MISSILE DEFENSE

Opportunity to Refocus on 

Strengthening Acquisition 

Management

Statement of Cristina T. Chaplain, Director

Acquisition and Sourcing Management

Testimony 

Before the Subcommittee on Strategic 

Forces, Committee on Armed Services, 

U.S. Senate

For Release on Delivery 

Expected at 2:30 p.m. EDT

Thursday, May 9, 2013

GAO-13-604T

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-604T, a testimony

before the Subcommittee on Strategic Forces, 

Committee on Armed Services, U.S. Senate

May 9, 2013

MISSILE DEFENSE

Opportunity to Refocus on Strengthening 

Acquisition Management

Why GAO Did This Study

In order to meet its mission, MDA is 

developing a highly complex group of 

systems comprised of land-, sea-, and 

space-based 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. Since its 

initiation in 2002, MDA has been given 

a significant amount of flexibility in 

executing the development and fielding 

of the ballistic missile defense system. 

This statement addresses recent MDA 

progress and the challenges it faces 

with its acquisition management. It is 

based on GAO’s April 2013 report and 

reports on missile defense issued from 

September 2008 through July 2012. 

What GAO Recommends

GAO makes no new recommendations 

in this statement. In the April 2013 

report, GAO made 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 that report.

What GAO Found

The Department of Defense’s (DOD) Missile Defense Agency (MDA) has made 

some recent progress gaining important knowledge for its Ballistic Missile 

Defense System (BMDS) by successfully conducting several important tests. In 

addition, the agency made substantial improvements to the clarity of its cost and 

schedule baselines since first reporting them in 2010, and declared the first major 

deployment of U.S. missile defense in Europe operational in December 2011. 

MDA also took steps to reduce acquisition risk by decreasing the overlap 

between technology and product development for two of its programs. 

MDA faces considerable challenges in executing acquisition programs; 

strengthening accountability; assessing alternatives before making new 

investment commitments; developing and deploying U.S. missile defense in 

Europe and using modeling and simulations to understand capabilities and 

limitations of the BMDS. The appointment of a new director for MDA provides an 

opportunity to address these challenges. More specifically:

• Interceptor production for three of MDA’s systems has been significantly 

disrupted during the past few years due to high-risk acquisition strategies

which have resulted in delaying planned deliveries to the warfighter, raising 

costs, and disrupting the industrial base. Further, MDA continues to follow 

high-risk acquisition strategies for other programs. For example, its Targets 

and Countermeasures program is adding risk to an upcoming complex, 

costly operational flight test involving multiple MDA systems because it plans 

to use unproven targets.

• While MDA made substantial improvements to the clarity of its reported cost 

and schedule baselines, MDA’s estimates are not comprehensive because 

they do not include costs from military services in reported life-cycle costs for 

its programs. Instability due to MDA’s frequent adjustments to its acquisition 

baselines makes assessing progress over time using these baselines 

extremely difficult and, in many cases, impossible. 

• While MDA has conducted some analyses that consider alternatives in 

selecting which acquisitions to pursue, it did not conduct robust analyses of 

alternatives for two of its new programs, both of which were recently 

proposed for cancellation.

• During the past several years, MDA has been responding to a mandate from 

the President to develop and deploy new missile defense systems in Europe 

for the defense of Europe and the United States. GAO’s work continues to 

find that a key challenge facing DOD is to keep individual system acquisitions 

synchronized with the planned deployment time frames. 

• MDA has also struggled for years to develop the tools—the models and 

simulations—to understand the capabilities and limitations of the individual 

systems before they are deployed. While MDA recently committed to a new 

approach that could enable them to credibly model individual programs and 

system-level BMDS performance, warfighters will not benefit from this effort 

until after the first two of the currently planned three phases for U.S. missile 

defense in Europe have been deployed in 2011 and 2015 respectively. 

View GAO-13-604T. For more information, 

contact Cristina Chaplain at (202) 512-4841 or 

chaplainc@gao.gov.
Page 1 GAO-13-604T

441 G St. N.W.

Washington, DC 20548

Chairman Udall, Ranking Member Sessions, and Members of the 

Subcommittee:

I am pleased to be here today to discuss the progress made and 

challenges that remain for the Department of Defense’s (DOD) Missile 

Defense Agency (MDA) in developing and fielding the Ballistic Missile 

Defense System (BMDS). Since MDA was established in 2002, it has 

spent over $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 $7.5 

billion per year through 2018. Since its inception, MDA has been 

operating in an environment of 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. It 

is now also operating in an environment of growing budgetary constraints, 

which have already necessitated tough trade-off decisions and will require 

additional steps to reduce acquisition risk. At the same time, MDA is 

undergoing significant transition. In addition to a recent change in the 

agency’s leadership, MDA is responding to the Secretary of Defense’s 

March 2013 announcement to increase the planned numbers of groundbased interceptors designed to protect the United States as well as to 

changes in plans for U.S. missile defense in Europe.

Since the 2002 National Defense Authorization Act, we have been 

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

acquisition goals.1 The National Defense Authorization Act for Fiscal Year 

2012 required 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.

We recently issued our report responding to this 

2 Pub. L. No. 112-81, § 232 (2011).

 
 

Page 2 GAO-13-604T

mandate.3 This testimony highlights our findings from that report as well 

as relevant findings from several of our prior reports on missile defense 

issued from September 2008 through July 2012, particularly as they 

relate to the progress MDA made this year in reducing acquisition risks 

and the challenges that still face MDA.4

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. We 

conducted this work in accordance with generally accepted government 

auditing standards. Additional information on our scope and methodology 

is available in our April 2013 and prior issued reports.

MDA’s BMDS is being designed to counter ballistic missiles of all 

ranges—short, medium, intermediate, and intercontinental. Because 

ballistic missiles have different ranges, speeds, sizes, and performance 

characteristics, MDA is developing multiple systems that, when 

integrated, provide multiple opportunities to destroy ballistic missiles 

before they can reach their targets. The BMDS architecture includes 

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

management, and communications system to provide the warfighter with 

the necessary communication links to the sensors and interceptor 

missiles.

Table 1 provides a brief description of individual BMDS systems, which 

MDA refers to as elements of the BMDS. As noted in the table, two 

 

3

GAO, Missile Defense: Opportunity to Refocus on Strengthening Acquisition 

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

4

GAO-13-432; GAO, Missile Defense: Opportunity Exists to Strengthen Acquisitions by 

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

Practices Provide Opportunity to Enhance Missile Defense Agency Accountability and 

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

Defense Acquisitions: Periodic Assessment Needed to Correct Parts Quality Problems in 

Major Programs, GAO-11-404 (Washington, D.C.: June 24, 2011); Missile Defense: 

Actions Needed to Improve Transparency and Accountability, GAO-11-372 (Washington, 

D.C.: Mar. 24, 2011); 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); Defense Acquisitions: Sound Business Case Needed to Implement 

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

2008).

Background 
 

Page 3 GAO-13-604T

programs were proposed for cancellation in April 2013 as part of DOD’s 

Fiscal Year 2014 President’s Budget Submission.

Table 1: Description of Selected Ballistic Missile Defense System (BMDS) Elements and Supporting Efforts

BMDS element/supporting effort Description and key components

Aegis Ballistic Missile Defense (BMD) with 

Standard Missile-3 (SM-3) Block IA and 

Block IBa

Aegis BMD is a sea-based system developed for ballistic missile defense and other 

missions. MDA is developing several versions of SM-3 and associated ship-based 

software and processors. The first two variants of SM-3 missiles are referred to as Block 

IA and Block IB. The SM-3 Block IB features additional capabilities over the Block IA to 

identify, discriminate, and track objects during flight.

Aegis Ashore 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 BMD SM-3 Block IIA 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.

Aegis BMD SM-3 Block IIB The SM-3 Block IIB was planned to address different threats and have more advanced 

capabilities than earlier SM-3 versions. Key components had not yet been finalized before 

DOD proposed canceling the program in April 2013 as part of its Fiscal Year 2014 

President’s Budget Submission. 

BMDS Sensors MDA has fielded and/or upgraded a variety of sensors that support various elements of 

the BMDS including: the Army Navy/Transportable Radar Surveillance and Control Model 

2 (AN/TPY-2) radar; the Sea-Based X-Band radar; upgraded early warning radars; and 

the Cobra Dane radar. 

Command, Control, Battle Management, 

and Communications (C2BMC)a 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. 

Ground-based Midcourse Defense (GMD) A ground-based missile defense system with interceptors located at Fort Greely, Alaska 

and Vandenberg, California. The interceptor consists of a 3-stage booster with a kill 

vehicle on top that can steer itself into the threat missile to destroy it. There are currently 

two versions of the kill vehicle: the Capability Enhancement-I (CE-I) and the upgraded 

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

Precision Tracking Space System (PTSS) A new constellation of nine satellites planned to provide high-quality track information on 

threat missiles to other ballistic missile defense systems, DOD proposed canceling the 

program in April 2013 as part of its Fiscal Year 2014 President’s Budget Submission.

Targets and Countermeasures MDA develops and manufactures highly complex targets to present realistic threat 

scenarios during BMDS flight tests. Our testimony focuses on medium-range air-launched 

targets being flown for the first time in fiscal year 2013. 

Terminal High Altitude Area Defense 

(THAAD) 

A mobile, ground-based missile defense system organized as a battery which includes 

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

and other support equipment. 

Source: Missile Defense Agency (data); GAO (presentation).

a

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

covered in our April 2013 report.

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

exceptional flexibility to set requirements and manage the acquisition of 
 

Page 4 GAO-13-604T

the BMDS in order to quickly deliver protection against ballistic missiles. 

This decision enabled MDA to rapidly deliver assets but we have reported 

that it has come at the expense of transparency and accountability.

5

• In recent years, MDA has experienced several test failures. These, as 

well as a test anomaly and delays, disrupted MDA’s flight test plan 

and the acquisition strategies of several components.

Moreover, to meet tight deadlines, MDA has employed high-risk 

acquisition strategies that have resulted in significant cost growth, 

schedule delays, and in some cases, performance shortfalls. Examples of 

key problems we have cited in reports in recent years are highlighted 

below.

6 Overall, these 

issues forced MDA to suspend or slow production of three out of four 

interceptors being manufactured. The GMD program in particular has 

been disrupted in its attempts to demonstrate the CE-II interceptors by 

two test failures. As a result of a failed flight test in January 2010 due 

to an assembly process quality issue, MDA added a retest designated 

as Flight Test GMD-06a (FTG-06a). However, this retest also failed in 

December 2010 due to the effects of vibration on the kill vehicle’s 

guidance system. As a result of these failures, MDA decided to halt 

GMD flight testing and restructure its multiyear flight test program, halt 

production of the GMD interceptors, and redirect resources to returnto-flight testing activities. Additionally, as we reported in April 2013, 

the costs to demonstrate and fix CE-II capability have grown from 

$236 million to over $1.2 billion and are continuing to grow.7

• MDA acquisitions have faced significant cost growth, schedule delays, 

and/or performance shortfalls due to a highly concurrent acquisition 

approach.8

 

5

Concurrency is broadly defined as the overlap between 

technology development and product development or between 

product development and production. While some concurrency is 

understandable, committing to product development before 

requirements are understood and technologies are mature or 

committing to production and fielding before development is complete 

is a high-risk strategy that often results in performance shortfalls, 

GAO-11-372 and GAO-12-486. 

6

GAO-12-486. 

7

GAO-13-432. 

8

GAO-12-486 and GAO-13-432. 
 

Page 5 GAO-13-604T

unexpected cost increases, schedule delays, and test problems. High 

levels of concurrency were present in MDA’s initial efforts and remain 

present in current efforts.

• There has been limited visibility into cost and schedule progress 

associated with the BMDS. We have reported on the limited 

usefulness of MDA’s acquisition baselines for oversight due to (1) a 

lack of clarity, consistency, and completeness; (2) a lack of highquality supporting cost estimates and schedules; and (3) instability in 

the content of the baselines.9

• MDA has made limited progress in developing the individual system 

models it uses to assess performance of the BMDS elements and 

linking those models.10

• Quality issues have also impeded missile defense development in 

recent years.

Models and simulations are critical to 

understanding BMDS capabilities. The complex nature of the BMDS, 

with its wide range of connected elements, requires integrated 

system-level models and simulations to assess its performance in a 

range of system configurations and engagement conditions.

11

Congress and DOD have taken steps in recent years to address concerns 

over MDA’s acquisition management strategy, accountability, and 

oversight. These include efforts to provide more information on cost, 

schedule, and other baselines; efforts to prevent quality problems; and 

efforts to begin obtaining independent cost estimates.

These were due to workmanship issues, the use of 

undocumented and untested manufacturing processes and poor 

control of manufacturing materials, among other factors.

 

9

GAO-11-372, GAO-12-720R, and GAO-13-432. 

10GAO-13-432, GAO-12-486, and GAO-11-372. 

11GAO-11-404. 
 

Page 6 GAO-13-604T

In April 2013, we reported that in the past year MDA gained important 

knowledge through its test program, including successfully conducting its 

most complex integrated air and missile defense flight test to date, and it 

took some positive steps to reduce acquisition risks for two of its 

programs. It has also improved the clarity of baseline information it 

reports to Congress.12

Specifically, in April 2013 we reported that in October 2012, MDA 

conducted the largest integrated air and missile defense flight test to date, 

achieving near simultaneous intercepts of multiple targets by various 

BMDS interceptors. This test was a combined developmental and 

operational flight test that for the first time used warfighters from multiple 

combatant commands and employed multiple missile defense systems. 

All five targets—three ballistic and two cruise missiles—were launched 

and performed as expected. In this test, THAAD also intercepted a 

medium range target for the first time and an Aegis ship conducted 

successfully a standard missile-2 Block IIIA engagement against a cruise 

missile. This test also provided valuable data to evaluate interoperability 

between several systems during a live engagement.

In April 2013, we reported that in fiscal year 2012, the Aegis BMD SM-3 

Block IB and THAAD programs also attained important knowledge in their 

flight test programs. In May 2012, the Aegis BMD SM-3 Block IB system 

intercepted a short-range target for the first time. In June 2012, the 

system completed another successful intercept which provided more 

insight into the missile’s enhanced ability to discriminate the target from 

other objects during an engagement. In October 2011, THAAD 

successfully conducted its first operational flight test prior to entering fullrate production.13

 

12

During the test, THAAD fired two missiles that 

intercepted two short-range targets, demonstrating that the system can 

perform under operationally realistic conditions from mission planning 

through the end of the engagement. Additionally, this test supported the 

resumption of interceptor manufacturing, and was used by the Army as 

support for accepting the first two THAAD batteries. This also marked the 

GAO-13-432. 

13Pursuant 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.

MDA Has Made 

Progress on Testing, 

Reducing Some 

Acquisition Risks, and 

Improving the Clarity 

of the Baselines
 

Page 7 GAO-13-604T

first time Army and DOD test and evaluation organizations confirmed that 

the test and its results resembled the fielded system.

We also reported in April 2013 that MDA took steps to reduce acquisition 

risk by decreasing the overlap between technology and product 

development for two of its programs—the Aegis BMD SM-3 Block IIA and 

Block IIB programs.14

Lastly, in April 2013 we reported that MDA has taken steps to improve the 

clarity of its acquisition baselines since we reported on these issues in 

March 2011. 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 (BAR) to respond to 

statutory requirements in the National Defense Authorization Act for 

Fiscal Year 2008.

By taking steps to reconcile gaps between 

requirements and available resources before product development 

begins, MDA makes it more likely that programs can meet cost, schedule, 

and performance targets. The Aegis BMD SM-3 Block IIA program added 

time and money to extend development following significant problems 

with four components. MDA reduced its acquisition risk by delaying the 

program’s system preliminary design review for more than one year and, 

as a result, in March 2012, the program successfully completed the 

review because it allowed additional development of the components. We 

also reported in April 2013 that the Aegis BMD SM-3 Block IIB program 

had taken important steps to reduce concurrency and increase the 

technical knowledge it planned to achieve before development by 

delaying product development until after its preliminary design review was 

completed.

15

 

14

MDA’s baselines, including resource and schedule 

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

2012 resource baselines report costs for all the categories of the life 

cycle—research and development, procurement, military construction, 

GAO-13-432. 

15Pub. L. No. 110-181, § 223(g), repealed by Pub. L. No. 112-81, § 231(b) (2011). 
 

Page 8 GAO-13-604T

operations and support, and disposal costs.16

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

resource and schedule baselines in response to our concerns and 

congressional direction. For example, MDA

Schedule baselines include 

key milestones and tasks, such as important decision points, significant 

increases in performance knowledge, modeling and simulation events, 

and development efforts. Some also show time frames for flight and 

ground tests, fielding, and events to support fielding.

• reported the full range of life cycle costs borne by MDA;

• defined and explained more clearly what costs are in the resource 

baselines or were excluded from the estimates;

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

Countermeasures so they were more complete;

• added a separate delivery table that provided more detailed 

information on deliveries and inventories; and

• 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.

Although the MDA has made some progress, the new MDA Director faces 

considerable challenges in executing acquisition programs; strengthening 

accountability; assessing alternatives before making new investment 

commitments; developing and deploying U.S. missile defense in Europe 

and using modeling and simulations to understand capabilities and 

limitations of the BMDS.

 

16Research 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.

MDA Continues to 

Face a Variety of 

Acquisition 

Challenges 
 

Page 9 GAO-13-604T

In April 2013 we reported that though MDA has gained important insights 

through testing and taken some steps to reduce acquisition risk and 

increase transparency, it still faces challenges stemming from high-risk 

acquisition strategies. As noted earlier, MDA has undertaken and 

continues to undertake highly concurrent acquisitions. While some 

concurrency is understandable, committing to product development 

before requirements are understood and technologies are mature or 

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. It can also create 

pressure to keep producing to avoid work stoppages.

Our April 2012 report detailed how the Aegis BMD SM-3 Block IB, GMD, 

and THAAD programs undertook highly concurrent acquisition 

strategies.17

In April 2012, we also reported that the Aegis Ashore and PTSS 

programs were adopting acquisition strategies with high levels of 

concurrency. The Aegis Ashore program, for instance, began product 

development on two systems—one designated for testing and the other 

operational—and set the acquisition baseline before completing the 

preliminary design review. Best practices, by contrast, call for such 

baselines to be set after this review because the review process is 

designed to ensure the program has sufficient knowledge about 

resources and requirements before engaging in large-scale acquisition 

activities. Similarly, for its new PTSS, MDA planned to develop and 

produce two industry-built satellites while a laboratory-led contractor team 

was still in the development phase of building two lab development 

satellites. Such an approach would not enable decision makers to fully 

For example, to meet the presidential directive to deploy an 

initial set of missile defense capabilities by 2004, the GMD program 

concurrently matured technology, designed the system, tested the design, 

and produced and deployed an initial set of missile defense capabilities. 

CE-I interceptors were rapidly delivered to the warfighter but they 

required an expensive retrofit and refurbishment program that is still 

ongoing. Similarly, MDA proceeded to concurrently develop, manufacture, 

and deliver 12 of the next generation of interceptors, the CE-IIs. They 

were also delivered prematurely to the warfighter and will require an 

extensive and expensive retrofit.

 

17GAO-12-486. 

Challenge: Executing 

Acquisition Programs
 

Page 10 GAO-13-604T

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.

In our April 2013 report, we noted that the concurrent high risk 

approaches for the GMD and Aegis BMD SM-3 Block IB programs were 

continuing to have negative effects, while the THAAD program was able 

to overcome most of its issues.18

We also reported in April 2013 that MDA was continuing to follow high 

risk acquisition strategies for its Aegis Ashore, PTSS, and Targets and 

Countermeasures programs. For example, this year we reported that the 

Targets and Countermeasures acquisition strategy is adding risk to an 

upcoming complex, costly operational flight test involving multiple MDA 

systems because it plans to use unproven targets. 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 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.

For instance, discovery of the CE-II 

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, due to the costs of additional flight tests 

including the target and test-range, investigating the failure, developing 

failure resolutions, and fixing the already delivered missiles. Costs 

continue growing because MDA further delayed the next intercept test 

planned for fiscal year 2012. At this time, the next intercept test date is 

not yet determined as MDA is considering various options. While the 

Aegis BMD SM-3 Block IB program slowed production to address 

developmental issues that arose when the program experienced a failure 

and a flight anomaly in early flight tests, it experienced further difficulties 

completing testing of a new maneuvering component—contributing to 

delays for a third flight test needed to validate the interceptor’s capability.

In 2012, we recommended MDA make adjustments to the acquisition 

schedules to reduce concurrency.19

 

18

DOD agreed and partially addressed 

GAO-13-432. 

19GAO-12-486. 
 

Page 11 GAO-13-604T

the recommendation. Specifically, MDA reduced concurrency in the Aegis 

BMD SM-3 Block IIA and Block IIB programs, but continues to include 

high levels of concurrency in other programs as discussed above. We 

also recommended in 2013 that the Secretary of Defense direct MDA’s 

new Director to add non-intercept flight tests for each new type of target 

missile developed to reduce risk.20 DOD partially concurred, stating that 

the decision to perform a non-intercept target test must be balanced 

against cost, schedule and programmatic impacts. While there may be 

exceptions that need to occur when there is a critical warfighter need, we 

believe, whenever possible, that MDA should avoid using 

undemonstrated targets, particularly for costly and complex major 

operational tests.

In April 2013 we reported that while MDA made substantial improvements 

to the clarity of its reported resource and schedule baselines in fiscal year 

2012, 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.21

In our March 2011 report, we assessed MDA life cycle cost estimates 

using the GAO Cost Estimating and Assessment Guide.

In particular, MDA’s 

resource baselines are not yet sufficiently reliable, in part because they 

do not include costs from military services in reported life cycle costs for 

its programs. Instability due to MDA’s frequent adjustments to its 

acquisition baselines also makes assessing progress over time extremely 

difficult and, in many cases, impossible. Despite some positive steps 

forward since 2004, the baselines are of limited use for meaningfully 

assessing BMDS cost and schedule progress.

22

 

20

We found that 

the cost estimates we assessed, that were used to support MDA’s 

resource baselines, were not comprehensive, lacked documentation, 

were not completely accurate, or were not sufficiently credible. In April 

2013 we reported that, in June 2012, MDA completed an internal Cost 

Estimating Handbook, largely based on our guide which, if implemented, 

could help address nearly all of the shortfalls we identified. Because the 

GAO-13-432. 

21GAO-11-372. 

22GAO-11-372 and GAO, GAO Cost Estimating and Assessment Guide, GAO-09-3SP

(Washington, D.C.: March 2009). 

Challenge: Strengthening 

Accountability by Ensuring 

Program Baselines 

Support Oversight
 

Page 12 GAO-13-604T

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

the quality of MDA’s cost estimates have improved. In our April 2013 

report, we found that while the agency made improvements to its reported 

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

from development through retirement of the program, the baselines do 

not include operation and support costs funded by the individual military 

services.23

In our April 2013 report, we recommended that the Secretary of Defense 

direct MDA’s new Director to include in its resource baseline cost 

estimates all life cycle costs, specifically the operations and support costs 

from the military services in order to provide decision makers with the full 

costs of ballistic missile defense systems. DOD partially concurred with 

this recommendation, agreeing that decision makers should have insight 

into the full life cycle costs of DOD programs, but disagreeing that they 

should be reported in MDA’s BAR. DOD did not identify how the full life 

cycle costs should be reported. We continue to believe that these costs 

should be reported because good budgeting requires that the full costs of 

a project be considered when making decisions to provide resources. In 

addition, 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. We also believe that MDA’s BAR is the most 

appropriate way to report the full costs to Congress because it already 

includes the acquisition costs and the MDA funded operation and support 

costs. 

According to our guide, cost estimates should be 

comprehensive. Comprehensive estimates include both the 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. MDA officials told us in 2011 that MDA does 

not consider military service operation and support funds to be part of the 

baselines because the services execute the funds. It is unclear what 

percentage operation and support costs are in the case of MDA programs 

because they have not been reported. For programs outside of MDA 

these costs can be significant, and as a result the reported life cycle costs 

for some MDA programs could be significantly understated.

 

23GAO-13-432. 
 

Page 13 GAO-13-604T

In July 2012, we also used our Schedule Assessment Guide to assess 

five MDA program schedules that support the baselines and found that 

none fully met the best practices identified in the guide.24

Lastly, as we reported in March 2009, in order for baselines to be useful, 

they need to be stable over time so progress can be measured and so 

that decision makers can determine how to best allocate limited 

resources.

For example, 

three programs took steps to ensure resources were assigned to their 

schedule activities, but one program did not do so and the other only 

partially did so. Moreover, none of the five programs we reviewed had an 

integrated master schedule for the entire length of acquisition as called 

for by the first best practice, meaning the programs are at risk for 

unreliable completion estimates and delays. DOD concurred with our 

recommendations to ensure that best practices are applied to those 

schedules as outlined in our guide, and MDA programs have taken some 

actions to improve their schedules, though they have 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.

25 In April 2013, we reported that most major defense 

acquisition programs are required to establish baselines prior to 

beginning product development.26

However, as we reported in April 2013, MDA only reports annual progress 

by comparing its current estimates for unit cost and scheduled activities 

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.

 

24GAO-12-720R. 

25GAO-09-3SP. 

26A baseline description for a major defense acquisition program or any designated major 

subprogram under the program shall be prepared ... before the program or subprogram 

enters system development and demonstration; before the program or subprogram enters 

production and deployment, and before the program or subprogram enters full rate 

production. 10 U.S.C. § 2435.
 

Page 14 GAO-13-604T

against the prior year’s estimates. As a result, MDA’s baseline reports are 

not useful for tracking longer term progress. When we sought to compare 

the latest 2012 unit cost and schedule estimates with the original 

baselines set in 2010, we found that because the baseline content had 

been adjusted from year to year, in many instances the baselines were no 

longer comparable. I would like to highlight the problems we identified in 

Aegis Ashore to illustrate how these adjustments limited visibility into cost 

or schedule progress. MDA prematurely set the Aegis Ashore baseline 

before program requirements were understood and before the acquisition 

strategy was firm. The program has subsequently added significant 

content to the resource baseline to respond to acquisition strategy 

changes and requirements that were added after the baseline was set. In 

addition, activities from Aegis Ashore’s 2010 BAR schedule baseline were 

split into multiple events, renamed, or eliminated altogether in the 

program’s 2012 BAR schedule baseline. MDA also redistributed planned 

activities from the Aegis Ashore schedule baselines into several other 

Aegis BMD schedule baselines. These major adjustments in program 

content made it impossible to understand annual or longer-term program 

cost progress. Rearranging content to other baselines also made tracking 

the progress of these activities very difficult and in some cases 

impossible.

We recommended in our April 2013 report that the Secretary of Defense 

direct MDA’s new Director to stabilize the acquisition baselines so that 

meaningful comparisons can be made over time that support oversight of 

those acquisitions. DOD concurred with this recommendation.

Our April 2013 report discussed a variety of other challenges facing MDA 

that I would like to highlight today. First, in light of growing fiscal 

pressures, it is becoming increasingly important that MDA have a sound 

basis before investing in new efforts. But MDA has not analyzed 

alternatives in a robust manner before making recent commitments. 

Second, during the past several years, MDA has been responding to a 

mandate from the President to develop and deploy new missile defense 

systems in Europe for defense of Europe and the United States. Our work 

continues to find that a key challenge facing DOD is to keep individual 

system acquisitions synchronized with the planned time frames of the 

overall U.S. missile defense capability planned in Europe. Third, 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, which will require the 

agency to overcome technical limitations in the current approach to 

Other Challenges Reported 

by GAO
 

Page 15 GAO-13-604T

modeling missile defense performance. While MDA recently committed to 

a new approach in modeling and simulation that could enable them to 

credibly model individual programs and system-level BMDS performance, 

warfighters will not benefit from this effort until two of the currently 

planned three phases for U.S. missile defense in Europe have already 

been deployed in 2011 and 2015 respectively.

Because MDA faces growing fiscal pressure as it develops new programs 

at the same time as it supports and upgrades existing ones, DOD and 

MDA face key challenges getting the best value for its missile defense 

investments. We have frequently reported on the importance of 

establishing a sound basis before committing resources to developing a 

new product.27 We have also reported that part of a sound basis is a full 

analysis of alternatives (AOA).28

 

27

The AOA is an analytical study that is 

intended to compare the operational effectiveness, cost, and risks of a 

number of alternative potential solutions to address valid needs and 

shortfalls in operational capability. A robust AOA can provide decision 

makers with the information they need by helping establish whether a 

concept can be developed and produced within existing resources and 

whether it is the best solution to meet the warfighter’s needs. 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. 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.

GAO-08-1113; 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). 

28GAO-09-665 and Homeland Security: DHS Requires More Disciplined Investment 

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

2012). 

Analyses of Alternatives Could 

Help MDA Balance and 

Prioritize Its Portfolio of 

Investments
 

Page 16 GAO-13-604T

We reported in February 2013 that the Aegis BMD SM-3 Block IIB had 

not conducted a robust alternatives analysis and also reported in April 

2013 that MDA did not conduct robust alternatives analyses for the PTSS 

program. Both of these programs were recently proposed for cancellation 

in the Fiscal Year 2014 President’s Budget Submission. In our April 2013 

report, we recommended that the Secretary of Defense direct the new 

MDA Director to undertake robust alternatives analyses for new major 

missile defense efforts currently underway and before embarking on other 

new missile defense programs. Doing so can help provide a foundation 

for developing and refining new program requirements, understanding the 

technical feasibility and costs of alternatives and help decision makers 

determine how to balance and prioritize MDA’s portfolio of BMDS 

investments.DOD concurred with our recommendation but asserted MDA 

already performs studies and reviews that function as analyses of 

alternatives. We have found, however, that these studies are not 

sufficiently robust.

In September 2009, the President announced a new approach to provide 

U.S. missile defense in Europe. This four-phase effort was designed to 

rely on increasingly capable missiles, sensors, and command and control 

systems to defend Europe and the United States. In March 2013, the 

Secretary of Defense canceled Phase 4, which called for Aegis BMD SM3 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. DOD declared the first 

phase of U.S. missile defense in Europe operational in December 2011. 

The current three-phase effort is shown in figure 1.

Developing and Deploying U.S. 

Missile Defense in Europe
 

Page 17 GAO-13-604T

Figure 1: Three-Phase U.S. Approach to Missile Defense in Europe

We reported in April 2012 that in order to meet the 2009 presidential 

announcement to deploy missile defenses in Europe, MDA has 

undertaken and continues to undertake highly concurrent acquisitions. 

We reported in April 2013 that, according to MDA documentation, system 

capabilities originally planned for the first three phases are facing delays, 

either in development or in integration and testing.

• The systems delivered for Phase 1 do not yet provide the full 

capability planned for the phase. Phase 1 was largely defined by 

existing systems that could be quickly deployed because of the limited 

time between the September 2009 announcement and the planned 

deployment of the first phase in 2011. MDA planned to deploy the first 

phase in two stages—the systems needed for the phase and then 

upgrades to those systems in 2014. However, an MDA official told us 

that MDA now considers the system upgrades stage to be part of the 

second phase, which may not be available until the 2015 time frame.

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

software upgrade, may not yet 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.

• We recommended in our April 2012 report that DOD review the extent 

to which capability delivery dates announced by the President in 2009 

were contributing to concurrency in missile defense acquisitions and 

identify schedule adjustments where significant benefits could be 
 

Page 18 GAO-13-604T

obtained by reducing concurrency. DOD concurred with this 

recommendation.

We reported in April 2013 that a key challenge for both the Director of 

MDA and the warfighter is understanding the capabilities and limitations 

of the systems MDA is going to deploy, particularly given the rapid pace 

of development. 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.29 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 then, 

we reported in March 2011 and again in April 2012 that MDA has had 

difficulty developing its models and simulations to the point where it can 

assess operational performance. In April 2013, we reported that MDA 

recently committed to a new approach in modeling and simulation that 

officials stated could enable them to credibly model individual programs 

and system-level BMDS performance by 2017.30

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 

To accomplish this, 

MDA will use only one simulation framework, not two, to do ground 

testing and performance assessments. With one framework, the agency 

anticipates data quality improvements through consistent representations 

of the threat, the environment, and communications at the system level. 

Without implementing these changes, MDA officials told us it would not 

be possible to credibly model BMDS performance by 2017, in time to 

assess the third phase of U.S. missile defense in Europe.

 

29A 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. 

30GAO-13-432. 

Modeling and Simulation 

Limitations
 

Page 19 GAO-13-604T

which involves identifying more areas in the models where credibility can 

be certified by the BMDS Operational Test Agency. Another focuses 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.

Because MDA recently committed to a new approach for modeling and 

simulation, we did not make recommendations in our 2013 report. 

However, it is important that this effort receive sufficient management 

attention and resources, given past challenges and the criticality of 

modeling and simulation.

In conclusion, many of the challenges I have highlighted today are rooted 

in both the schedule pressures that were placed on MDA when the 

agency was directed in 2002 to rapidly field an initial missile defense 

capability and the flexibilities that were granted MDA so that it could do 

so. Today, however, initial capability is in place; MDA has begun to 

transition more mature systems to the military services; it has had to 

propose canceling two major efforts in the face of budget reductions, 

concerns about affordability, and technical challenges; and the 

employment of BMDS systems is becoming increasingly interdependent, 

thereby increasing the potential consequences of problems discovered 

late in the development cycle. In recent years, both Congress and MDA 

have recognized that conditions have changed and steps need to be 

taken that reduce acquisition risk, while increasing transparency and 

accountability. However, especially in light of growing budget pressures, 

additional actions are needed, including

• sufficiently analyzing alternatives before making major new 

investment commitments;

• stabilizing acquisition baselines and ensuring they are comprehensive 

and reliable;

• ensuring acquisition strategies allow for the right technical and 

programmatic knowledge to be in place before moving into more 

complex and costly phases of development; and

• demonstrating new types of targets in less critical tests before they 

are used in a major test in order to lower testing risks

The appointment of a new Director provides an opportunity to address 

these challenges, but doing so will not be easy as MDA is still under 
 

Page 20 GAO-13-604T

significant schedule pressures and the agency is undergoing a transition 

to respond to new Secretary of Defense direction to expand the GMD 

capabilities. As such, we look forward to continuing to work with MDA to 

identify and implement actions that can reduce acquisition risk and 

facilitate oversight and better position MDA to respond to today’s 

demands.

Chairman Udall, Ranking Member Sessions, and Members of the 

Subcommittee, this concludes my statement. I am happy to answer any 

questions you have.

For future questions about this statement, please contact me at (202) 

512-4841 or chaplainc@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this statement. Individuals making key contributions to this statement 

include David B. Best, Assistant Director; Aryn Ehlow; Ivy Hübler; 

Meredith Allen Kimmett; Wiktor Niewiadomski; Kenneth E. Patton; John 

H. Pendleton; Karen Richey; Brian T. Smith; Steven Stern; Robert 

Swierczek; Brian Tittle; and Hai V. Tran.

GAO Contact and 

Staff 

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