the expected operational 

performance of PTSS against two other MDA sensors—the operational 

AN/TPY-2 radar and the developmental Airborne Infrared.3 While this 

review could be a useful source of information for a more robust AOA, the 

study cannot be considered a robust AOA because it assessed too 

narrow a range of alternatives and did not fully assess programmatic and 

technical risks, both of which are important aspects of a robust AOA.4

Although MDA has also conducted a number of studies in the past that 

mostly focused on follow-on concepts for MDA’s Space Tracking and 

Surveillance System demonstration program, none of the completed 

studies considered a broad range of alternatives.

Partially in response to concerns raised by the National Academy of 

Sciences last year about the costs and benefits of the PTSS program,5 in 

January 2013, Congress required DOD to evaluate PTSS alternatives.6

DOD’s Cost Assessment and Program Evaluation office is currently 

conducting a comprehensive review of the PTSS program in response. 

 

2

GAO-09-665. 

3

The Airborne Infrared was a program designed to track ballistic missiles shortly after 

launch by utilizing infrared sensors onboard select unmanned aircraft systems. DOD 

canceled the program in 2012 based on Congress’ recommendation in the conference 

report to the Consolidated Appropriations Act 2012 to reduce the program’s funding in its 

entirety. H.R. No. 112-331, at 719 (2011) (Conf. Rep.).

4

Criteria for robust analyses of alternatives can be found in GAO, Defense Acquisitions: 

Many Analyses of Alternatives Have Not Provided a Robust Assessment of Weapon 

System Options, GAO-09-665 (Washington, D.C.: Sept. 24, 2009).

5

National Research Council, Making Sense of Ballistic Missile Defense. 

6

Pub. L. No. 112-239, § 224. 
Appendix VIII: Precision Tracking Space 

System (PTSS)

Page 96 GAO-13-432 Missile Defense

Because the study is ongoing at the time of this review, it was not 

available for our review. DOD plans to complete the study in April 2013.

The PTSS program faces significant technical challenges to achieving a 

fully operational constellation by 2023. Some of PTSS’s major 

components require significant development to function in the high 

radiation environment in which the satellites will operate. If that 

development is not successful, the satellite performance could be less 

than currently planned and the expected life of the satellites could be 

reduced. In addition, the program expects some level of performance 

reduction of the satellites on orbit because it plans to operate the 

satellites past their planned mission life. Although the program is 

developing the satellites to achieve a fully operational, nine-satellite 

constellation no sooner than 2023, its strategy leaves little margin for 

error. If these technical risks are realized, the operational performance of 

the constellation could be reduced, development costs could grow, and 

the cost to maintain the planned nine-satellite constellation could grow 

significantly if more frequent replacement is required.

The high radiation environment in which the PTSS satellites plan to 

operate in is more intense than that experienced by other satellite 

systems and could result in reduced performance. The PTSS satellites 

are designed to view ballistic missiles as they fly above the earth’s 

horizon. To accomplish this, the satellites will orbit the earth at an altitude 

of approximately 930 miles above the earth’s surface. Consequently, the 

satellites will pass within the region of one of the earth’s radiation belts 

where fast moving protons and electrons can penetrate and damage 

sensitive satellite equipment. The Space Tracking and Surveillance 

System demonstration satellites currently operate in a similarly high 

radiation environment at an altitude of approximately 840 miles and, as 

we have previously reported, have experienced multiple problems as a 

result.7 Although program officials anticipate these problems to 

occasionally occur and have successfully recovered from all prior 

incidents, radiation events have affected the Space Tracking and 

Surveillance System satellites’ availability and contributed to an 11-month 

delay completing initial check-out for the satellites to reach full capability 

 

7

GAO, Missile Defense: Actions Needed to Improve Transparency and Accountability, 

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

The Program Faces 

Technical and Operational 

Challenges, Primarily from 

High Radiation 

Environment 
Appendix VIII: Precision Tracking Space 

System (PTSS)

Page 97 GAO-13-432 Missile Defense

after launch. Recently, the National Aeronautics and Space 

Administration launched the Van Allen Probes, a space program led by 

the same laboratory leading the PTSS design efforts, to explore the 

Earth’s radiation belts. These probes may collect data that could help 

design PTSS components to protect them against radiation damage.8 The 

Van Allen Probes recently discovered a previously unknown, additional 

radiation belt, indicating a more dynamic radiation environment than 

previously thought.

Recognizing the high radiation challenge, the PTSS program is seeking to 

develop ways to minimize the effects of radiation damage to components. 

While most of PTSS’s technologies are mature, some of the technologies 

with less maturity are major components of the satellite’s design. These 

technologies have low levels of maturity, in part, because they require 

radiation protection at levels that have not yet been demonstrated for 

those specific technologies. The program has added the development of 

these critical technologies to its high risk list, such as the star tracker, a 

component of the guidance and control system that uses stars to track its 

orientation, and the focal plane array, a component of the optical payload 

that locates and tracks enemy missiles. While some of these technologies 

are in early development, the program has undertaken risk reduction 

plans to focus development of these technologies. Because these 

technologies are critical, if they require additional development for 

radiation protection beyond what is already planned, the program could 

experience delays, a reduction in system performance, or a reduction in 

the satellites’ planned mission life.

The program expects that over time, the satellites will have some 

reduction to their initial performance because it plans to operate satellites 

longer than their planned 5-year mission life. During the mission life, the 

PTSS satellites are expected to perform the designed functions to 

effectively meet the system’s performance requirements. After that 5-year 

period, there will be a growing likelihood that operational performance will 

be reduced. The program plans to launch the final satellites needed to 

achieve an operational nine-satellite constellation in 2023.9 However, it 

won’t launch replacement satellites for the first two satellites until 2025—

 

8

This program was formerly known as the Radiation Belt Storm Probes. 

9

The program currently plans to utilize a launch vehicle that will carry 2 PTSS satellites 

per launch, resulting in an initial 10-satellite constellation in 2023.
Appendix VIII: Precision Tracking Space 

System (PTSS)

Page 98 GAO-13-432 Missile Defense

nearly 8 years after they were put in orbit. In fact, all of the satellites in the 

constellation will be operated beyond their planned mission life with an 

average 8 years in orbit and in some cases, as long as 9.5 years. 

Historically, several DOD space systems have continued to operate 

several years beyond their planned mission life. For example, the Global 

Positioning System Block IIA satellites were designed to last an average 

7.5 years but have actually lasted about twice as long. This is largely 

because satellites are typically designed with high levels of redundancy 

and other reliability measures that ensure performance over a period of 

time.

For PTSS, employing a strategy of leaving satellites in orbit for 8 years 

rather than only 5 years will, in the long term, mean that MDA will 

purchase, produce, and launch about 16 fewer satellites through 2040 at 

a cost savings of several billion dollars. However, it also adds 

performance risk for the warfighter. Although other DOD space programs 

have planned for satellites to operate past their planned mission life, they 

usually wait until they have some on-orbit performance data from 

demonstration or similar previous satellites. The PTSS strategy, however, 

is based solely on pre-launch engineering and design analysis with 

assumptions that may or may not prove to be accurate. For example, the 

program estimates satellite reliability to gradually decrease over time 

assuming that random failures may occur, but components are not likely 

to prematurely wear out. However, if radiation risks do materialize, 

satellite components are much more likely to prematurely wear out. Also, 

program officials stated they plan to include fewer redundant measures 

than prior space systems to reduce cost, weight, power consumption, and 

design complexity. However, this may increase the likelihood the 

satellites will not effectively perform beyond their planned mission life.

In April 2012, we reported the program’s acquisition strategy incorporated 

several important aspects of sound acquisition practices, such as 

competition and short development time frames.10 However, we also 

found that there were elevated acquisition risks tied to the concurrency—

the overlap—between the development of the laboratory-built satellites 

and industry-built satellites. Under the previous strategy, the program 

planned to select a manufacturer, conduct a major review to finalize the 

 

10GAO-12-486. 

PTSS Program Revised Its 

Acquisition Strategy but 

Elevated Acquisition Risks 

Remain
Appendix VIII: Precision Tracking Space 

System (PTSS)

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satellite design, and authorize production of items that require a long lead 

time (more than 2 years) for satellites 3 and 4—all while the laboratory 

team develops and manufactures satellites 1 and 2. Because the 

industry-built satellites will be under contract before on-orbit testing of the 

lab-built satellites, we found that the strategy may not enable decision 

makers to fully benefit from the knowledge about the design to be gained 

from that on-orbit testing before making major commitments. In October 

2012, the program approved its third acquisition strategy, revising it so 

that two manufacturers are initially selected rather than one. After the 

program has conducted the design review, the program will then select 

one of the manufacturers to produce satellites 3 and 4 and authorize 

production of long lead items.

Although the revised acquisition strategy may improve collaboration 

between the laboratory team and industry, the concurrency risks remain 

unchanged. The revised strategy may improve the opportunity for 

collaboration between industry and the laboratory teams because the two 

manufacturers will be able to coordinate with the laboratory team while 

they are finalizing the design. However, the same concurrent activities in 

the previous strategy—finalizing the design and committing to long lead 

production for satellites 3 and 4 while developing satellites 1 and 2—

continue. This approach will not enable decision makers to fully benefit 

from the knowledge about the design to be gained from on-orbit testing of 

the laboratory-built satellites before committing to the next industry-built 

satellites. Also, these first four satellites will be operational satellites, 

forming part of the operational nine satellite constellation until they are 

replaced between 2025 and 2027. As a result, if on-orbit testing reveals 

the need for hardware changes, the operational constellation will not fully 

benefit from those changes until the initial four satellites are replaced.
Appendix IX: Targets and Countermeasures

Page 100 GAO-13-432 Missile Defense

Recent Events 

• All eight targets launched in fiscal year 2012 were flown 

successfully.

• Developmental issues with a new extended mediumrange ballistic missile target contributed to delays for 

MDA’s first system-level operational test. 

• Successful first flight of a new extended long-range airlaunched target in October 2012. 

• Contract for medium-range ballistic missile target 

expected in April 2013.

Overview

 MDA’s first use of new targets in complex and costly system-level 

tests is causing delays and unnecessary risk.

 Competitive contracts could offer opportunity for savings.

 New medium-range targets cost baseline adjustments prevent 

insight into long-term cost progress; schedule baseline reflects 

delivery delays.. 

The Missile Defense Agency’s (MDA) Targets and Countermeasures 

program designs, develops, produces, and procures missiles serving as 

targets for testing missile defense systems. The targets program acquires 

many types of targets covering the full spectrum of threat missile 

capabilities and ranges.1 A typical target consists of a launch vehicle 

made up of

(1) one or more boosters,

(2) a control module that steers the vehicle after the booster stage 

separates,

(3) a payload module that can deploy countermeasures,2 and

(4) a surrogate re-entry vehicle.

Some target types have been used by MDA’s test program for years while 

others have been recently or are now being developed to represent more 

complex threats. As MDA’s test effort has matured, its Targets and 

Countermeasures program has worked toward developing more complex 

targets to more closely represent current and future threats. Our 

 

1

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

less than 621 miles; medium-range ballistic missiles have a range from 621 to1,864 miles; 

intermediate-range ballistic missiles have a range from 1,864 to 3,418 miles; and 

intercontinental ballistic missiles have a range greater than 3,418 miles.

2

Countermeasures are objects, released by a threat missile, that imitate the re-entry 

vehicle in an effort to confuse the intercepting missile and associated sensors. 

Appendix IX: Targets and Countermeasures

Background and Overview
Appendix IX: Targets and Countermeasures

Page 101 GAO-13-432 Missile Defense

assessment primarily focuses on two new medium-range air-launched 

targets that are being flown for the first time in fiscal years 2012 and 

2013: (1) the extended medium-range ballistic missile target (eMRBM), 

and (2) the extended long-range air-launched target (E-LRALT).

MDA has chosen to demonstrate new targets for the first time during 

complex and costly system-level tests instead of first demonstrating them 

in less complex and expensive scenarios. System-level flight tests can 

involve multiple BMDS elements including land-, sea-, air-, and spacebased sensors and one or more interceptors and can cost hundreds of 

millions of dollars. MDA launched a new target, its E-LRALT, for the first 

time as part of its first system-level integrated flight test, its most complex 

test to-date, in the first quarter of fiscal year 2013. MDA plans to launch 

two of its new eMRBMs for the first time during the agency’s first 

operational system-level test in the fourth quarter of fiscal year 2013.

MDA’s first system-level integrated flight test, Flight Test Integrated-01, 

was conducted in October 2012 and was the most complex test MDA has 

conducted. It coordinated multiple combatant commands and missile 

defense elements to intercept four of five targets launched. MDA added 

this test as a risk reduction exercise for its planned operational test. While 

the E-LRALT target performed successfully, the test experienced a minor 

delay from September to October 2012 when the new target was unable 

to meet the readiness reviews for the original test deadlines. This target 

needed additional time to complete a series of tests of the target’s flight 

termination system – a safety system that terminates the booster motor’s 

thrust if unsafe conditions develop during flight. These tests were delayed 

when workmanship and test set up issues required correction and further 

retesting, which delayed the integration of these components into the 

missile. Despite the additional risk, this target was successfully launched 

for the first time and performed as expected during the integrated test in 

October 2012.

MDA’s first operational system-level test, Flight Test Operational-01, is 

currently planned for the fourth quarter of fiscal year 2013. During this 

test, the agency plans to use a total of five targets, three ballistic missiles 

and two cruise missiles, and a variety of coordinated missile defense 

elements to conduct a highly complex scenario. This test is a very 

important integrated flight test designed to demonstrate regional 

capabilities of U.S. missile defense. MDA plans to use its new eMRBM 

target for the first time for two of the five targets during this operational 

test rather than using it first in a simpler and less costly risk reduction 

MDA’s First Use of New 

Targets in Complex and 

Costly System-Level Tests 

Is Causing Delays and 

Unnecessary Risk
Appendix IX: Targets and Countermeasures

Page 102 GAO-13-432 Missile Defense

flight test. Risk reduction flight tests are normally conducted the first time 

a system, such as a new target, is tested in order to confirm that it works 

before adding other test objectives. This operational flight test has 

experienced between a six and nine month delay caused by weapon 

system issues and developmental problems associated with the eMRBM 

target. MDA was on a tight schedule to meet the original test date before 

issues arose with the air-launched target’s restraint system, which holds 

the target in cradles while it is launched from an aircraft cargo hold. The 

entire target restraint system had to be redesigned and was not finalized 

until August 2012. The delay in availability of this target contributed to 

MDA’s decision to delay this test.

MDA’s contracting strategy has evolved from a single prime contractor 

strategy to more competitively awarded contracts for new target types. In 

2003, MDA chose a single prime contractor, Lockheed Martin, to lead the 

acquisition of targets with what it called the Flexible Target Family 

approach, which used common components and shared inventory, and 

promised reduced acquisition time, cost savings, and increased 

capability. However, the approach soon proved more costly and more 

time-consuming than expected. Responding to congressional concern 

about these problems3 and our 2008 recommendations, MDA revised its 

acquisition approach in 2009, seeking to increase competition by 

returning to a multiple contract strategy with as many as four prime 

contractors—one for each separate target class. Shortly after, attempts to 

competitively award the first contract were canceled because the bids 

received were more expensive than anticipated. MDA completed a 

competitive award for an intermediate-range target in 2011 but otherwise 

continued to rely heavily on Lockheed Martin for new target types. For 

example, in 2011, MDA awarded three new task orders to its prime 

contractor for eMRBM targets, a more specialized medium-range target 

that will be procured in fewer quantities, and for re-entry vehicles that are 

interchangeable among multiple targets.

MDA is now using parts of both approaches by using its prime contractor 

to keep some commonality among new targets it develops, and by issuing 

some competitive solicitations for other targets. It has recently begun to 

see some cost savings from the intermediate-range competition, reporting 

 

3

H.R Rep No. 110-477, at 823-24 (2007) (Conf. Rep.). 

Competitive Contracts 

Could Offer Opportunity 

for Savings
Appendix IX: Targets and Countermeasures

Page 103 GAO-13-432 Missile Defense

a cost of $103 million less than expected, compared to the independent 

government estimate it developed for that competition. In addition, MDA 

has continued to pursue additional competitive awards in fiscal years 

2012 and 2013. MDA awarded a contract in October 2012 for the first two 

intercontinental ballistic missiles needed for future flight tests, and, 

according to a program official, also expects to award a contract for a new 

medium-range target in April 2013. These competitive contract decisions 

could offer more opportunities for cost efficiencies.

MDA’s BMDS Accountability Report (BAR) reports baselines for cost and 

schedule. In the BAR, Targets and Countermeasures report detailed cost 

and schedule information for individual targets under three baselines for 

short-, medium-, and intermediate-range interceptors. In addition, MDA 

added new baselines in the 2012 BAR for common components, such as 

re-entry vehicles and associated objects. We focused our assessment on 

the new medium-range targets—the eMRBM and E-LRALT targets 

mentioned above.

In its 2012 BAR resource baselines for Targets and Countermeasures, 

MDA reports an average unit cost and a non-recurring cost baseline. 

Non-recurring costs include the cost to design and develop a target 

configuration. Average unit cost is the sum of manufacturing costs for 

targets using research, development, test, and evaluation funding divided 

by the number of targets delivered. The agency reports that it uses these 

nonstandard unit costs because targets are modified to meet specific 

threat representations and are consumed in testing. In addition, no 

procurements funds are used to acquire targets.

Although Targets and Countermeasures have reported baselines since 

2010, it is no longer possible to compare the 2012 BAR reported average 

unit cost or non-recurring cost baselines with the original baselines set in 

the 2010 BAR for any of the Targets—including the eMRBM and ELRALT targets. Unit cost baselines were affected when costs for common 

target components, which were previously included in the target 

baselines, were removed and redirected into a separate, newly created 

baseline for common components. In addition, the agency also changed 

the way it calculated its unit cost estimates for the eMRBM by adding 

costs incurred in previous years. Non-recurring cost baselines were also 

affected by removing costs for common target components, adding costs 

incurred in previous years, and removing support costs.

New Medium-Range

Targets Cost Baseline 

Adjustments Prevent 

Insight into Long-Term 

Cost Progress; Schedule 

Baseline Reflects Delivery 

Delays
Appendix IX: Targets and Countermeasures

Page 104 GAO-13-432 Missile Defense

The agency applied these new accounting rules retroactively to the 2011 

BAR and reported the revisions in the 2012 BAR which enabled a oneyear comparison. Between the retroactively adjusted 2011 BAR and the 

2012 BAR, the average unit cost and non-recurring costs decreased for 

the E-LRALT target by 6 and 12 percent, respectively, as seen in figure 

12. According to program officials, this is because actual costs for quality 

control and testing requirements for this missile were lower than originally 

estimated.

Figure 12: Comparison of 2011 and 2012 BAR Reported E-LRALT Unit Costs

The E-LRALT is manufactured by the same contractor that manufactured 

the short-range air-launched target that failed during a THAAD flight test 

in 2009. Program officials explained that the estimates reported in the 

2011 BAR assumed that the extensive quality control measures and 

testing requirements imposed by MDA would be more costly than they 

ultimately were.

One-Year Comparison Shows 

an E-LRALT Unit Cost 

Decrease Because of Less Than 

Anticipated Quality Control and 

Testing Costs
Appendix IX: Targets and Countermeasures

Page 105 GAO-13-432 Missile Defense

As seen in figure 13, non-recurring and average unit costs increased for 

the eMRBM targets between the retroactively adjusted 2011 BAR and the 

2012 BAR by 15 and 18 percent, respectively, because of increased 

testing requirements and a reduction in the quantity. Non-recurring costs 

increased because design issues with the air launch system and 

additional testing requirements were added to the program after it 

experienced development issues. The average unit cost increased solely 

due to a reduction in the quantity which eliminated the opportunity to 

purchase them more efficiently. The quantity decreased from 11 to 5 

targets between the 2011 and 2012 BARs because the latest agency 

testing plan increased the number of intermediate-range targets and 

reduced the number of medium-range targets. Although the average unit 

cost change was above the 5 percent reporting threshold that MDA 

established in its 2012 BAR, the $6 million dollar change in the average 

unit cost of the eMRBM target was not separately reported because the 

agency attributed this increase solely to a quantity change and not to real 

cost growth.

Figure 13: Comparison of 2011 and 2012 BAR Reported eMRBM Unit Costs

One-Year Comparison Shows 

eMRBM Unit Cost Increase 

Because of Fewer Quantities 

and Higher Costs to Address 

Issues during Development 
Appendix IX: Targets and Countermeasures

Page 106 GAO-13-432 Missile Defense

The Targets and Countermeasures program met the majority of its 

schedule goals to support the test program in fiscal year 2012 by 

successfully flying eight targets. However, the program experienced 

delays in delivering an E-LRALT for Flight Test Integrated-01 and delays 

delivering eMRBM targets as previously discussed.

Figure 14: Schedule Assessment for Selected Targets and Countermeasures 

eMRBM and E-LRALT Activities in the BMDS Accountability Report

Note: All original dates for activities are based on baselines in the 2010 BAR unless noted otherwise.

a

The E-LRALT was originally planned for delivery in second quarter fiscal year 2012 to support FTT13, which was canceled for budgetary reasons. The E-LRALT was then rescheduled for use in Flight 

Test Integrated-01, originally planned for the fourth quarter of fiscal year 2012.

Developmental Challenges 

Cause Delays for eMRBM and 

E-LRALT Needed for SystemLevel Tests 
Appendix X: Terminal High Altitude Area 

Defense (THAAD)

Page 107 GAO-13-432 Missile Defense

Recent Events

• First two THAAD batteries conditionally accepted for 

use by the Army.

• Successfully conducted the first THAAD operational 

flight test.

• First intercept of a medium-range ballistic missile.

Overview

 THAAD overcame past production issues exacerbated by 

concurrency and has plans to recover from a 2012 production issue. 

 First two THAAD batteries conditionally accepted by the Army with 

full acceptance expected by 2017.

 THAAD completes first intercept of medium-range ballistic missile 

during a complex system-level flight test.

 THAAD was declared operationally effective in 2012, but test 

officials note several limitations.

 THAAD cost and schedule baselines reflect budget cut and the 

completion of previously scheduled activities.. 

THAAD is a rapidly deployable ground-based system designed to defend 

against short- and medium-range ballistic missile attacks during the 

middle and end of their flight. A THAAD battery currently consists of 24 

interceptor missiles, three launchers, a radar, a fire control and 

communications system, and other support equipment. Starting in fiscal 

year 2013, the program plans to increase each battery to 48 interceptors 

and six launchers. The first two batteries have been conditionally 

released to the Army for initial operational use. The program plans to 

continue production through fiscal year 2021, producing a total of 6 

batteries, including 503 interceptors and 6 radars.1

As we reported in April 2012, THAAD adopted a highly concurrent 

development, testing, and production strategy for its interceptors. Under 

this concurrent strategy, the program committed to production in 2006 

before the requirements or design for a required safety device, called an 

optical block, were completed. An optical block is an ignition safety device 

designed to prevent accidental launches of the missile. Problems 

encountered while THAAD was concurrently designing and producing 

these interceptors led to slower delivery rates for the first and second 

THAAD batteries. While all other systems needed for the first two 

batteries were complete in 2010, only 11 out of the expected 50 

interceptors were delivered during fiscal year 2011. Although the program 

 

1

The BMDS Sensors program manages the Army Navy/Transportable Radar Surveillance 

and Control Model 2 (AN/TPY-2) production and delivers the radars to THAAD.

Appendix X: Terminal High Altitude Area 

Defense (THAAD)

Background and Overview

THAAD Overcame Past 

Production Issues 

Exacerbated by 

Concurrency and Has 

Plans to Recover from a 

2012 Production Issue
Appendix X: Terminal High Altitude Area 

Defense (THAAD)

Page 108 GAO-13-432 Missile Defense

still had not completed testing of the safety device for the interceptor or 

overcome its production issues, MDA continued its concurrent acquisition 

strategy by signing a production contract in early 2011 for two additional 

THAAD batteries.

In fiscal year 2012, after a 15-month delay, THAAD was able to overcome 

its production issues and deliver the remainder of the interceptors needed 

for the first two batteries. The program resumed production in the second 

quarter of fiscal year 2011 after completing testing for its optical block. 

MDA issued a contract in July 2012 for the continued production of 

THAAD batteries including procurement of additional interceptors as well 

as manufacturing and delivery of launchers and support equipment. The 

program is planning to award another production contract in fourth quarter 

fiscal year 2013 which will continue production for a total of 320 

interceptors through fiscal year 2017.

After experiencing a minor delay to interceptor production during 2012, 

the THAAD program plans to continue interceptor deliveries as planned. 

The program was on track to meet the new interceptor production goals in 

mid 2012 when faulty memory devices were discovered on the mission 

computers of interceptors procured in 2010 and 2011. Though the 

defective parts were discovered while most interceptors were still at the 

contractor’s facility, the issue caused a production gap beginning in late 

fourth quarter fiscal year 2012. This gap put the interceptor production 

schedule four months behind. However, program officials have acquired 

and completed initial testing of the new parts and expect to recover the 

delays by increasing the average rate of production from three up to four 

interceptors per month. By making this change, they expect to be able to 

deliver the next set of 48 interceptors by December 2013 as scheduled. 

However, six interceptors with the faulty parts had already been delivered 

with the first two batteries and will have to be retrofitted.

The Army has declared the THAAD Weapon System as safe, suitable, 

and supportable for Army soldiers to operate, with conditions. A list of 

these conditions that must be satisfied before the Army approves full 

materiel release has been defined. Examples of which include additional 

flight testing, verification of safety systems, training, and reliability 

improvements. Also defined are the resolution plan, funding, and 

estimated schedules. The program expects the last conditions to be 

resolved by the end of fourth quarter fiscal year 2017.

First Two THAAD

Batteries Conditionally 

Accepted by the Army with 

Full Acceptance Expected 

by 2017
Appendix X: Terminal High Altitude Area 

Defense (THAAD)

Page 109 GAO-13-432 Missile Defense

One of the conditions that must be met to achieve full materiel release of 

THAAD to the Army is the incorporation of the required Thermally Initiated 

Venting System. The venting system is a safety feature of the interceptor 

that prevents the boost motor from starting or exploding in the event that 

the canister holding the interceptor heats up beyond a certain 

temperature. The program concurrently developed and tested this system 

while producing the fielded interceptors. After a redesign in 2011, the 

system is performing better in recent testing than it has in the past. 

Program officials say that this safety system may not meet all of the Army 

standards for full materiel release. However, military standards for the 

venting requirement are written for smaller scale systems and have never 

been incorporated into a system as large as THAAD. Although the 

program does not expect to complete all required testing of the safety 

system until late in the second quarter of fiscal year 2013, the program 

has already inserted the latest version into the interceptor production line 

for batteries three and four and plans to include it in all subsequent 

interceptors.

THAAD successfully demonstrated its capability to intercept a mediumrange ballistic missile for the first time during a complex, integrated test

(Flight Test Integrated-01) involving multiple BMDS elements and targets 

in October 2012. This test provided key data to DOD test organizations to

demonstrate recent upgrades to THAAD hardware and software. The test 

was also used to evaluate how well THAAD and other missile defense 

elements such as Aegis Ballistic Missile Defense, Patriot, and Command, 

Control, Battle Management and Communications elements work 

together. THAAD was operated by Army soldiers during the test, even 

though the overall event was considered a combined developmental and 

operational test.

Although THAAD was able to achieve an important step by intercepting a 

medium-range target during the test, other capabilities have still not been 

demonstrated. One significant example is demonstrating the performance 

of the system using the radar advanced software against a complex 

target. The software has been implemented in the operational radar and 

ground tested, but will not be demonstrated in a flight test until fiscal year 

2015. The THAAD program expects to have three batteries delivered to 

the Army before this test is complete. The program plans to deliver 

additional batteries while it continues conducting flight tests to verify the 

system’s capabilities. If the program discovers issues that need to be 

corrected during these later tests, it could be very costly to resolve any 

issues and retrofit existing inventory.

THAAD Completes First 

Intercept of MediumRange Ballistic Missile 

during a Complex SystemLevel Flight Test
Appendix X: Terminal High Altitude Area 

Defense (THAAD)

Page 110 GAO-13-432 Missile Defense

Testing officials declared THAAD operationally effective in 2012 after it 

successfully conducted its first operational flight test in October 2011. We 

reported in April 2012 that THAAD successfully conducted this flight test 

and demonstrated its ability to perform, from planning through live 

operations, under operationally realistic conditions (within the constraints 

of test range safety).2 A February 2012 evaluation of this test and prior 

flight test data by the Director, Operational Test and Evaluation, 

concluded that the system is operationally effective, suitable, and 

survivable against the threats and environments tested.3 However, the 

evaluation also noted some suitability-related limitations and maintenance 

shortfalls as well as the need for improvements in its ability to be 

deployed, and its manpower and training, ease of using its software, and 

ability to connect and function with other systems. Army and BMDS test 

organizations provided data to the Army for evaluation of materiel 

release. Additional testing will be needed to further verify that these 

issues have been resolved.

While the system begins to release initial batteries to the Army, flight and 

ground testing of THAAD continues in order to further verify system 

performance and other ongoing modifications. For example, while all 

THAAD components used in the operational test were the final major 

hardware and software used in the first two batteries, additional software 

and hardware modifications are planned for subsequent batteries. As 

planned hardware and software modifications are made, additional testing 

demonstrations are required to verify that the new software and hardware 

work as intended.

Since the 2010 BAR baselines were reported, the THAAD program 

entered initial production and established a new baseline. Its resource 

baselines report separate unit costs for its interceptors, fire control 

system, and launchers.

 

2

GAO-12-486. 

3

Pursuant to MDA’s acquisition flexibilities, once an element enters the production and 

deployment phase, the element enters the formal DOD acquisition system. Consequently, 

10 U.S.C. § 2366 requires completion of realistic survivability testing of a weapon system 

before a program can begin full-rate production.

THAAD Was Declared 

Operationally Effective in 

2012, but Test Officials 

Note Several Limitations

THAAD Cost and Schedule 

Baselines Reflect Budget 

Cut and the Completion of 

Previously Scheduled 

Activities
Appendix X: Terminal High Altitude Area 

Defense (THAAD)

Page 111 GAO-13-432 Missile Defense

During the fiscal year, MDA reduced the number of THAAD batteries to 

be procured from nine down to six because of budget constraints. This 

reduction in THAAD batteries subsequently caused an increase in the unit 

cost to develop and produce launchers and fire controls. The cost for 

each unit has increased between the 2010 and 2012 BARs primarily 

because the development costs are shared by fewer numbers of 

operational systems. Because of these reductions, the unit cost to 

develop and produce the fire control and the launcher increased by 6 

percent and 55 percent, respectively as seen in figure 15. MDA did not 

separately report these increases, even though they are above the 5 

percent threshold that MDA established in its 2012 BAR, because they 

are solely attributed to the quantity change.

Figure 15: Comparison of 2010 and 2012 BAR Reported THAAD Unit Costs to 

Develop and Produce Items

Since its 2010 BAR reporting, the agency significantly reduced the 

planned rate of interceptor production from six down to three per month 

which led to a 9 percent increase in the average cost to develop and 

produce a THAAD interceptor as shown in figure 15. This rate change is 

also partly responsible for the increased average cost to produce one 

interceptor as seen in figure 16. MDA did not separately explain or report 

THAAD Unit Costs Have 

Grown Because of Quantity 

Reduction
Appendix X: Terminal High Altitude Area 

Defense (THAAD)

Page 112 GAO-13-432 Missile Defense

these increases, even though they are above the 5 percent threshold that 

MDA established in its 2012 BAR, because they are largely due to the 

rate change.

Figure 16: Comparison of 2010 and 2012 BAR Reported THAAD Unit Costs to 

Produce Items

According to program officials, the reported unit cost to produce the fire 

control and launcher decreased significantly between the 2010 and 2012 

BAR resource baselines largely due to a reallocation of common support 

costs after the total numbers of THAAD batteries were reduced but the 

total number of interceptors increased. A small portion of the decrease in 

the average costs to produce the fire control and launcher is attributable 

to favorable contract negotiations for the third and fourth battery. 

However, according to program officials, the majority of this cost 

decrease is due to how common support costs for the originally planned 

nine THAAD batteries were reallocated among the new quantity of six 

THAAD batteries. Officials explained that during this reallocation, a larger 

percentage of these common costs were allocated for the larger number 

of interceptors and a smaller percentage was allocated to the fewer 

number of fire control and launchers. This reallocation reduced the 

reported unit costs to produce the fire control and launchers and also 
Appendix X: Terminal High Altitude Area 

Defense (THAAD)

Page 113 GAO-13-432 Missile Defense

increased the unit cost to produce the interceptor—although some portion 

of the interceptor cost increase is because of the slower production rate.

In fiscal year 2012 THAAD completed many of its previously delayed 

schedule goals. Following successful performance in an early fiscal year 

2012 flight test, the program obtained a conditional materiel release from 

the Army in the second quarter of fiscal year 2012 after approximately a 

one year delay. After addressing production issues with its interceptors, 

the program was also able to deliver its first two THAAD batteries to the 

Service for operational use during the fiscal year. Prior to BAR baseline 

reporting, the first full battery was originally scheduled to be delivered in 

the fourth quarter of fiscal year 2010. It was delivered in the second 

quarter of fiscal year 2012 after approximately a year and a half delay. 

The second THAAD battery was also delivered in the second quarter of 

the fiscal year following a 6-month delay. THAAD is expecting delays to 

deliveries of the third and fourth THAAD battery ground components, as 

seen in figure 17, driven by a longer than expected time to negotiate and 

issue production contracts needed for these batteries. Additionally, the 

program successfully met its goal to intercept a Medium-Range Ballistic 

Missile for the first time in the first quarter of fiscal year 2013, following a 

6-month delay, primarily driven by delays with a target delivery.

Many Previously Delayed 

Activities Completed
Appendix X: Terminal High Altitude Area 

Defense (THAAD)

Page 114 GAO-13-432 Missile Defense

Figure 17: Schedule Assessment for Selected THAAD Activities in the BMDS 

Accountability Report

Note: All original dates for activities are based on baselines in the 2010 BAR unless noted otherwise.

a

Prior to 2010 BAR, the first THAAD battery was originally scheduled to be delivered in the fourth 

quarter of fiscal year 2010. At the time of the June 2010 BAR, the battery had already been delayed 

and was, at that time, scheduled for delivery in the second quarter of fiscal year 2011.
Appendix XI: Comments from the Department 

of Defense

Page 115 GAO-13-432 Missile Defense

Appendix XI: Comments from the 

Department of Defense
Appendix XI: Comments from the Department 

of Defense

Page 116 GAO-13-432 Missile Defense
Appendix XI: Comments from the Department 

of Defense

Page 117 GAO-13-432 Missile Defense
Appendix XII: GAO Contact and Staff 

Acknowledgments

Page 118 GAO-13-432 Missile Defense

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

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

Brent Burris, Ivy Hübler; Meredith Allen Kimmett; Wiktor Niewiadomski; 

Kenneth E. Patton; John H. Pendleton; Karen Richey; Ann F. Rivlin; Brian 

T. Smith; Steven Stern; Robert Swierczek; Brian Tittle; Hai V. Tran; and 

Alyssa Weir made key contributions to this report.

Appendix XII: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Acknowledgments 

(121066)
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