Defense Acquisitions: Missile Defense Agency Fields Initial Capability but Falls Short of Original Goals
Published: 2006-03-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Defense (DOD) has spent nearly $90 billion since 1985 to develop a Ballistic Missile Defense System (BMDS). In the next 6 years, the Missile Defense Agency (MDA), the developer, plans to invest about $58 billion more. MDA's overall goal is to produce a system that is capable of defeating enemy missiles launched from any range during any phase of their flight. MDA's approach is to field new capabilities in 2-year blocks. The first--Block 2004--was to provide some protection by December 2005 against attacks out of North Korea and the Middle East. Congress requires GAO to assess MDA's progress annually. This year's report assesses (1) MDA's progress during fiscal year 2005 and (2) whether capabilities fielded under Block 2004 met goals. To the extent goals were not met, GAO identifies reasons for shortfalls and discusses corrective actions that should be taken.
section_title: What GAO Found
paragraphs: MDA made good progress during fiscal year 2005 in the development and fielding of two of the seven elements reviewed. Most of the others encountered problems that slowed progress. Meanwhile, contractors for the seven elements exceeded their fiscal year budget by about $458 million, or about 14 percent, most of which was attributable to cost overruns in developing the Ground-based Midcourse Defense (GMD) element. Accelerating Block 2004 allowed MDA to successfully field missile defense assets faster than planned. But, MDA delivered fewer quantities than planned and exceeded the cost goal of $6.7 billion by about $1 billion. The increased cost is primarily the added cost of sustaining fielded assets. However, the increase would have been greater if some development and other activities had not been deferred into Block 2006. Also, MDA has been unable to verify actual system performance because of flight test delays. Time pressures caused MDA to stray from a knowledge-based acquisition strategy. Key aspects of product knowledge, such as technology maturity, are proven in a knowledge-based strategy before committing to more development. MDA followed a knowledge-based strategy with elements not being fielded, such as Airborne Laser and Kinetic Energy Interceptor. But it allowed the GMD program to concurrently mature technology, complete design activities, and produce and field assets before end-to-end testing of the system--all at the expense of cost, quantity, and performance goals. For example, the performance of some GMD interceptors is questionable because the program was inattentive to quality assurance. If the block approach continues to feature concurrency as a means of acceleration, MDA's approach may not be affordable for the considerable amount of capability that is yet to be developed and fielded. MDA has unusual flexibility to modify its strategies and goals, make trade-offs, and report on its progress. For example, MDA's Director may determine when cost variations are significant enough to report to Congress. MDA is taking actions to strengthen quality control. These actions are notable, but they do not address the schedule-induced pressures of fielding or enhancing a capability in a 2-year time frame or the need to fully implement a knowledge-based acquisition approach.

section_title: Letter
paragraphs: For nearly 50 years, the Department of Defense (DOD) has been spending  money to develop a missile defense system capable of protecting the U.S.  homeland and U.S. deployed forces from ballistic missile attacks. Since  1985, DOD has spent almost $90 billion for this purpose, and it plans to  invest an additional $58 billion, or about 14 percent of its research and  development budget, over the next 6 years. The Ballistic Missile Defense  System (BMDS) under development includes a diverse collection of land-,  air-, sea-, and space-based assets located around the globe and founded on  cutting-edge technology. The Missile Defense Agency (MDA)—the  component within DOD responsible for managing the development of the  various missile defense programs—originally focused on developing a test  bed in which the design of the various BMDS assets could be matured and  demonstrated. However, in 2002, the President directed MDA to begin  fielding an initial BMDS capability in the 2004 and 2005 time frame.
MDA is currently developing eight BMDS elements: Ground-Based  Midcourse Defense (GMD); Aegis Ballistic Missile Defense (Aegis BMD);  Command, Control, Battle Management, and Communications (C2BMC);  Airborne Laser (ABL); Kinetic Energy Interceptors (KEI); Space Tracking  and Surveillance System (STSS); Terminal High Altitude Area Defense  (THAAD); and BMDS Sensors. MDA has adopted an evolutionary  acquisition approach in which the BMDS will be developed and fielded in  2-year blocks. The first block, known as Block 2004, ended on December  31, 2005. The block fielded an initial capability that includes initial  versions of GMD; Aegis BMD; Patriot Advanced Capability-3; and the  Command, Control, Battle Management, and Communications elements.  This capability is designed to provide limited protection of the United  States from ballistic missile attacks out of North Korea and the Middle  East and protection of U.S. forces and critical assets from short- and  medium-range ballistic missiles. Future blocks are expected to enhance  this capability. Over time, MDA expects its block approach to produce an  overarching BMDS capable of protecting the United States, deployed  forces, friends, and allies from ballistic missile attacks of all ranges.
To facilitate oversight of the ballistic missile defense program, the Defense  Authorization Acts for fiscal years 2002 and 2005 mandated that we  prepare annual assessments of MDA’s ongoing progress. To date, we have  delivered assessments covering fiscal years 2003 and 2004 to Congress.  Because our assessment of MDA’s fiscal year 2005 progress was ongoing  when Block 2004 ended, we were also able to make observations about the  outcome of the block. Specifically, this report  1.  assesses the progress MDA made during fiscal year 2005 toward the  fiscal year plans of work established by seven of the BMDS elements;  2.  compares the fielded Block 2004 capability with the quantity, cost, and  performance goals established for that capability;  3. identifies reasons why the fielded capability fell short of goals; and  4.  discusses corrective actions being taken by MDA.
To address our objectives, we looked at the accomplishments of seven  BMDS elements—GMD, Aegis BMD, C2BMC, ABL, KEI, STSS, and  THAAD. These elements collectively account for about 73 percent of  MDA’s research and development budget. For each element, we examined  documents such as System Element Reviews, test plans and reports,  production plans, and Contract Performance Reports. We also interviewed  officials within each element program office and within MDA functional  offices, such as the Office of Safety, Quality, and Mission Assurance. In  addition, we discussed each element’s test program and the results of tests  with DOD’s Office of the Director, Operational Test and Evaluation  (DOT&E). We performed our work from May 2005 to March 2006 in  accordance with generally accepted government auditing standards.
Additional details of our scope and methodology can be found in   appendix VI.
subsections: section_title: Background
paragraphs: A weapon system for ballistic missile defense, even a rudimentary one,  requires the coordinated operation of a diverse collection of components.  For example, the initial capability emplaced in 2004 employs early-warning  satellites for launch detection, ground-based radars in California and  Alaska, and sea-based Aegis radars in the Sea of Japan for surveillance and  tracking of enemy missiles, interceptors at launch sites in Alaska and  California to engage and destroy incoming warheads, and command and  control nodes in Alaska and Colorado to orchestrate the mission.
A typical scenario to engage an intercontinental ballistic missile (ICBM)  would unfold as follows:  Infrared sensors aboard early-warning satellites detect the hot plume of a  missile launch and alert the command authority of a possible attack.
Upon receiving the alert, land- or sea-based radars are directed to track  the various objects released from the missile and, if so designed, to  identify the warhead from among spent rocket motors, decoys, and debris.
When the trajectory of the missile’s warhead has been adequately  established, an interceptor—consisting of a “kill vehicle” mounted atop a  booster—is launched to engage the threat. The interceptor boosts itself  toward a predicted intercept point and releases the kill vehicle.
The kill vehicle uses its onboard sensors and divert thrusters to detect,  identify, and steer itself into the warhead. With a combined closing speed  on the order of 10 kilometers per second (22,000 miles per hour), the  warhead is destroyed through a “hit-to-kill” collision with the kill vehicle  above the atmosphere.
To develop a system capable of carrying out such an engagement, MDA is  executing an evolutionary acquisition strategy in which the development  of missile defense capabilities is organized in 2-year increments known as  blocks. In 2001, when it adopted the block strategy, MDA planned to  construct a test bed in which new sensors, weapon projects, and  enhancements to existing capabilities could be matured. When assets were  considered mature, MDA planned to integrate them into the BMDS to  increase the system’s capability to respond to the evolving threat.  However, with the President’s directive to begin fielding an initial BMDS  capability beginning in 2004, MDA switched its emphasis from developing  a test bed to developing and fielding an operational capability.
MDA is completing its Block 2004 program of work. The associated  military capability of this block is primarily one for defending the United  States against ICBM attacks from North Korea and the Middle East,  although the block increases the United States’ ability to engage short- and  medium-range ballistic missiles. Block 2004 is built around the GMD  element, augmented by shipboard Aegis BMD radars and missiles, and  integrated by the system-level C2BMC element. In addition, MDA  attempted to accelerate the fielding of the Forward-Based X-Band- Transportable (FBX-T) radar into Block 2004. This radar, being developed  by the Sensors Program Office, was originally intended for operation  during Block 2006.
MDA is also carrying out an extensive research and development effort to  expand its current operational capability into future blocks. During fiscal  year 2005, MDA funded the development of four other major BMDS  elements in addition to the four elements that were to be fielded as part of  the Block 2004 BMDS. These elements are the ABL, KEI, STSS, and  THAAD. MDA expects to field a limited THAAD capability during Block  2008. The other elements, which are primarily in technology development,  will likely be fielded in later blocks. Table 1 provides a brief description of  all elements being developed by MDA. More information about them is  provided in appendix II.
Since 2002, missile defense has been seen as a national priority and has  been funded nearly at requested levels. However, DOD’s Program Budget  Decision of December 2004 called for MDA to plan for a $5 billion  reduction in funding over fiscal years 2006-2011. In addition, MDA will  continue to compete with hundreds of existing and planned technology  development and acquisition programs for research, development, and  evaluation funding. Cost growth of existing weapon programs is also likely  to affect MDA’s share of future DOD budgets.
section_title: MDA Made Progress during Fiscal Year 2005, but Some Activities Were Not Completed as Planned
paragraphs: MDA made progress during fiscal year 2005 in carrying out the fiscal year  plans of work established by the seven BMDS elements, but it was not able  to field all planned components or conduct all scheduled tests. Also, some  activities that would have furthered the development of elements planned  for later blocks slipped into fiscal year 2006, possibly delaying the  elements’ scheduled integration into the BMDS. In addition, although MDA  did not complete all work scheduled during the fiscal year, most of MDA’s  prime contractors reported that the work accomplished cost more than  expected.
During fiscal year 2005, MDA intended to improve the C2BMC, field eight  Standard Missile-3 (SM-3) missiles, make seven Aegis destroyers capable  of performing long-range surveillance and tracking, upgrade two Aegis  cruisers with a missile defense contingency engagement capability,  upgrade two radars (Beale and Fylingdales early warning radars), and  deliver and emplace 10 GMD interceptors. In addition, MDA planned a  number of flight tests—six GMD flight tests, four of which Aegis BMD  would participate in to detect and track ICBM targets, and three Aegis  BMD intercept tests.
subsections: section_title: Good Progress Made in the C2BMC and Aegis Elements
paragraphs: The C2BMC program completed most activities required to provide  situational awareness of the missile defense battle. The C2BMC element,  whose development is in its early stages, is initially expected to monitor  the operational status of each BMDS component and display threat  information, such as missile trajectories and impact points. In 2005, the  program installed C2BMC suites (communications software and  hardware) at U.S. Strategic Command, U. S. Northern Command, and U.S.  Pacific Command. The additions at U.S. Strategic Command and U.S.  Northern Command provide redundant capability and more flexibility to  test, exercise, and maintain the C2BMC. MDA also planned to install a Web  browser in the United Kingdom, to provide situational awareness for the  British government. However, the Web browser will not be operational  until 2006 because DOD did not complete final policy agreements as  scheduled.
Development of two C2BMC software upgrades was also completed  during the fiscal year. The first upgrade gave C2BMC the ability to display  GMD assets on the user’s computer monitors, improved the user’s ability  to call up BMDS information, reduced the time to transfer force-level  planning files, and installed the software and hardware necessary to  provide an operational capability at U.S. Pacific Command. The final  decision to make the U.S. Pacific Command suite operational has not yet  been made, but a decision is expected in March 2006. Completion of the  second upgrade was a little behind schedule, but it was completed by the  first quarter of calendar year 2006. Development of the upgrade, known as  Spiral 4.5, was completed by the end of September 2005, but all testing is  not expected to be completed until the end of March 2006. Spiral 4.5 gives  C2BMC the capability to receive, distribute, and display information  developed by three new sensors—the FBX-T and Sea-Based X-Band (SBX)  radars and the Fylingdales upgraded early warning radar. It also improves  the consistency between the data displayed by the C2BMC and the GMD  fire control monitors, both of which receive information directly from  various sensors.
The Aegis BMD program made good progress in developing and delivering  missiles and upgrading Aegis ships for the missile defense mission. To  increase the United States’ capability to defend against short- and medium- range ballistic missiles, the program produced and delivered eight  Standard Missile-3s—the “bullet” for the Aegis BMD element. These  missiles will be launched from Aegis cruisers, two of which were upgraded  in fiscal year 2005 to enable them to perform their engagement and long- range surveillance and tracking missions. Six destroyers, whose ballistic  missile defense mission is to provide long-range surveillance and tracking  of ICBMs for the GMD element, were also upgraded in fiscal year 2005.  The program was unable to upgrade a seventh destroyer during the fiscal  year as scheduled—although assets required to proceed with the upgrade  were in place—because the Navy had scheduled the ship for other  activities. However, the destroyer was upgraded before the end of Block  2004.
section_title: GMD Program Makes Less Progress
paragraphs: Although the GMD program made progress during fiscal year 2005, it did  not meet all expectations. The GMD program had planned to field   10 additional interceptors during the fiscal year, but actually fielded 4.  Two additional GMD interceptors were delivered and fielded at Fort  Greely, Alaska, and the first 2 interceptors were emplaced at Vandenberg  Air Force Base, California. The 2 interceptors installed at Vandenberg  provide a redundant launch site and a better intercept trajectory against  some ICBM threats. MDA also upgraded two early warning radars—one at  Beale Air Force Base, California, and another at Fylingdales in the United  Kingdom. In some scenarios, each of these radars will act as the primary  fire control radar for the GMD element.
Interceptor production slowed as the year progressed primarily because  technical problems were discovered, mostly in the interceptor’s  exoatmospheric kill vehicle (EKV). MDA officials explained that these  problems were traced back to poor oversight of subcontractors, too few  qualification tests, and other quality assurance issues. By the end of the  fiscal year, the program had reduced its fiscal year plan for fielding  interceptors from 10 to 6 so that additional interceptors could be made  available for ground tests, but the contractor was only able to emplace the  2 interceptors at Fort Greely and the 2 at Vandenburg Air Force Base.
section_title: Two of Nine Flight Tests Successfully Completed
paragraphs: The GMD and Aegis BMD programs also planned to conduct a number of  flight tests during the fiscal year. The GMD program planned three  nonintercept and three intercept flight tests. However, the program was  able to successfully complete only one of the nonintercept flight tests and  none of the intercept tests. The successful nonintercept test demonstrated  that the upgraded Cobra Dane radar could detect and track a target of  opportunity. However, a second nonintercept flight test that would have  examined upgrades to the Beale upgraded early warning radar was  delayed, when GMD’s test plan was restructured to make it less  concurrent. Also, the other nonintercept test (integrated flight test - 13C) that was to demonstrate operational aspects of the fielded  configuration of GMD’s interceptor could not be completed because the  interceptor failed to launch. Of the three planned intercept tests, the  program conducted one (IFT-14). However, this test was also aborted  when the interceptor failed to launch. MDA planned two other intercept  tests, but the tests did not take place because MDA restructured GMD’s  test plan after the interceptor failures to implement a less risky test  strategy. The first test in the restructured plan—which was a nonintercept  test to assess the interceptor’s operation in space—was successfully  completed in December 2005.
The Aegis BMD Program Office planned to participate in four of the GMD  tests during fiscal year 2005. Aegis BMD did not participate in any of these  tests because weather conditions prevented the ship from participating in  one test, the ship was unavailable during another, and GMD’s test plan was  restructured, causing two tests to be canceled.
In addition to participating in GMD tests, the Aegis BMD program planned  three intercept tests during fiscal year 2005. However, only one test was  conducted. The program delayed the two other tests because of budgetary  constraints and technical problems. MDA completed one of the delayed  tests in the first quarter of fiscal year 2006 and canceled the second  delayed test because most of its objectives had been accomplished in the  completed test. In the fiscal year 2006 test, an SM-3 missile successfully  engaged a separating target, that is, a target whose warhead separates  from its booster. In defeating this target, the program demonstrated that  the Aegis BMD element has a capability against a more advanced threat  than the nonseparating targets included in earlier tests.
section_title: Developmental Elements Progress but Experience Some Setbacks
paragraphs: MDA made progress in developing the four elements that are expected to  enhance the BMDS during future blocks—THAAD, ABL, STSS, and KEI— but some planned activities fell behind schedule. The THAAD Program  Office completed numerous ground and component qualification tests that  led to a successful first flight test in the first quarter of fiscal year 2006.  The program also worked to solve technical problems that could have  affected the success of the first flight tests. The ABL program completed  the first major milestones of its restructured program—First Flight and  First Light, completed scheduled activities associated with a series of  Beam Control/Fire Control low-power passive flight tests, and began  integrating the full Beam Control/Fire Control with other laser systems  aboard the aircraft. The STSS program tested and integrated spacecraft  components for the demonstration satellites that the program expects to  launch and began testing the first satellite’s payload. The KEI program  completed the construction of a shelter to house prototype fire control  and communications equipment and conducted several demonstrations  during which the prototype equipment collected data from overhead  nonimaging infrared satellites in a timeline that, according to program  officials, proves a boost phase intercept is possible. In addition, the  program completed studies of communications equipment—which uplinks  information from KEI’s fire control and communications component to its  interceptor—that allowed the program to optimize the equipment’s design  to operate in a nuclear environment or against jamming threats.
However, all four programs experienced some setbacks. The THAAD  program delayed the start of flight tests until the first quarter of fiscal year  2006. The ABL Program Office did not complete laboratory testing of the  element’s high-energy laser in September 2005, as planned, and the STSS  Program Office rescheduled tests of the first satellite’s payload until the  second quarter of fiscal year 2006. The fourth element, KEI, also delayed  some activities related to its Near Field Infrared Experiment (NFIRE),  which is being conducted to gather data on the risk in identifying the body  of a missile from the plume of hot exhaust gases that can obscure the body  while the missile is boosting.
The THAAD Program Office expected to begin flight tests in June 2005.  However, the first test was delayed until November 2005 because of  unexpected integration problems. For example, one delay was caused by a  tear in a filter in the missile’s divert attitude control system. Program  officials expect to recover the test schedule and conduct 14 flight tests  before turning the first THAAD fire unit over to the Army in 2009 for  operational use and testing. However, the test schedule is aggressive,  requiring as many as 5 tests in some years. To complete all tests as  planned, the officials told us that there can be no test failures.
The Airborne Laser Program Office planned to complete tests of the  element’s high-energy laser by September 30, 2005. The laser is a  component of the ABL prototype that will be used to demonstrate the  element’s lethality as early as the 2008 time frame. Prior to installing the  laser on the prototype aircraft, the program tested the laser in its System  Integration Laboratory at Edwards Air Force Base. Program officials  expected the tests, which began in November 2004, to be completed by the  end of fiscal year 2005. During this time frame, officials wanted to  demonstrate that the laser could generate 100 percent of its design power  and that it could repeatedly operate at that power for periods of about   10 seconds. As of October 2005, the laser had produced 83 percent of the  power it is designed to generate and was able to operate for periods of  about 5 ¼ seconds. After solving technical problems with the laser’s abort  system and completing the planned installation of an ammonia cooling  system, the program was able, in December 2005, to extend the laser’s  operating time to more than 10 seconds. Although the laser has not  reached 100 percent of its design power, officials told us that the   83 percent obtained thus far is sufficient to achieve 95 percent of  maximum lethal range against all classes of ballistic missiles. The ABL  Program Manager originally told us that he expected the laser to remain in  the system integration laboratory until it produced 100 percent of its  design power. Nonetheless, on December 9, 2005, MDA’s Director gave the  ABL program permission to disassemble the System Integration  Laboratory and install the laser on the aircraft. Program officials told us  that they would continue to test the laser, when the aircraft is on the  ground, in an attempt to demonstrate that the laser can produce   100 percent of its design power.
During fiscal year 2005, the STSS program intended to integrate and test  the spacecraft for two demonstration satellites and integrate and test the  sensor payload, which includes surveillance and tracking sensors, for the  first of the two satellites. The program is constructing the demonstration  satellites from hardware developed by the Space-Based Infrared System- Low program before it was canceled in 1999 and plans to launch the  satellites in fiscal year 2007, after all hardware has been integrated and  tested. The program did not complete the payload integration and test  activities in fiscal year 2005, as planned, because thermal vacuum testing  is taking longer than expected. Hardware issues have emerged as the  payload is being tested in a vacuum and at cold temperatures for the first  time. For example, in a vacuum, the sensors’ optics did not cool to the  desired temperature and the power supply to the acquisition sensor’s  signal processor failed. The program office believes that repairs will  correct the problems, but program officials are in the process of deciding  whether further tests must be completed after the repairs are made and  before the sensor payload is placed aboard the satellite.
As part of its fiscal year 2005 activities, the KEI program intended to  complete a number of tasks that would have enabled it to conduct the  NFIRE experiment. The experiment places sensors aboard a satellite that  will be launched into space, where the sensors will observe and collect  infrared imagery of boosting intercontinental ballistic missiles. In fiscal  year 2005, the KEI program expected to calibrate and deliver the sensor  payload, complete the space vehicle integration and acceptance test,  procure targets, and certify mission operation readiness. However,  anomalies in the sensor payload delayed the delivery of the payload, in  turn delaying the remaining activities. The day-to-day management of all  NFIRE activities has since been transferred to the STSS program, which  has extensive experience with the development of satellites. STSS officials  told us that they do not expect the fiscal year 2005 delays to affect the  experiment’s launch date.
section_title: Completed Work Cost More than Expected
paragraphs: Although MDA was unable to complete all activities during fiscal year 2005  as planned, the completed work cost more than expected. Collectively,  prime contractors for the various elements overran their budgets by about  $458 million, or about 14 percent, with GMD accounting for approximately  80 percent of the collective overrun. Although the GMD contractor  experienced the largest overrun, exceeding its fiscal year 2005 budget by  approximately 25 percent, it is notable that the ABL contractor overran its  fiscal year budget. The ABL contract had been restructured in 2004 to  provide a more realistic cost estimate for the work planned. It is also  noteworthy that continuing cost growth in the development of the THAAD  missile caused the contractor to overrun its fiscal year budget for the first  time since the contract was awarded.
Table 2 contains our analysis of the contractor’s cost and schedule  performance in fiscal year 2005 and the potential overrun or underrun of  each contract at completion. All estimates of the contracts’ costs at  completion are based on the contractors’ performance through fiscal year  2005. Collectively, the six contracts, for which data were available to  estimate a cost at completion, could overrun their budgets by about   $1.3 billion to $2.1 billion. It should be noted that the cost variance at  completion projected for most of the contracts is based on more than one  block of work. For example, the STSS contract covers the contractor’s  work on Block 2006 and Block 2010. Appendix III provides further details  regarding the performance of the prime contractors for the seven elements  shown in the table.
About $240 million of the GMD overrun can be traced to the interceptor,  with the EKV accounting for more than 42 percent, or $102 million, of that  amount. The EKV’s cost growth was caused by poor quality control  procedures and technical problems during development, testing, and  production. The interceptor’s cost also grew when the contractor had to  bring a new supplier online to produce the motors for the BV+ booster,  one of the two boosters being developed to carry the EKV into space. A  new supplier was needed because explosions at the old supplier’s plant  prevented it from delivering the motors.
As of September 30, 2005, the SBX radar, which is also being developed by  the GMD program, had also overrun its fiscal year budget by about   $55 million. The cost of developing this component increased when  numerous unplanned changes were made to the platform that holds the  radar, subcontractor costs could not be negotiated at the expected price,  and additional efforts were required to ensure a functional radome.
The ABL prime contractor also experienced cost growth during fiscal year  2005, even though the ABL contract had been restructured in 2004. This  action provided a more realistic budget and schedule for remaining  contract activities leading up to a 2008 ABL lethality demonstration. With  the restructure, the contractor was no longer required to report past cost  and schedule growth. However, in fiscal year 2005, the contractor once  again reported that ABL’s cost was growing and that some work had been  delayed. Cost grew and schedules slipped as the contractor made software  changes to address problems identified during tests of the Beam  Control/Fire Control, modified the laser’s abort system so that it would not  shut down the operation of the laser prematurely, and reprioritized  activities throughout the program. Other costs were attributable to  problems with ABL’s Active Ranger System and Beacon Illuminator Laser.  For example, the contractor’s cost grew when it redesigned and replaced  contaminated, damaged, and inefficient optics in the commercial off-the- shelf Active Ranger System. In addition, the contractor incurred additional  cost because numerous faults in the power supply for the Beacon  Illuminator Laser forced changes in circuit cards and circuit boards.
For the first time since the THAAD contract was awarded, in 2000, the cost  of the work being performed in a given fiscal year was greater than the  funds budgeted for that work. The THAAD Program Office attributed the  contractor’s overrun to unanticipated missile integration problems. For  example, the Flight Termination Assembly, which is responsible for  terminating a THAAD missile in flight, failed qualification tests that in turn  delayed qualification of the next larger assembly. In another instance,  work was delayed while engineers determined why telemetry equipment,  which is placed aboard a test missile to report the missile’s condition in  flight, sent corrupted data to the test station. Program officials told us that  the program solved all known problems that could have prevented a  successful first flight test. However, the officials said that the missile still  has telemetry problems that prevent the test station from collecting all of  the data that will be generated in the third flight test. Program officials  expect to find solutions for these problems prior to the third test.
section_title: Block 2004 Delivers Assets Faster, but with Unverified Performance
paragraphs: MDA succeeded in fielding an initial missile defense capability by the end  of fiscal year 2004 and in improving that capability by December 31, 2005,  when Block 2004 ended. However, the block included fewer components  than planned, cost more than anticipated, and its performance is  unverified. In February 2003, MDA forwarded to Congress the goals that it  had established for the initial BMDS capability that it planned to develop  and field during Block 2004. The goals included the quantity of  components that would compose the block, the cost of developing and  producing those components, and the performance that the initial BMDS  capability was to deliver. However, over the course of the block, MDA  progressively reduced the number of components that it expected to field  and increased its cost goal, primarily to recognize the cost of sustaining  fielded assets. Even with changes, MDA was unable to meet its quantity  goals, and MDA is reporting that the cost of Block 2004 will be greater  than expected because of additional sustainment costs. However, the  Block 2004 cost being reported by MDA does not include the cost of some  activities that must still be completed. MDA did not change its  performance expectations for the block.
subsections: section_title: Significantly Fewer Block 2004 Assets Fielded than Planned
paragraphs: Between 2003 and mid-2005, MDA progressively decreased the number of  components it planned to field as part of the Block 2004 capability.  However, even with the reductions, MDA was unable to deliver all  components planned. Table 3 illustrates the evolution of MDA’s quantity  goals and compares those goals with the number of assets fielded.
By mid-2005, MDA had reduced its February 2003 goal for operational  GMD interceptors from 20 to 14. The first reduction occurred when MDA  recognized that an explosion at a subcontractor’s facility would reduce the  number of boosters available for interceptors slated for fielding.  Although MDA was developing an alternate source for boosters, the  second developer could not produce all of the boosters needed to field   20 interceptors. Therefore, MDA decided two interceptors would be  diverted for testing. One was used in ground testing, and the second,  which will not be built until calendar year 2006, will be used in a flight test.  In mid-2005, after two unsuccessful flight tests, the GMD Program Office  reduced its goal for operational interceptors further—from 18 to 14—to  set aside more interceptors for ground tests. The test missiles will be  assembled in a later block.
Even with the reductions, MDA failed to meet its quantity goals. By the  end of Block 2004, MDA had delivered 10 GMD interceptors. Production  slowed as the program addressed technical issues and quality control  problems discovered during testing and in quality control audits. Further,  GMD program officials also told us that the SBX radar will not be  operational until 2006 because funds that were to be used to integrate the  radar into the BMDS were used to cover some of the cost of the  restructured test program.
MDA was also unable to place the FBX-T radar and the Fylingdales  upgraded early warning radar in operation before the end of the block.  While MDA did not formally add the FBX-T to its Block 2004 Statement of  Goals, agency officials told congressional committees that they were  developing this radar and expected to have it fully operational by the end  of the block. MDA was able to accelerate this capability by 1 full year and  to ready the radar for deployment within Block 2004. However,  negotiations with Japan, the host nation for the radar, were not completed  by December 2005, and site preparation, which will commence once  negotiations are complete, is expected to take 8 to 9 months. Full  functionality of the Fylingdales upgraded early warning radar was also  delayed. MDA used the funds that were needed to make the radar fully  functional to cover part of the cost of the restructured GMD test program.
Over time, MDA also altered the number of SM-3 missiles that it planned to  procure. MDA’s goal of producing up to 20 missiles was never reached  because of fiscal constraints and missile parts availability. MDA set aside  funding for 11 SM-3 missiles, 9 of which were to be made available for  operational use. Program officials told us that had MDA funded more than  11 missiles it would have been necessary to restart some component  production lines, which had been closed. Reopening these lines would  have caused the additional components to be expensive. Also, the  production lines could not have produced the components in a time frame  that would have allowed the Aegis BMD program to meet the President’s  directed fielding date. In December 2004, MDA further reduced its  operational goal for SM-3 missiles from 9 to 8 in response to a DOD  reduction in MDA’s fiscal year 2005 budget request. However, by the end  of 2005, MDA was able to make 9 missiles available for operational use  because 1 missile that the Aegis BMD program expected to use for testing  was not needed for that purpose.
MDA’s February 2003 Statement of Goals also included the planned  upgrade of 15 destroyers and three cruisers for the missile defense  mission. However, the Aegis BMD Program Office told us that the  established goals were based on a capability-defined block, that is, a block  that ended when the final ship was upgraded. In February 2004, MDA  corrected Aegis BMD goals to take into account the agency’s definition of  a block as a 2-year time period. In making this correction, MDA reduced  the number of destroyers to be delivered during Block 2004 from 15 to 10.  By February 2005, budgetary constraints also caused MDA to reduce its  planned Block 2004 upgrade of cruisers from three to two.
section_title: Block 2004 Cost Is Understated
paragraphs: MDA is reporting that the cost of Block 2004 will exceed the cost goals  established in 2003 and 2004, but the reported cost does not include the  cost of Block 2004 activities that have been deferred until Block 2006. In  February 2003, when it sent its Statement of Goals for Block 2004 to  Congress, MDA estimated that in addition to the funds received in 2002,  the agency would need $5.5 billion more, or a total of about $6.7 billion, to  field this capability. Table 4 shows how MDA estimated those funds would  be used. A year later, in 2004, the goal had increased to approximately   $7 billion. However, the expected cost of the capability is now about   $7.7 billion, or around $600 million more than the revised goal and   $1 billion, or about 15 percent, more than the original Block 2004 goal.  MDA primarily attributes Block 2004’s increased cost to the sustainment of  fielded assets, which officials told us they could not fully estimate until  they prepared their fiscal year 2006 budget request. However, the   $7.7 billion cost does not include some work planned for Block 2004,  which the contractor could not complete before December 31, 2005.  According to GMD officials, this work has been deferred until Block 2006  and its cost will be recognized as part of that block’s cost.
The Aegis BMD element was the only element of the BMDS program that  estimated it would need funds during the first quarter of 2006 to complete  Block 2004 fielding. GMD and C2BMC predicted that all work related to  fielding the Block 2004 capability would be completed by September 30,  2005, when MDA expected to place a limited defensive operational  capability on alert.
In February 2004, MDA revised its estimated cost for fielding a Block 2004  capability to a little over $7 billion, or about $332 million more than  originally projected. Table 5 presents the changes in the composition of  the goal.
The cost of fielding the Block 2004 capability will be about $939 million  more than the originally estimated cost of $6.7 billion and approximately  $607 million more than the revised cost goal of $7 billion. Officials  primarily attribute the increased cost to MDA’s sustainment of fielded  assets. However, the Block 2004 cost that MDA is reporting does not  include work that the contractor was unable to complete within the  block’s time frame. Program officials told us that in fiscal year 2006 the  contractor will conduct additional Block 2004 development and  deployment efforts. This will be followed in fiscal year 2007 with work  needed to characterize and verify the Block 2004 fielded elements. The  officials said that Block 2006 funds will be used to pay for these activities.
Table 6 shows the actual cost incurred between October 1, 2002, and  December 31, 2005, for the Block 2004 fielded capability and the  sustainment cost expected to be incurred in fiscal years 2006 and 2007. It  should be noted that this is not the full cost of the initial capability  because DOD began to spend funds to develop the current missile defense  capability in 1995, and as noted above, additional Block 2004 work will be  completed and funded during Block 2006.
section_title: BMDS Performance Is Unverified
paragraphs: Because test data are not available to anchor simulations that MDA uses to  predict BMDS performance, the capability of Block 2004 cannot be  verified. MDA has conducted a variety of tests that suggest Block 2004  offers some protection against ballistic missile attacks. However, MDA  cannot be sure how well the BMDS will perform against ICBMs because  tests needed to characterize the system’s performance have not yet been  conducted. Test officials have also suggested that to fully characterize the  BMDS’s ability to defeat short- and medium-range ballistic missile threats,  more tests of Aegis BMD are needed. Additionally, the performance of  emplaced GMD interceptors is uncertain because inadequate mission  assurance/quality control procedures may have allowed less reliable or  inappropriate parts to be incorporated into the manufacturing process.
In February 2003, MDA set performance goals for Block 2004 that  included a numerical goal for the probability of a successful BMDS  engagement, a defined area from which the BMDS would prevent an  enemy from launching a ballistic missile, and a defined area that the BMDS  would protect from ballistic missile attacks. MDA did not alter Block  2004 performance goals, despite its actions on quantity and cost goals.
A combination of tests and simulations is necessary to demonstrate  whether the Block 2004 capability can meet its performance goals.  Because it does not always conduct a sufficient number of tests to  compute statistical probabilities of performance, MDA uses models and  simulations to measure the probability that the BMDS will perform as  designed. By employing digital simulations, estimates of system  effectiveness are obtained over a wide range of conditions, scenarios, and  system architectures. However, to ensure that models underlying these  simulations are reflective of real-world operation, the models must be  anchored by data collected during both ground and flight tests.
MDA has completed simulations, ground tests, and flight tests that  demonstrate various functions of the BMDS engagement, such as launch  detection, tracking, interceptor launch, and intercept. However, it has not  successfully completed an end-to-end flight test of the GMD element—the  centerpiece of the BMDS—using production-representative components.  In the absence of these data, MDA’s assessment of GMD’s Block 2004  performance is based on data derived from a number of sources, including  design specifications, output from high-fidelity simulations, and integrated  ground tests of various components. Officials in DOD’s Office of  Operational Test and Evaluation told us that MDA’s computer-based  assessments are appropriate for a developmental program but could  present difficulties in interpreting results for operational considerations.
During fiscal year 2005, MDA planned four integrated flight tests to  demonstrate the ability of the Block 2004 BMDS against ICBMs. Together  these tests were to assess the ability of different radars to detect and track  targets for the GMD element, the ability of GMD’s fire control system to  formulate a firing solution from each radar’s data, and the interceptor’s  ability to hit and kill the target. Two of these tests were initiated. However,  both tests were aborted because, in each, the GMD interceptor failed to  launch. MDA postponed and has not rescheduled the third and fourth tests  because, after the test failures, MDA decided to restructure its test  program to make it less concurrent.
MDA’s cancelation of the third flight test was particularly problematic  because it prevented MDA from exercising Aegis BMD’s long-range  surveillance and tracking capability in a manner consistent with an actual  defensive mission. The Aegis BMD Program Office told us that Aegis BMD  can adequately perform detection and tracking for the GMD element  because in one test Aegis BMD demonstrated the ability to track a real  target and in another test the ability to communicate track data to GMD’s  fire control. However, DOT&E officials told us that having Aegis BMD  perform long-range surveillance and tracking in real time would determine  the degree to which errors are introduced when these activities are  combined.
MDA also planned to have the third test fulfill a congressional mandate to  test the Block 2004 configuration in an operationally realistic manner. For  the first time, a test would have included production-representative GMD  hardware and software operated by sailors and soldiers. All successful  GMD intercepts, to date, have used surrogate and prototype components.
section_title: Test Officials Suggest Further Aegis BMD Characterization Tests Are Needed
paragraphs: DOT&E officials suggested that further tests are needed to fully  characterize Aegis BMD’s capability against ballistic missiles. The officials  told us that Aegis BMD is making good progress in incorporating  operational realism into its flight tests. Operational crews execute the  intercept flight missions without advance notice of launch time. However,  in early tests, ship position with respect to the target’s trajectory is still  controlled to increase the probability of intercept. In addition, the tests  have been constrained by sea states, time of day, weather, target  dynamics, and the need to baseline Aegis BMD’s performance and concept  of operations. The officials are recommending that in future tests Aegis  BMD’s tactical mission planner should dictate the ship’s position and the  sectors that its radar searches, rather than the program scripting the ship’s  locations and its radar’s search sectors.
Aegis program officials explained that the need to baseline Aegis BMD’s  performance has indeed affected the ship’s position during tests. An  intercept attempt in February 2005, for example, that tested a specific  burn sequence for the missile’s booster required the ship be placed close  to the target track. Yet another test, in November 2005, placed the ship  relatively far from the target track. The officials emphasized that in both  tests Aegis BMD performed successfully.
section_title: Quality Control Issues Raise Additional Performance Questions
paragraphs: Even if MDA had successfully completed flight tests needed to anchor the  models and simulations used to predict the performance of the initial  BMDS capability, the performance of some emplaced GMD interceptors  would still be uncertain. GMD officials told us that before emplacing  interceptors at Fort Greely and at Vandenberg Air Force Base for  operational use, the interceptors undergo various tests. However, quality  control procedures may not have been rigorous enough to ensure that  unreliable parts or parts that were inappropriate for space applications  would be removed from the manufacturing process. Two unsuccessful  flight tests have been traced to poor quality control procedures. GMD  officials have recommended that MDA remove the first nine interceptors  emplaced at Fort Greely and Vandenberg Air Force Base, as the  interceptors are scheduled for upgrades, so that any parts that tests have  shown may not be adequately reliable or appropriate for use in space can  be replaced.
One of the two test failures (IFT-10) occurred in December 2002 when the  EKV could not separate from its booster. A team of engineers that  investigated the test failure found that an open circuit occurred in one part  of the interceptor’s Laser Firing Unit, which disconnects the EKV from the  booster. The open circuit was caused by a broken pin in an application- specific integrated circuit (ASIC) that controlled one aspect of the  EKV/booster separation. The pin was fatigued during flight vibration.  According to the test report, the ASIC’s design did not allow for variations  in the assembly process and the contractor did not lay out an adequate  process to uniformly produce the part. Additionally, the contractor did not  adequately test to identify the problem. In earlier tests, the board on which  the ASIC was mounted was stabilized with a foam material so that the  board was not as affected by the severe vibrations that occur at launch.  However, to improve producibility and reliability, the foam was removed  prior to IFT-8.
The second flight test (IFT-14) failure occurred in fiscal year 2005. The  interceptor in this test failed to launch because two of the three arms that  support the interceptor within its silo did not fully retract and lock. MDA’s  investigation into the test failure found that the arms could not retract  because the surface of one part was significantly corroded, and crush  blocks, which absorb the impact of the arms as they retract and lock into  position, were an earlier design that required more force to crush. MDA’s  Deputy Director for Technology and Engineering pointed out that the  corroded part was subjected to a more severe environment than it was  designed to withstand. However, officials in the Office of Safety, Quality,  and Mission Assurance told us that if simple quality assurance procedures  had been in place, the corroded part would have been detected and the  earlier design of the crush blocks would not have been installed.
The GMD program considered four options for dealing with the first nine  interceptors emplaced for operational use (seven at Fort Greely and two at  Vandenberg Air Force Base). The options included (1) leaving the  interceptors in their silos and accepting them as is; (2) using the  interceptors in reliability tests; (3) over time, returning the interceptors to  the contractor’s facility for disassembly and remanufacture; or (4) a  combination of the other options. GMD program officials recently told us  that their recommendation to MDA is to replace questionable parts when  the interceptors are upgraded in fiscal year 2007. The officials said to  replace the parts, the interceptors will be removed from their silos.
section_title: Schedule Pressures Caused Management to Stray from Knowledge-Based Practices
paragraphs: The problems encountered during Block 2004, which ultimately prevented  MDA from achieving all of its goals for the block, were brought about by  management compromises. Time pressures caused MDA to stray from a  knowledge-based acquisition strategy, allowing the GMD program to  condense its acquisition cycle at the expense of cost, quantity, and  performance goals. DOD has given MDA the flexibility to make such  changes.
subsections: section_title: GMD Program Sacrificed Knowledge-Based Approach to Accelerate Schedule
paragraphs: MDA programs follow a structured acquisition plan called the Integrated  Management Plan that is meant to guide the development of elements and  components, as well as their integration into the BMDS. If the plan, which  includes eight events, is completed in an orderly manner, it will increase  the likelihood that programs will attain knowledge at appropriate points in  the acquisition cycle. Successful developers have found that attaining  certain knowledge at specific points decreases the likelihood of cost  growth, schedule slips, or degraded performance. However, because  MDA’s plan allows early deployment of a capability well before the eight  events are completed, programs may gain knowledge too late in the  process to prevent such problems. MDA officials told us that because the  agency was directed to field a capability earlier than planned, it accepted  additional risks. The risks were greatest in the GMD program that  concurrently matured technology, designed the system, and produced and  fielded operational assets as it attempted to meet its Block 2004 fielding  dates.
A primary tenet of a knowledge-based approach to product development is  to demonstrate the maturity of critical technologies before starting  product development and to demonstrate design maturity and production  process maturity before committing to production and fielding. MDA’s  Integrated Management Plan provided for this orderly progression through  the acquisition cycle. At Event 1, an assessment of all technology critical  to the system’s design was to be completed. By the end of Event 2, design  work was to be finished, and at the end of Event 4, the design was to be  demonstrated in developmental tests. By the close of Event 5, an  assessment of the element’s operational capability would be complete and  MDA would decide whether the element was ready to be handed over to a  military service for production, operation, and sustainment or whether the  element should be developed further.
However, the Integrated Management Plan also allows a program to depart  from a knowledge-based acquisition strategy if a decision is made to field  all or part of a capability early. At the end of each event from Event 3 on,  MDA may elect to accelerate fielding of all or part of a capability by  simultaneously completing all phases of the acquisition cycle. That is, a  program can concurrently mature technology, design its system, and  produce and field assets for operational use—which is contrary to a  knowledge-based acquisition strategy. According to MDA officials, GMD  was at Event 3—the point at which a pilot production line produced its  first components and the components’ functionality had been tested—  when the presidential decision was made to deploy an early capability.  MDA’s Integrated Management Plan is presented in appendix IV.
Until the President’s directive, the GMD program was focused on  developing a test bed. If GMD had serially progressed through all eight  events of the Integrated Management Plan, components would have been  matured and demonstrated in the test bed. At the end of Block 2004, MDA  could have (1) transferred GMD to a military service for production,  operation, and sustainment; (2) developed GMD further in a subsequent  block; or (3) terminated the program altogether. However, to field early,  the GMD program condensed its Block 2004 acquisition cycle. The  program attempted to simultaneously demonstrate technology, design an  integrated GMD element, and produce and emplace assets for operational  use—all within 2 years of the President’s directive.
The GMD program fielded an initial capability in 2004 and 2005, as it was  directed to do. However, there were consequences of the accelerated  schedule. The fielding schedule for some GMD components slipped, and  the program could not complete an end-to-end test needed to verify GMD’s  performance. Production and fielding of GMD interceptors was slowed by  technical problems and the program’s need to address quality control  issues. To address these issues, the program restructured its test plan at a  cost of about $115 million; but it funded the plan at the expense of making  the Sea-Based X-Band and Fylingdales upgraded early warning radars  operational. Block 2006 funds will now be used to complete these Block  2004 activities.
Other BMDS elements, whose fielding was not planned as part of Block  2004, are currently following a knowledge-based acquisition strategy. For  example, the ABL program is concentrating on maturing technologies  critical to the element’s design by designing a prototype. If the prototype  successfully demonstrates its lethality in a demonstration planned no  earlier than 2008, it will become the basis for the design of an operational  capability. Similar to ABL, the KEI program is also concentrating on  demonstrating technologies critical to its design. If these demonstrations  are successful, they could be incorporated into KEI’s design.
section_title: GMD Management Became Inattentive to Quality Control Risks
paragraphs: GMD officials told us that in the process of accelerating GMD’s schedule  they became inattentive to weaknesses in the program’s quality control  procedures. The GMD program had realized for some time that its quality  controls needed to be strengthened. However, the program’s accelerated  schedule left little time to address the problems. The extent of the  weaknesses was documented in 2005 when MDA’s Office of Safety,  Quality, and Mission Assurance conducted audits of the contractor  developing the interceptor’s EKV and the Orbital Boost Vehicle.
In its audit of the EKV contractor, the MDA auditors found evidence that    The prime contractor did not correctly communicate all essential EKV  requirements to its subcontractor and the subcontractor did not  communicate complete and correct requirements to its suppliers.
The EKV subcontractor did not exercise good configuration control.
The reliability of the EKV’s design cannot be determined, and any  estimates of its serviceable life are likely unsupportable.
The contractor has no written policy involving qualification testing and  does not require that its EKV subcontractor follow requirements  established by industry, civilian, and military users of space and launch  vehicles.
The contractor’s production processes are immature, and the contractor  cannot build a consistent and reliable product.
More details on MDA’s audit of the EKV contractor can be found in  appendix IV.
Similarly, the auditors found that the contractor producing the Orbital  Boost Vehicle needed to improve quality control processes and adherence  to those processes. According to deficiency reports, the contractor did not  always, among other things, flow down requirements properly; practice  good configuration management to ensure that the booster met form, fit,  and function requirements; implement effective environmental stress  screening; or have an approved parts, material, and processes  management plan.
Ironically, the pitfalls that result from an accelerated fielding had already  been learned in the THAAD program. In 2000, we reported that pressure  on the THAAD program to meet an early fielding date nearly resulted in  the program’s cancelation in 1998. When flight testing began, in 1995, the  THAAD missile experienced numerous problems. Eight of the first nine  flight tests revealed problems with software errors, booster separation,  seeker electronics, flight controls, electrical short circuits, foreign object  damage, and loss of telemetry. According to several expert reviews from  both inside and outside the Army, the causes of early THAAD flight test  failures included inadequate ground testing, poor test planning, and  shortcomings in preflight reviews. One study noted that failures were  found in subsystems usually considered low-risk. Subsequently, the  THAAD program manager adopted a knowledge-based strategy, which led  to successes in later tests.
section_title: MDA Has Flexibility in Making and Reporting Program Changes
paragraphs: Compared with other DOD programs, MDA has greater latitude to make  changes to the BMDS program without seeking the approval of high-level  acquisition executives outside the program. In early 2002, DOD allowed  MDA to effectively defer the application of DOD acquisition regulations to  the BMDS program until a decision is made to transfer a BMDS capability  to a military service for production, operation, and sustainment. This  allows MDA to make program changes without asking for prior approval.  For example, MDA has the flexibility to make trade-offs between BMDS  elements. That is, the MDA Director can decide to accelerate one element  while slowing another down. That is not to say that DOD and Congress are  not kept informed of MDA’s progress or changes, but that the MDA  Director, by statute, has the discretion to determine which variations are  significant enough to be reported. Accountability has thus become broadly  applied as to mean delivering some capability within funding allocations.
Under DOD’s acquisition regulations, each BMDS element would likely  have met the definition of a major acquisition program. Major acquisition  programs are required by statute (10 U.S.C. § 2435) to develop a program  baseline when the program begins system development and  demonstration. The baseline, which includes cost and schedule estimates  and formal performance requirements developed by the warfighter, is  considered the initial business case for the acquisition effort. Once a  baseline is approved, major acquisition programs are required to operate  within the baseline or to obtain approval from a high-level acquisition  executive outside the program to make cost, schedule, or performance  changes. Changes in any of these baseline parameters would reflect a  change in the program’s business case. Approved programs also report  program status measured against the baseline and any baseline changes to  Congress in an annual Selected Acquisition Report (SAR). Congress has  also established criteria to identify significant variations in a weapon  system’s cost or schedule and requires that those changes be reported  more often, in a quarterly SAR.
MDA is not yet required to have an approved program baseline as defined  by 10 U.S.C. § 2435 for either the BMDS or its elements. Instead MDA  develops more flexible cost and quantity goals and capability-based  performance objectives. MDA has a separate statutory requirement to  establish and report cost, schedule, and performance baselines for block  configurations of the BMDS being fielded. But these baselines are more  flexible than the rigid baselines required of other acquisition programs  that DOD and Congress use in performing program oversight. While MDA  reports its cost, quantity, and performance information to Congress in an  annual Selected Acquisition Report, it is free to revise its goals and  objectives, as it did during Block 2004, if they are not achievable with the  time or funds available. MDA is also required by statute to report  significant variations from the baselines in its annual SAR. However,  there are no criteria to identify which variations are significant enough to  report. Instead, MDA’s Director, by statute, has the discretion to determine  which variations will be reported. For example, the Director decides  whether to report that activities that Congress funded in one block are  being deferred to a later block and will be paid for with the latter block’s  funding.
section_title: MDA Is Taking Several Corrective Actions
paragraphs: MDA has begun to address the quality control weaknesses in the BMDS  program. Some actions are as simple as revising reporting lines so that  MDA’s Chief of Safety, Quality, and Mission Assurance reports directly to  MDA’s Director and Deputy Director and establishing toll-free telephone  numbers for the report of safety and quality issues. MDA is also  renegotiating some aspects of its prime contracts to revise the award fee  determination process in an effort to place more emphasis on quality  control and the implementation of industry best practices, and adding  mission assurance provisions to contracts that promote process  improvements, improve productivity, and enhance safety, quality, and  mission assurance. Furthermore, MDA is placing more emphasis on the  definition and correction of quality control weaknesses by conducting  audits of major contractors and subcontractors. It has also renewed the  emphasis on the role of the Defense Contract Management Agency in  performing quality assurance functions in support of MDA programs.  Finally, MDA has adopted a more conservative test approach for the GMD  program that includes increased ground tests and an incremental  approach to flight testing. However, the actions have not gone so far as to  ensure that all BMDS programs implement knowledge-based practices or  to ensure that the activities planned to develop, demonstrate, and produce  the capabilities intended for future blocks are achievable within the block  time frames without resorting to a concurrent schedule.
subsections: section_title: Contracts to Reflect the Importance of Good Quality Assurance Strategy
paragraphs: MDA plans to revise prime contracts to reflect the importance of good  quality assurance procedures and the contractor’s implementation of  industry best practices. GMD officials told us that in fiscal year 2005 award  fee on the GMD contract was partially based on a good quality control  program. The officials said that of the $407 million award fee available for  the period running from October 1, 2004, through September 30, 2005,   $9 million was based on the contractor’s implementation of good quality  assurance and supplier management procedures. In November 2005, MDA  awarded the contractor $2.1 million of the $9 million set aside for the  implementation of quality assurance procedures. MDA officials also told  us that in fiscal year 2006, the overarching criteria for the entire award fee  pool of $302 million will be the contractor’s implementation and  adherence to industry standards and best practices.
MDA also expects to modify prime contracts to incorporate a document  referred to as MDA Assurance Provisions (MAP). All prime contracts are  to include MAP standards, but not all contracts have been modified  because MDA and some contractors have not reached agreement on the  cost of implementing the MAP. For example, the GMD prime contractor  estimates that implementation costs will be somewhere around   $280 million. However, officials in MDA’s Office of Safety, Quality, and  Mission Assurance told us that at least one contractor has agreed to  implement the MAP at no additional cost.
The MAP provides a measurable, standardized set of safety, quality, and  mission assurance requirements to be applied to developers for mission-  and safety-critical items in support of evolutionary acquisition and  deployment of MDA systems. For example, the document includes  standards regarding the collection and reporting of foreign object damage  and debris incidents, a requirement for working-level peer reviews  throughout design and development to identify and resolve technical  issues and concerns prior to formal system-level reviews, and a  requirement for ensuring that commercial off-the-shelf items meet all  functional and interface requirements and are qualified to operate in their  intended environment.
In addition to requiring contractors to abide by MAP standards, MDA also  requires each BMDS element program office to compare its mission  assurance plan with the MAP. As a result of the comparison, the program  is expected to identify critical mission assurance needs that are not being  met. The results are catalogued in a Mission Assurance Implementation  Plan (MAIP), which element program directors are accountable for  implementing. Each element is to continuously assess MAIP execution so  that feedback can be used to improve both the MAP and the MAIP.
section_title: MDA Renews Emphasis on Contractor Surveillance
paragraphs: So that the quality assurance weaknesses in the BMDS program are  accurately defined, the MDA Director also gave the Office of Safety,  Quality, and Mission Assurance unfettered access to all MDA contractor  operations, activities, and documentation. Under this authority, MDA  quality personnel have been placed in each prime contractor facility to  monitor the contractor’s quality procedures, and the office is auditing  major contracts to identify quality assurance deficiencies and areas where  procedures can be improved. As of November 2005, the office had  completed audits of the Aegis BMD SM-3, GMD EKV, and Orbital Sciences  Corporation booster, and THAAD contracts.
MDA is also placing a renewed emphasis on the Defense Contract  Management Agency’s (DCMA) quality assurance role. In a May 2005  delegation letter, MDA directed DCMA to    perform quality assurance surveillance activities in accordance with  DCMA policies and directives;   ensure that mandatory government inspections authorized by MDA are  incorporated into the contractor’s manufacturing process plans and/or  critical suppliers’ plans; report mandatory government inspection test results, missed inspections,  and requests for permission to waive inspections to MDA’s Office of  Safety, Quality, and Mission Assurance for that office’s approval; and    support technical surveillance activities by carrying out such duties as  participating in mission critical item and component Material Review  Boards and providing insight and recommendations on engineering change  proposals, requests for waivers, employee training, and the contractor’s  critical manufacturing processes.
section_title: MDA Restructures GMD’s Test Plan
paragraphs: In 2005, the MDA Director established a new position—Director, Mission  Readiness—whose primary focus during fiscal year 2005 was to examine  the Ground-Based Midcourse Defense test program. To assist in this  examination, a small, highly experienced Mission Readiness Task Force  was established. The goals of the task force were to establish confidence  in GMD’s ability to reliably hit its target, establish credibility in setting and  meeting test event dates, build increasing levels of operationally realistic  test procedures and scenarios, raise confidence in successful outcomes of  flight missions, and conduct the next flight test as soon as practical within  acceptable risk bounds.
To meet these goals, the task force recommended a knowledge-based  flight readiness process and flight test program. Before a test is held, the  GMD program presents evidence that all components are ready for test.  Program officials explained that senior executives from all key  stakeholder organizations review the evidence and make a  recommendation to the MDA Director as to whether the test event should  proceed. GMD’s test plan has also been restructured to place more  emphasis on successful ground tests prior to each flight test. According to  MDA program officials, part of the evidence for proceeding from one flight  test to another is success in the preceding ground and flight tests.
The first flight tests have simple objectives. For example, flight test 1,  conducted in December 2005, demonstrated the successful launch of the  GMD interceptor and the separation of the EKV from its booster. By flight  test 4, MDA expects to be ready to demonstrate that the GMD system is  capable of hitting an operationally representative target. Tests that follow  will become progressively more difficult.
section_title: Corrective Actions May Not Alleviate Pressures Associated with Schedule- Driven Block Approach
paragraphs: Although MDA is taking many actions to address quality assurance  problems, it has not taken any steps to ensure that all elements follow a  knowledge-based acquisition strategy or to ensure that the time is  available to follow such a strategy. For example, a number of activities  planned for the GMD element during Block 2004 have been deferred to  Block 2006. Also, developmental efforts for other elements did not  progress as planned, leaving more work to be completed during Block  2006 and, perhaps, later blocks.
section_title: Conclusions
paragraphs: Missile defense is one of the largest weapon system investments DOD is  making. To date, around $90 billion has been spent, and over the next   6 years, DOD expects that it will need about $58 billion more to enhance  the BMDS. Beyond that, more funding will be required if DOD is to reach  its ultimate goal of developing a system capable of countering ballistic  missile launches from any range during all phases of flight. By driving to a  fielding date during Block 2004, MDA placed assets in the field faster than  originally planned. However, in doing so, MDA strayed from the  knowledge-based approach that allows successful developers to deliver,  within budget, a product whose performance has been demonstrated.  Instead, MDA fielded assets before their capability was known. In  addition, the full cost of this capability is not transparent to decision  makers because MDA has deferred the cost of some Block 2004 activities  into the next block.
The fielding of the Block 2004 capability provides an opportunity for DOD  to take stock of the approach it has taken thus far on missile defense and  determine whether changes are warranted for its approach to future  blocks. We believe they are. The concurrent development approach  dictated by the directed fielding date and enabled by considerable  flexibility to lower goals and defer capability has resulted in delivering  fewer assets than planned. Accountability has been very broadly applied  as to mean delivering some capability within funding allocations. While  recognizing this approach did successfully accelerate fielding, to the  extent it continues to feature concurrency as a means for acceleration, it  may not be affordable for the considerable amount of capability that is yet  to be developed and fielded. While the effects of this approach were  perhaps most keenly felt with the Block 2004 capability, signs of its  continuance can be seen in the developmental activities that were  deferred during fiscal year 2005.
It is possible for MDA to return to a knowledge-based approach to  development while still fielding capability in blocks. To its credit, MDA  instituted its own audits and is heeding the results of those audits in taking  a number of steps to correct the quality assurance and testing problems  encountered thus far. Yet these corrective actions have not gone far  enough to put all of the BMDS elements on a knowledge-based approach  to development and fielding. MDA’s experience during Block 2004 shows  that it may not always be possible to deliver a capability in a 2-year time  frame. Clearly, a block or stepped approach to fielding a new system is  preferable to attempting a single step to full capability. However, a  primary tenet of a knowledge-based acquisition strategy is that a program  should be event- rather than schedule-driven. This philosophy is consistent  with the evolutionary acquisition approach preferred by DOD in its  acquisition regulations. It also provides a better basis for holding MDA  accountable for what it can deliver within estimated resources.
section_title: Recommendations for Executive Action
paragraphs: To better ensure the success of future MDA development efforts, we  recommend that the Secretary of Defense direct the Director, MDA, to  take the following three actions.
Direct all BMDS elements to implement a knowledge-based acquisition  strategy that provides for demonstrating knowledge points for major  events or steps leading up to those events. These knowledge points should  be consistent with those called for in DOD’s acquisition regulations. For  example, markers could be established that would demonstrate that  programs have the knowledge to meet design review standards and are  ready to hold those reviews.
Assess whether the current 2-year block strategy is compatible with the  knowledge-based development strategy recommended above. If not, the  Secretary should develop event-driven time frames for future blocks.  Events could represent demonstrated increases in capability, such as the  addition of software upgrades, stand-alone components, or elements.
Adopt more transparent criteria for identifying and reporting on significant  changes in each element’s quantities, cost, or performance, such as those  that are found in DOD’s acquisition regulations. Coupled with a more  knowledge-based acquisition strategy, such criteria would enable MDA to  be more accountable for delivering promised capability within estimated  resources.
section_title: Agency Comments and Our Evaluation
paragraphs: DOD’s comments on our draft report are reprinted in appendix I. DOD  partially concurred with our first recommendation. DOD stated that MDA  has implemented a knowledge-based acquisition strategy that relies upon  discrete activities to produce data that can be used to judge an element’s  progress. DOD noted that unlike the knowledge points discussed in DOD  acquisition regulations, the knowledge points used by MDA are discrete  points, not reviews. According to DOD, MDA’s strategy is consistent with  the principles of DOD acquisition regulations while providing MDA’s  Director with the flexibility to determine their applicability to the BMDS  block development concept. We agree that knowledge is obtained through  discrete events, such as a successful test or the completion of a  cost/benefit analysis, but we define knowledge points as meaning more  than discrete events. Rather, knowledge must be looked at in the  aggregate. For example, the knowledge gained from a number of discrete  events must be considered collectively to confirm that the design of a  system is stable. It is these aggregations that we consider to be the  knowledge points that should form the basis for investment decisions. For  example, the GMD program’s successful demonstration of various  functions of the BMDS engagement may have been sufficient to continue  funding of the element’s development, but the discrete events were not  sufficient to demonstrate that the element’s design and production  processes were sufficiently mature to begin production and fielding. We  also note that the knowledge points discussed in DOD acquisition  regulations do represent measurable, demonstrated knowledge, such as  technology and design maturity, that then become the basis for reviews.  They are not the reviews themselves, as reviews can take place regardless  of the level of knowledge available.
DOD also partially concurred with our recommendation that MDA assess  whether the 2-year block strategy is compatible with a knowledge-based  acquisition strategy. DOD stated that MDA uses knowledge points to  establish block goals and makes adjustments to those goals when  necessary. DOD noted that the 2-year block strategy is compatible with  this approach. We have not seen the decisions made on Block 2004 as  being consistent with knowledge points. During Block 2004, MDA allowed  the GMD program to complete all phases of the acquisition cycle— technology development, product design, production, and fielding— simultaneously to enable the program to field a capability within the 2-year  time frame. If MDA is to be truly knowledge-based, it must be dedicated to  taking the time to gather the knowledge needed to be successful in the  next acquisition phase. Because MDA did not follow this strategy in Block  2004, we still believe that MDA should assess future blocks to determine  whether those blocks can be developed within the 2-year time frame  without resorting to a concurrent schedule.
DOD did not concur with our third recommendation to adopt more  transparent criteria for identifying and reporting program changes. In  responding to this recommendation, DOD responded that MDA in 2005, by  statute, began submitting fielding baselines to Congress and must report  significant cost, schedule, or performance variances to these baselines in  future reports. DOD believes that these reports and the quarterly reviews  conducted by DOD staff provide an adequate level of oversight. We agree  that MDA is required to report significant variances to established  baselines to Congress and that MDA keeps DOD informed about the  Ballistic Missile Defense program. However, given the management  flexibilities accorded MDA and the large amount of resources (more than  $50 billion) that DOD currently plans for missile defense, more transparent  criteria is needed for better program management and oversight.
DOD provided technical comments to our draft report, which we  considered and incorporated as appropriate. In its technical comments, for  example, DOD expressed concern that our draft report measured Block  2004 against goals established in February 2003 rather than the fielded  baseline goals established in 2005. We chose the 2003 goals as a baseline  because the goals were MDA’s official notification to Congress of the  agency’s expectations for the block.  In addition, goals are meant to be a  result that an organization strives to achieve. If goals are changed over  time to more closely reflect actual performance, they lose their validity.   We have included in the report a discussion of the changes that MDA made  in its Block 2004 goals from 2003 through 2005 and the reasons for those  changes.
We are sending copies of this report to the Secretary of Defense and to the  Director, MDA. We will make copies available to others upon request. In  addition, the report will be available at no charge on the GAO Web site at  http://www.gao.gov.
If you, or your staff, have any questions concerning this report, please  contact me at (202) 512-4841. Contact points for our offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. The major contributors to this report are listed in appendix  VII.
section_title: Appendix I: Comments from the Department of Defense
section_title: Appendix II: Block 2004 Element Assessments
paragraphs: The Missile Defense Agency (MDA) developed and fielded in Block 2004  three Ballistic Missile Defense System (BMDS) elements for operational  use in the event of an emergency. These elements are the Aegis Ballistic  Missile Defense (Aegis BMD); Ground-Based Midcourse Defense (GMD);  and the Command, Control, Battle Management, and Communications  (C2BMC) elements. MDA also attempted to accelerate the fielding of the  Forward-Based X-Band Transportable (FBX-T) radar being developed by  the Sensors Program Office into Block 2004. Although the agency was able  to complete the radar’s development, DOD did not complete negotiations  with Japan, the host nation, in time to make the FBX-T operational during  the block.
During Block 2004, MDA also carried out development efforts for other  elements that are expected to be incorporated into the BMDS during later  blocks to enhance the system’s capability. These elements include the  Airborne Laser (ABL), Kinetic Energy Interceptor (KEI), Terminal High  Altitude Area Defense (THAAD), and Space Tracking and Surveillance  System (STSS). Development of the THAAD element, which is being  designed to attack short- and medium-range ballistic missiles during the  terminal stage of their flight, is further along than the other developmental  elements, and MDA expects to make one THAAD fire unit available for  operational use in fiscal year 2009. The other three developmental  elements are at an early stage. The ABL element, which is to attack  missiles during the boost phase of their flight, is developing a prototype to  demonstrate technologies critical to the system’s design. MDA expects to  demonstrate the technologies no earlier than 2008, when the program will  test the element’s lethality against a short-range ballistic missile. Similarly,  the KEI program’s work during Block 2004 is focused on technology  demonstration. MDA will assess KEI’s progress in 2008 and decide the  future of its effort to develop a mobile, multi-use system capable of  intercepting ballistic missiles during the boost and midcourse phases of  flight. During Block 2004, the STSS program readied demonstration  satellite and sensor hardware for launch. MDA expects the STSS to  provide surveillance and tracking of enemy ballistic missiles for other  BMDS elements. If the two STSS satellites being launched in 2007  successfully demonstrate this function, a constellation of STSS satellites  could be launched beginning in 2013.
subsections: section_title: Aegis BMD
paragraphs: The Aegis BMD element is a sea-based missile defense system designed to  defeat short- and medium-range ballistic missiles in the midcourse phase  of flight. Its mission is to protect deployed U.S. forces, allies, and friends  from such attacks, and to employ its shipboard radar as a forward- deployed Ballistic Missile Defense System sensor to support  intercontinental ballistic missile (ICBM) engagements.
The Aegis BMD element builds upon the existing capabilities of Aegis- equipped Navy cruisers and destroyers. Planned hardware and software  upgrades to these ships will enable them to carry out the missile defense  mission in addition to their current role of protecting U.S. Navy ships from  air, surface, and subsurface threats. The program is also developing the  Standard Missile-3 (SM-3)—the system’s “bullet”—which is designed to  destroy enemy warheads through hit-to-kill collisions above the  atmosphere. The SM-3 is composed of a kinetic warhead (kill vehicle)  mounted atop a three-stage booster.
subsections: section_title: Program Accomplishes Fielding Plan
paragraphs: The program fielded Block 2004 assets mostly on schedule. Nine (Block I)  SM-3 missiles were ready for operational use by December 2005, as  planned. In addition, two Aegis BMD cruisers received system upgrades  making them capable of launching missiles to engage ballistic missile  targets. Ten Aegis BMD destroyers were equipped with long-range  surveillance and tracking software during Block 2004.
section_title: Test Results Are Good, but Further Tests Are Needed
paragraphs: Aegis BMD conducted the most realistic tests of all the BMDS elements,  but further tests are needed to fully characterize the element’s missile  defense performance. The program has successfully tested Aegis BMD’s  engagement capability in six intercept attempts since 1999 using variants  of the SM-3 missile. One of these successful intercepts, Flight Test Mission  (FTM) 04-1, was conducted in fiscal year 2005. Operational test officials  reported that the test incorporated many operational characteristics. For  example, the warfighter had no preknowledge of the target launch time,  the target was representative of a real-world threat, and the fielded missile  configuration was used. However, the officials said that in early tests,  including FTM 04-1, ship position with respect to the target’s trajectory  was controlled to increase the probability of intercept. The officials are  recommending that in future tests Aegis BMD’s tactical mission planner  should dictate the ship’s position and the sectors that its radar searches,  rather than the program scripting the ship’s locations and its radar’s  search sectors.
Additional tests are also needed to demonstrate that the program has  resolved problems that limit the SM-3 missile’s ability to divert to its  target. Although the current configuration is adequate for the current  threat, the missile will require more divert capability if it is to hit more  complex targets and targets with more challenging trajectories than were  seen in early tests. For example, the missile’s Solid Divert and Attitude  Control System (SDACS) needs to operate in a pulse mode, rather than its  current sustain mode, to increase the missile’s ability to maneuver toward  its target. Performance problems with the SDACS’s pulse mode of  operation were first noticed in a June 2003 flight test, Flight Mission (FM)- 5, and have remained a concern to the program. Program officials  modified the SDACS’s design in fiscal year 2005, and they believe that the  root cause of the problem is understood. However, ground and flight tests,  planned for fiscal year 2006, are needed to verify that the SDACS will  perform as designed. If the tests are successful, the pulsed SDACS could  be incorporated into the missile in fiscal year 2007. Although the earliest  fielded missiles will not be capable of pulse mode operation, which will  reduce their divert capability, program officials believe that these missiles  will provide a credible defense against a large population of the threat. A  test (FTM 04-2) successfully conducted in November 2005 against a  “separating” target—a target whose warhead separates from its booster  rocket—also showed that the SM-3 has some capability against a more  advanced target than the nonseparating targets used in prior tests.
The program has also flight-tested Aegis BMD’s long-range surveillance  and tracking capability, but further verification of fielded system upgrades  is needed. In fiscal year 2005, the program successfully used the system  upgrade (Ballistic Missile Defense 3.0E) to track live ICBM targets of  opportunity in two separate events. However, because GMD did not  participate in these tests, track data developed from the live target were  not used to formulate a task plan for a GMD interceptor, as it would need  to do in an actual defensive mission. Although track data have been passed  to the fire control unit in a separate event, this has not been demonstrated  in real time. MDA expected to test Aegis BMD’s long-range surveillance  and tracking capability in several fiscal year 2005 flight tests, but it was  unable to do so, mostly because of delays in the GMD test program. Aegis  BMD was unable to participate in Integrated Flight Test (IFT)-13C because  of weather conditions and in IFT-14 because of fleet scheduling conflicts.  Other GMD tests were put on hold and later folded into a new test  schedule to begin in fiscal year 2006. MDA has not yet rescheduled a GMD  flight test that uses Aegis BMD in its long-range surveillance and tracking  role.
section_title: Ground-Based Midcourse Defense
paragraphs: The GMD element is a missile defense system being developed to protect  the United States against ICBM attacks launched from Northeast Asia and  the Middle East. The GMD element relies on a broad array of components,  including (1) space- and ground-based sensors to provide early warning of  missile launches, (2) ground- and sea-based radars to track and identify  threatening objects, (3) ground-based interceptors to destroy enemy  missiles through hit-to-kill impacts above the atmosphere, and (4) fire  control and communications nodes for battle management and execution  of the GMD mission. Figure 1 illustrates the various GMD components,  which are situated at several locations within and outside the United  States.
GMD’s progress toward meeting Block 2004 goals was less than expected.  Silos and other construction at GMD facilities were completed on  schedule, but the program was unable to meet its fielding goals for ground- based interceptors. Most of the GMD radars are fielded and could be used  for defensive operations if needed. However, some radar upgrades were  delayed, and none of the radars have been tested in integrated flight tests.  In addition, an operational flight test and other key tests needed to  characterize GMD’s performance were delayed into fiscal year 2006.
subsections: section_title: Program Did Not Meet Scheduled Deliveries
paragraphs: The infrastructure for the missile defense complex is complete, but MDA  was unable to deliver almost half of the interceptors initially planned for  the Block 2004 inventory. MDA completed, on schedule, construction of all  facilities needed to place the GMD system on alert, including the  construction of the first missile field at the missile defense complex at  Fort Greely, Alaska. However, the GMD program emplaced only 10 of the  20 interceptors originally planned for Block 2004. In fiscal year 2004, the  program designated 2 of the 20 interceptors as test assets after an  explosion at a plant producing motors for the interceptor’s booster caused  the interceptor’s delivery schedule to slip. In fiscal year 2005, the program  diverted 4 more interceptors to the test program in response to a MDA  task force recommendation for a revised test plan. According to GMD  officials, delivery of five of the six test assets and the remaining four  missiles for operational use were delayed beyond December 2005.
MDA has two radars ready for operation, Cobra Dane and the Beale  upgraded early warning radar. However, tests have identified a Cobra  Dane shortcoming, and neither radar’s capability has been verified in  system-level flight tests. The Cobra Dane radar has been ready for limited  defensive operations since September 2004. It has participated in ground  tests and successfully tracked several targets of opportunity. Because the  radar’s location prevents it from participating in integrated flight tests, an  air-launched target was used in a September 2005 flight test (FT 04-5). The  test was designed to assess the radar’s ability to transmit track data, in real  time, to the missile defense fire control system. Cobra Dane performed as  expected in these test events, but officials in the office of the Director,  Operational Test and Evaluation (DOT&E) are concerned that the radar’s  software, as currently written, could cause the GMD element to waste  inventory. The Beale radar is also ready to conduct the missile defense  mission, but software deficiencies and lack of testing are still a concern.  While Beale radar hardware and communications upgrades are complete,  software deficiencies caused software upgrades planned for Block 2004 to  fall slightly behind schedule. The program planned to resolve the  deficiencies, which could cause some degradation in the radar’s  performance, in early 2006. However, officials consider Beale ready to  perform its basic missile defense mission should the BMDS be placed on  alert prior to the resolution of the deficiencies because the radar has  successfully tracked several targets of opportunity. A test to certify all  radar upgrades is currently scheduled for fiscal year 2006. In early fiscal  year 2007, MDA also plans to test Beale’s operational capability as the fire  control radar in an intercept attempt. In this test, for the first time, Beale  will track a live target and provide track data to the GMD fire control  component that will use the data to develop a weapon system task plan.
Full functionality of two additional early warning radars was delayed into  later blocks. Fylingdales upgraded early warning radar was delayed  slightly to cover some of the cost of additional flight tests added to the  GMD program. Its missile defense capability will be available in early  Block 2006, after a distributed ground test scheduled for the second  quarter of fiscal year 2006. Full radar functionality, which will allow the  radar to perform both its missile defense mission and its legacy Air Force  mission, is expected in October 2006. Likewise, deployment of the Thule  upgraded early warning radar, which MDA had planned to upgrade  incrementally, was postponed to Block 2008 so that the radar could be  fully upgraded before taking on its missile defense mission.
The Sea-Based X-Band radar (SBX) is also slightly behind schedule.  Additional funding needs for new flight tests prevented the GMD program  from integrating the Sea-Based X-Band radar into the BMDS by December  31, 2005, as planned. The radar is able to track targets but will not be able  to pass track data to the fire control center until it is integrated with the  GMD system during the distributed ground test scheduled for April 2006.  The radar is expected to be transported to its home port at Adak, Alaska,  by the third quarter of calendar year 2006 where it will be available in the  event of an emergency. However, MDA does not plan to verify the  performance of the radar in a system-level flight test until late in 2007.
section_title: GMD Unable to Carry Out Flight Test Plan
paragraphs: The GMD program was unable to demonstrate the Block 2004 GMD  system in flight tests. The program attempted two integrated flight tests in  fiscal year 2005, IFT-13C in December 2004 and IFT-14 in February 2005. In  both tests, interceptors failed to launch from their silos. In IFT-13C, a  timing problem with the interceptor’s flight computer caused the  interceptor to abort its launch. In IFT-14, the first intercept attempt since  2002, the interceptor was unable to lift off because the arms inside the silo  failed to fully retract and lock out of the way. Program officials traced the  root cause of this failure to poor quality control procedures.
In response to these test failures, MDA delayed upcoming plans for future  tests and chartered the Mission Readiness Task Force to review the  program and propose changes. The task force found that MDA’s problems  were primarily linked to inadequate quality assurance processes. An  independent review team attributed these problems to the urgency of the  fielding schedule, which drove decision making and program planning.  The task force provided guidance for improving the test program by  significantly restructuring the focus of upcoming test events. MDA  adopted the recommended test strategy at an additional cost of   $115 million.
Although early tests in the restructured plan have simple objectives, the  tests get progressively more difficult, and DOT&E is concerned that MDA  cannot meet its schedule to conduct the first four tests between November  2005 and November 2006. The first flight test (FT-1) was successfully  conducted in December 2005, 1 month later than planned. The objective of  the test was not to intercept a live target, but to verify that an interceptor,  representative of the configuration being fielded, could be successfully  launched and to evaluate its booster’s delivery performance. The next  intercept attempt, FT-4, is not scheduled until late calendar year 2006.
One consequence of restructuring the GMD test program was MDA’s  inability to fulfill the statutory mandate that required DOD to conduct an  operationally realistic test of the BMDS by October 1, 2005. MDA had  planned to conduct this test in the third quarter of fiscal year 2005.  However, after the two flight test failures, the task force recommended  that MDA spend additional time addressing mission readiness before  attempting an operational test of the BMD system. FT-4, scheduled for  November 2006, is the first test that has the potential to fulfill the  mandated objectives. FT-4 is planned as an intercept attempt using the  Beale radar as the fire control radar. This will be the GMD program’s first  intercept attempt to use a nonsurrogate fire control radar.
section_title: Program Proves GMD Concept, but Not Its Design
paragraphs: While the GMD program has proved the concept of destroying ICBMs  during the midcourse of their flight, the program has not proved GMD’s  design will deliver the performance desired. The GMD program, the  centerpiece of the BMDS Block 2004 defensive capability, has  demonstrated its ability to intercept target warheads in flight tests since  1999. The program has conducted five successful intercept attempts, the  last one in 2002. While the program maintains that each piece of the  engagement sequence has been demonstrated by flight and ground tests,  the program has been unable to verify that the integrated system, using  production-representative components, will work in an end-to-end  operation. Until further testing is done, MDA will not know for sure that  the integrated system using operational interceptors and fire control  radars will perform as expected, or that technical problems with the kill  vehicle and its booster have been fixed.
Quality control weaknesses also raise concerns about the performance of  GMD interceptors. Quality control procedures may not have been rigorous  enough to ensure that unreliable parts, or parts that were inappropriate for  space applications, would be removed from the manufacturing process.  For example, a leak in an attitude control system regulator was traced to  unauthorized rework. Although production has slowed as the program  introduces initiatives to strengthen quality controls, interceptors are still  being emplaced in silos before all initiatives are in place. Additionally, the  first nine interceptors emplaced for operational use—seven at Fort Greely  and two at Vandenberg Air Force Base—could include questionable parts  that were not detected during the interceptor’s acceptance tests. Program  officials told us that they are recommending that such parts be replaced in  2007, when the interceptors are scheduled to be upgraded. Making the  replacements will require that the interceptors be removed from their  silos.
section_title: Command, Control, Battle Management, and Communications
paragraphs: The C2BMC element is being developed as the integrating and controlling  entity of the BMDS. Leveraging existing infrastructure, it is initially  designed to provide connectivity between the various BMDS components  and in later blocks will manage their operations as part of an integrated,  layered missile defense system. Over time, C2BMC will not only provide  planning tools to assist the command structure in formulating defensive  actions, it will also generate detailed instructions for executing various  missile defense functions, such as tracking enemy missiles, discriminating  the warhead from decoys and associated objects, and directing the launch  of interceptors. It will also manage the exchange and dissemination of  information necessary for carrying out the missile defense mission.
The Block 2004 C2BMC element provides situational awareness by  monitoring the operational status of each BMDS component, and it  displays threat information such as missile trajectories and impact points.  When the FBX-T becomes operational, C2BMC will also provide sensor  control, sensor tasking, and sensor monitoring of the radar and forward  the data to GMD.
The incorporation of battle management capabilities into the C2BMC  element begins with Block 2006. In the 2006-2007 time frame, the element  is expected to track a ballistic missile threat throughout its entire  trajectory and select the appropriate element to engage the threat. For  example, the Block 2006 C2BMC configuration would be able to generate a  single, precise track from multiple radars and transmit it to the other  elements. This allows elements to launch interceptors earlier, providing  more opportunity to engage incoming ballistic missiles.
Block 2006 is also expected to enhance C2BMC’s communications with  each BMDS component. C2BMC program officials will work to establish  communications with all elements of the BMDS, overcome limitations of  legacy satellite communications protocols, and establish redundant  communications links to enhance robustness. Such upgrades will improve  operational availability and situational awareness.
subsections: section_title: Most Block 2004 Activities Completed on Schedule
paragraphs: The C2BMC team executed all of its planned fiscal year 2005 activities as  scheduled and nearly all of the activities needed to complete the Block  2004 capability. Program officials completed software development and  testing, and integration activities, and enhanced the system’s robustness.  Additional suites were also installed at command centers to provide the  warfighter with the capability to plan and monitor the missile defense  mission.  A number of activities in preparation for Block 2006 were also  completed during fiscal year 2005. For example, design and planning  requirements for Block 2006 software upgrades (Spirals 6.1 and 6.2), along  with a Block 2006 system requirements review, were completed in June  and July of 2005 respectively.
During fiscal year 2005, program officials completed the development of  the final two upgrades (Spirals 4.4 and 4.5) to Block 2004 C2BMC element  software. The first upgrade (Spiral 4.4) added the ability to display GMD  assets on users’ computer monitors, improved the user’s ability to call up  BMDS information, and reduced the time to transfer force-level planning  files. The second upgrade (Spiral 4.5) gave C2BMC the capability to  receive, distribute, and display information developed by three new  sensors—the Forward-Based X-Band and Sea-Based X-Band radars and  the Fylingdales upgraded early warning radar. It also improved the  consistency between the data displayed by the C2BMC and the GMD fire  control monitor, which also receives information directly from various  sensors.
The program office installed a suite at the U.S. Pacific Command during  fiscal year 2005, and it is waiting on policy agreements to turn on a Web  browser— providing summary screens of the unfolding battle—in the  United Kingdom. Additionally, second suites were added at the U.S.  Strategic Command (STRATCOM) and the U.S. Northern Command  (NORTHCOM) to allow for concurrent operations and system upgrades as  well as to make the C2BMC a more robust system.
The C2BMC program also completed most of the activities needed to  verify its Block 2004 capability. In August 2005, the program completed  testing that proved the readiness of Spiral 4.4 software for operations. The  program also participated in demonstrations with other elements to  practice transitioning the BMDS to alert. By the end of Block 2004, the  final software upgrade (Spiral 4.5) was tested to verify that the C2BMC  could interface with each BMDS element and that the improved software  was ready for operational use. However, further testing is needed to verify  that Spiral 4.5 can provide planning and situational awareness at U.S.  Northern Command, U.S. Strategic Command, U.S. Pacific Command, and  the Department of Defense’s Cheyenne Mountain Operations Center.  Program officials told us that they expect to complete the verification tests  by the end of March 2006.
section_title: Performance Mostly on Track
paragraphs: The C2BMC program successfully demonstrated its ability to maintain  situational awareness during several ground- and flight-testing activities.  Program officials were able to monitor the operational status of BMDS  components and display threat information, such as missile trajectories  and impact points. However, during tests, program officials discovered  three primary risk items that have the potential to affect C2BMC’s  performance. Table 7 identifies these risks, the possible impact on  program performance, and the actions being taken to address each.
section_title: Terminal High Altitude Area Defense
paragraphs: The THAAD element is being developed as a mobile, ground-based missile  defense system to protect forward-deployed military forces, population  centers, and civilian assets from short- and medium-range ballistic missile  attacks. A THAAD unit consists of a THAAD fire control component for  controlling and executing a defensive mission, truck-mounted launchers,  ground-based radars, interceptor missiles, and ground support equipment.  The THAAD missile is composed of a kill vehicle mounted atop a single- stage booster and is designed to destroy enemy warheads through hit-to- kill collisions.
subsections: section_title: Assessment of Element Progress
paragraphs: The THAAD program is not expected to deliver an initial capability until  2009, when a fire unit and 24 missiles will be handed over to the Army for  concurrent test and operation. Fiscal year 2005 activities focused on  developing and ground-testing THAAD components in preparation for the  initiation of THAAD’s flight test program. While several of these  preparatory activities were completed on schedule, others were deferred,  causing a further delay in the flight test program. According to program  officials, unanticipated missile integration issues caused the delay.
section_title: Integration Problems Delay Flight Tests
paragraphs: During fiscal year 2005, the THAAD program accomplished several key  activities in preparation for flight tests, but flight tests began later in the  block than planned. Program officials successfully integrated software  upgrades into the launcher and radar and completed missile qualification  tests that lead to flight readiness certification. However, a flight test delay  that we reported last year has lengthened.  Two explosions in the summer  of 2003 at a subcontractor’s propellant mixing facility delayed the start of  flight testing from December 2004 to March 2005 and led to revisions of  the program’s flight test plan. However, because of unanticipated  integration issues, the first flight test, which validated missile performance  in a high endoatmospheric flight environment, was further delayed from  March to November 2005. The delay occurred because program officials  found problems with THAAD’s Laser Initiated Ordnance System and its  telemetry system during ground tests and assembly operations. The  discovery of these problems delayed other ground tests and the assembly  of the THAAD missile being manufactured for the first THAAD flight test.
Tests identified two problems in the Laser Initiated Ordnance System. A  design issue caused one subcomponent to fail during testing, delaying the  Laser Initiated Ordnance System’s qualification test. Also, during assembly  operations, the program identified a change in the Laser Initiated  Ordnance System’s power output that required the program to improve the  design robustness of a fiber optic cable assembly. Additional qualification  testing was then required to obtain range safety approval. Both of these  problems, which were discovered during ground and qualification tests,  were solved, but not before they affected the flight test schedule.
The program also identified a problem with the missile’s telemetry system,  which transmits flight test data to ground stations for observation during  testing. During integration testing, transmission errors occurred between  the missile’s telemetry system and the ground test station. Program  officials told us that a solution was found that eliminated transmission  errors in the first flight test. However, the telemetry system is not  providing as much information as wanted in one mode of operation.  According to the officials, this does not present a problem until flight test  3, which is scheduled for July 2006, and a solution is expected by that  time.
The THAAD program also had to address a number of range safety  requirements prior to the initiation of flight testing. In September, the  officials told us that they had addressed all requirements related to the  first flight test, which did not involve an intercept attempt, and the  majority of the requirements related to the second flight test. Officials do  not expect any range safety requirements to delay future flight tests.
THAAD program officials plan to conduct 14 more flight tests between  April 2006 and December 2008. To complete these tests prior to handing  the first THAAD fire unit over to the Army for concurrent operation and  tests in 2009, the program will have to successfully conduct as many as   5 flight tests in each fiscal year. Program officials told us that if all tests  are successful, they can meet this schedule. However, a failure will cause  delays.
section_title: THAAD’s Performance Remains Uncertain
paragraphs: THAAD’s performance and effectiveness remain uncertain until the  program conducts flight tests with updated hardware and software. Data  from flight testing are needed to anchor simulations of THAAD’s  performance and to more confidently predict the element’s effectiveness.
section_title: Airborne Laser
paragraphs: The ABL element is a missile defense system designed to shoot down  enemy missiles during the boost phase of flight, the period after launch  when the missile’s rocket motors are thrusting. The concept involves the  coordinated operation of a high-energy laser and a beam control system  that focuses the laser on a target missile. By rupturing the missile’s fuel or  oxidizer tank, the laser causes the missile to lose thrust or flight control,  and the missile cannot reach its intended target.
The ABL element consists of three major components integrated onboard  a highly modified Boeing 747 aircraft—a high-energy chemical oxygen- iodine laser; a beam control/fire control component to focus the laser’s  energy on a targeted spot of the enemy missile; and a battle  management/command control, computers, communications, and  intelligence component to plan and execute the element’s defensive  engagements. In addition, the element includes ground support  infrastructure for storing, mixing, and handling chemicals used in the  laser.
subsections: section_title: Most Fiscal Year 2005 Activities Completed on Schedule
paragraphs: Commensurate with its fiscal year 2004 restructuring effort, the ABL  program continued to focus on near-term milestones. By accomplishing its  near-term goals, the program expects to increase confidence in its longer- term program objectives of demonstrating ABL’s lethality against a short- range ballistic missile target. During fiscal year 2005, the program focused  its efforts on testing ABL’s Beam Control/ Fire Control and its high-energy  laser. Nearly all activities related to these milestones were completed on  schedule. Program officials noted that the program’s progress over the  past 18 months caused Congress to appropriate an additional $7 million  for ABL’s fiscal year 2006 budget.
Both First Flight and First Light—the first major milestones of the  restructured program—were achieved during the first quarter of fiscal  year 2005. First Flight was the first of a series of planned flight tests with  the Beam Control/ Fire Control segment. The test demonstrated that all  necessary design, safety, and verification activities to ensure flight  worthiness had been completed. It also began the process of expanding  the flight envelope—types and combinations of flight conditions—in  which ABL can operate. The program also completed scheduled activities  associated with a series of Beam Control/ Fire Control low-power passive  flight tests. The program is currently integrating the full Beam Control/  Fire Control with the Beacon Illuminator Laser, which helps mitigate the  effects of the atmosphere on the laser beam’s quality and with the  Tracking Illuminator Laser, which helps focus the laser beam on its target.  Once integration is complete, the program plans to conduct a series of  active flight tests planned for summer 2006.
First Light, which integrated six individual laser modules to demonstrate  that the combined modules can produce a single beam of laser energy, was  completed in November 2004. Further tests to extend the duration of the  laser’s operation were scheduled for completion in September 2005.  However, the tests were not completed until fiscal year 2006.
The program plans to conduct its lethality demonstration—a flight test in  which the ABL aircraft will attempt to shoot down a short-range ballistic  missile—no earlier than 2008. If this test is successful, MDA believes it will  prove the concept of using directed energy for missile defense.
section_title: Program Moves Forward with Testing
paragraphs: As previously noted, the ABL’s fiscal year 2005 test program was centered  on its Beam Control/ Fire Control passive flight test series and its high- energy laser ground tests. The flight test series included 28 tests that  enabled the program to    demonstrate the performance of the aircraft’s turret, laser optics, and  initial integration of Beam Control/ Fire Control software;   verify the structural performance of the Active Ranger System—a system  that helps ABL predict a missile’s launch point;   complete flights under various combinations of flight conditions;    collect data critical for readying the aircraft for laser installation; and    demonstrate the performance of Link-16—a communications component  that ABL uses to interact with other elements of the BMDS.
The demonstration of First Light proved that individual laser modules,  which have the fit and function needed to be placed on the aircraft, could  be successfully integrated to produce a single laser beam for a fraction of  a second. The program planned a series of tests during fiscal year 2005  that would gradually increase the length and power of the laser’s  operation. However, problems encountered during testing limited the  duration of lasing to less than 1 second and affected the program’s ability  to determine the laser’s maximum power output. Program officials told us  that two of the laser’s individual laser modules experienced alignment  issues that prompted the system to shut down prior to completing  extended lase times. The alignment problem was rectified and the program  was able to conduct additional tests at longer durations. Over the fiscal  year, the program operated the high-energy laser 51 times for a total of  23.5 seconds, with the longest duration being 5.25 seconds. On December  6, 2005, the program conducted a longer-duration test of the high-energy  laser and was able to sustain the beam for more than 10 seconds. The ABL  also produced approximately 83 percent of its design power.
Although the ABL has not reached 100 percent of its design power,  program officials told us that the 83 percent power is sufficient to achieve  95 percent of maximum lethal range against all classes of ballistic missiles.  Prior to the longer-duration test, program officials told us that the laser  would not be installed on the aircraft until it produced 100 percent of its  specified power. However, on December 9, 2005, the Director, MDA, gave  the program permission to disassemble the System Integration Laboratory  and begin installation of the laser on the aircraft. Program officials said  that the program will continue to test the laser when the aircraft is on the  ground in an effort to demonstrate that the laser can produce 100 percent  of its design power.
section_title: Jitter Continues to Threaten ABL Performance
paragraphs: The program continues to characterize jitter as a risk to the ABL system’s  overall performance. Jitter is a phenomenon pertaining to the technology  of controlling and stabilizing the high-energy laser beam so that vibration  unique to the aircraft does not degrade the laser’s aim point. Jitter control  is crucial to the operation of the laser because the laser beam must be  stable enough to focus sufficient energy on a fixed spot of the target  missile to rupture its fuel or oxidizer tank. Program officials told us that  they will not be fully confident that jitter can be controlled until it is  demonstrated in an operational environment during the lethality  demonstration, but data on the two major components that cause jitter  were collected in ABL’s System Integration Laboratory. These data were  fed into simulations and models that help the program understand the  effects of jitter and how components can be designed to reduce jitter.  According to program officials, data obtained during recent laser and flight  tests increased the program’s understanding of the phenomenon.
section_title: Kinetic Energy Interceptor
paragraphs: The KEI element is being designed as a mobile, multi-use land-based  system designed to destroy medium, intermediate, and intercontinental  ballistic missiles during boost and all midcourse phases of flight. MDA  originally planned to develop KEI to defeat threat missiles during the  boost phase of their flight. However, in 2005 MDA directed the KEI  program to incorporate the capability to engage missiles during both the  ascent and the descent portions of the midcourse phase of flight, as well as  the boost phase.
The KEI program is currently focused on developing a mobile, land-based  system that according to program officials is expected to be available in  the Block 2014 time frame. The land-based system will be a deployable  unit consisting of a fire control and communications unit, mobile  launchers, and interceptors. The KEI element has no sensor component,  such as radars, for detecting and tracking boosting missiles. Instead, it will  rely on external ballistic missile defense system sensors, such as space- based infrared sensors and forward-deployed radars.
A sea-based capability is planned in subsequent blocks. Preliminary work  will also begin on a space-based interceptor in fiscal year 2008. If MDA  should decide to go forward with a space-based interceptor, it would not  be deployed until the next decade.
subsections: section_title: KEI Progresses Slowly
paragraphs: Although the KEI program completed many planned activities on  schedule, the program continued to progress slower than anticipated. KEI  officials were forced to replan several activities and reduce the scope of  others after both Congress and MDA reduced program funding.
The activities completed during the fiscal year included constructing a  shelter to house prototype fire control and communications equipment  and conducting several demonstrations. According to program officials,  the demonstrations showed the prototype equipment could collect data  from overhead nonimaging infrared satellites in a time frame that would  make a boost phase intercept possible. In addition, the program completed  studies that allowed it to optimize the design of communications  equipment that uplinks information from KEI’s fire control and  communications component to its interceptor so that there is a decreased  likelihood that communications will be jammed. The studies also allowed  the program to optimize the equipment’s design to operate in a nuclear  environment.
Other activities scheduled to be completed during fiscal year 2004 were  deferred into fiscal year 2005 and have now been further delayed. For  example, the System Requirements Review, which documents mission  objectives, identifies critical components, and establishes a program plan,  was delayed from fiscal year 2004 to 2005 and then to fiscal year 2007.  Program officials noted that funding shortfalls also forced the program to  eliminate some of its initial risk reduction activities. For instance, the  program originally planned to develop a two-color seeker, which would  aid in plume-to-hardbody handover. However, because of a reduced  program budget, program officials now plan to take advantage of the Aegis  Ballistic Missile Defense program’s development of a two-color seeker and  to work on a KEI-specific two-color seeker later in the program.
section_title: NFIRE Management Transferred To STSS
paragraphs: In fiscal year 2005, the KEI program office planned to continue work on its  Near Field Infrared Experiment (NFIRE), an experimental satellite that  will collect infrared imagery of boosting intercontinental ballistic missiles.  In 2004, the KEI program office signed a memorandum of agreement and  transitioned day-to-day management and execution of NFIRE to the Space  Tracking and Surveillance System program. The STSS Program Office has  experience with satellite development and can leverage its resources to  manage the experiment. STSS expects to launch NFIRE in September  2006, the launch date established by the KEI Program Office.
section_title: Too Early to Assess KEI’s Performance
paragraphs: At this early stage of element development, data are not available to  evaluate element performance. However, the program office identified  areas of high risk that could affect performance. The interceptor’s  booster motors, which demand high performance for KEI engagements,  and the algorithm enabling the kill vehicle to identify a target missile’s  body from its luminous exhaust plume, are high-risk technologies. Initially,  program officials were focused on designing KEI and maturing these  technologies concurrently. However, the program has adopted an  approach that lets it proceed with less risk. KEI is now focused on  maturing the high-risk technologies before integrating them into the land- based capability.
section_title: Contract Extended despite Uncertain Future
paragraphs: In 2008, KEI is scheduled to participate in its first booster flight test.  According to program officials, at that time a decision will be made on the  program’s future. In spite of program uncertainties, program officials are  working to extend the prime contract. Currently, KEI’s contract, which  was awarded in December 2003, has a term that extends through January  2012 (98 months). Program officials are now working to extend this period  until September 2015 (143 months).
section_title: Space Tracking and Surveillance System
paragraphs: MDA is developing STSS as a space-based sensor element of the BMDS. It  is currently working on the first increment of STSS, which is focused on  the preparation and launch of two technology demonstration satellites  partially built under the former Space-Based Infrared System-Low (SBIRS- Low) program. Each satellite making up the program’s “space segment”  includes a space vehicle and a payload of two infrared sensors—an  acquisition sensor to watch for the bright plumes (hot exhaust gas) of  boosting missiles, and a tracking sensor to follow the missile through  midcourse and reentry. The STSS element also has supporting ground  infrastructure, known as the ground segment, which includes a ground  station and mission software to support the processing and  communication of data from the satellites to the BMDS.
MDA plans to launch these satellites in 2007, in tandem, in an effort to  assess how well they perform surveillance and tracking functions. Using  data collected by the satellites, MDA will determine what capabilities are  needed and what goals should be set for the next generation of STSS  satellites. The first operational constellation of satellites is expected to be  available in the 2012 time frame.
subsections: section_title: Progress on Demonstration Satellites Slows
paragraphs: The STSS program accomplished many of the activities planned for  completion in fiscal year 2005. Both spacecraft buses have been integrated  and tested, the first of two ground software builds has successfully  completed acceptance testing, and the second software build is  progressing on schedule. However, one key activity, delivering the payload  for the first satellite, was delayed because of problems in testing of the  payload. By contract, the payload for the first satellite was supposed to be  delivered in January 2005, but delivery has been delayed twice, with the  last delaying delivery until early 2006. The delays are affecting scheduled  work on the second satellite’s payload, potentially delaying the satellites’  launch date.
During our last assessment of STSS, the program office expected the  satellites to be launched in February 2007, earlier than the contract date of  July 2007. However, the more recent problems and delays may result in the  launch being later than February 2007, but still before the required launch  date of July 2007. The program office is so confident that it will launch on  time that it has placed an order through the National Aeronautics and  Space Administration (NASA) for the Delta II launch vehicle, with a  requested launch date during the second quarter of fiscal year 2007.
section_title: Vacuum Tests Delay Delivery of Payload
paragraphs: The first satellite payload is being delayed because problems occurred  during thermal vacuum testing. Hardware issues emerged when the  payload was tested in a vacuum and at cold temperatures for the first time.  Although the significance of the problems is not yet clear, repairs will have  to be made. The program office and contractors plan to make the repairs  and then decide if further testing is needed to ensure that all problems  have been corrected. Several options for testing the payload are being  considered. They include (1) retesting the payload in the thermal vacuum  chamber without making repairs; (2) taking the payload out of the  chamber, completing the repairs, and then retesting; (3) taking the payload  out of the chamber and conducting tests at ambient (room) temperatures;  or (4) shipping the payload as is to the prime contractor for retest at the  contractor’s facility. However, if the program decides to return the payload  to the contractor’s facility, the contractor could not test as specifically as  could be done in the vacuum chamber, making it challenging to isolate  problems. If further testing is completed before returning the payload to  the prime contractor, several weeks will be added to the schedule because  the payload will have to be removed from the vacuum chamber,  disassembled, repaired, reassembled, and placed back in the chamber. The  chamber will then have to be returned to the right vacuum and  temperature conditions and the payload retested.
The program office is having an independent team review the situation  with the first payload to determine how much more testing should be  conducted. The program manager does not believe any of the thermal  vacuum testing problems are mission assurance or performance issues.
In addition to the thermal vacuum issues, integration issues have been  discovered as the subcontractor continues to integrate and test the  payload at successively higher levels of integration. The payload ambient- level testing took nearly 3 months longer than expected to complete. This  was due to the large number of software and hardware integration issues  discovered when the flight hardware and software were tested together for  the first time. Most software issues are due to the configuration  differences between the pathfinder hardware that served as the test bed  for the payload software and the actual flight hardware.
section_title: Program Continues to Address Quality Problems
paragraphs: The quality and workmanship problems with the payload subcontractor  have continued to persist. These problems have been ongoing for the last   2 years and have contributed to a schedule delay in delivering the payload.  According to program officials, the quality and workmanship problems are  the result of the subcontractor’s lack of experience. Examples of the  quality and workmanship issues include the initial failure of the second  satellite’s track sensor during vibration testing. The failure occurred  because fasteners were not tightened according to specifications and  because payload cables were poorly manufactured by a third-tier vendor.  Although neither of these issues resulted in damage to the flight hardware,  both have taken substantial management attention and considerable effort  to correct. In response to the quality and workmanship issues, quality  control at the subcontractor’s site has undergone significant restructuring.  In addition, the prime contractor’s on-site quality organization at the  subcontractor’s site stepped up its inspection and supervision of all  processes and is providing mentoring. A reeducation effort was also  undertaken to ensure that all personnel on the program knew and  understood the program instructions.
The program office expects that the quality improvements the payload  subcontractor has implemented will reduce the probability of additional  quality-related issues in the future. According to the program office, the  integration issues that have been discovered are not unusual for a first- time integration effort, but are taking more time than planned to work  through. However, the second satellite’s hardware is consistently moving  through integration and testing much more efficiently than the first  satellite’s hardware.
section_title: Appendix III: An Assessment of BMDS Prime Contractors’ Cost and Schedule Performance
paragraphs: Prime contractors typically receive most of the funds that MDA requests  from Congress each fiscal year to develop elements of the BMDS. To  determine if it is receiving a dollar of value for each dollar it spends, each  BMDS program office requires its prime contractor to provide monthly  reports detailing cost and schedule performance. In these reports, which  are known as Contract Performance Reports (CPR), the prime contractor  makes comparisons that inform the program as to whether the contractor  is completing work at the cost budgeted and whether the work scheduled  is being completed on time. If the contractor does not spend all funds  budgeted or completes more work than planned, the CPR shows positive  cost and/or schedule variances. Similarly, if the contractor spends more  than planned or cannot complete all of the work scheduled, the CPR  shows negative cost and/or schedule variances. Using data from the CPR,  a program manager can assess trends in cost and schedule performance,  information that is useful because trends tend to persist. Studies have  shown that once a contract is 15 percent complete, performance metrics  are indicative of the contract’s final outcome.
We used CPR data to assess the fiscal year 2005 cost and schedule  performance of prime contractors for seven BMDS elements. When  possible, we also predicted the likely cost of each prime contract at  completion. Our predictions of final contract cost are based on the  assumption that the contractor will continue to perform in the future as it  has in the past. An assessment of each element is provided in this  appendix.
subsections: section_title: Aegis BMD Contractors Deliver Good Performance
paragraphs: The Aegis BMD program has a prime contract for each of its two major  components—the Aegis BMD Weapon System and the Standard Missile-3.  During fiscal year 2005, both contractors completed most of their planned  activities on time and at or less than budgeted costs. Based on the weapon  system contractor’s performance through fiscal year 2005, the contractor  could underrun the budgeted cost of the contract by about $7.1 million to  $12.5 million, while the SM-3 contractor could underrun its budgeted costs  for the contract by about $11.5 million to $17.8 million.
subsections: section_title: Aegis BMD Weapon System Contractor Mostly on Track
paragraphs: Weapon System CPRs show that the contractor underran its budgeted  costs for the prime contract and was able to complete all of its planned  work on schedule. The weapon system contract’s cumulative cost and  schedule variances—variances that take into account all work completed  on the contract since its award—are highlighted in figure 2.
According to program officials, the minimal schedule variance during the  fiscal year was driven by ship availability and changing test event  schedules. Additionally, the contractor incurred a $6 million positive cost  variance as a result of underruns for Block 2004 and Block 2006 efforts. In  September 2005, work tasks were replanned for the Block 2004  completion effort to reflect funding impacts.
section_title: Standard Missile-3 Contractor’s Cost Performance Is Mostly Good
paragraphs: The prime contractor for the SM-3 missile component performed within its  budgeted costs, but was slightly behind schedule. By the end of fiscal year  2005, the contractor reported a positive cost variance of $10.9 million and  a negative schedule variance of $9.6 million. Figure 3 illustrates the  cumulative cost and schedule performance for the SM-3 prime contractor.
Our analysis of CPR data shows that the contractor spent less than  budgeted because it did not need all staff originally planned to conduct  test events; these events were delayed because of ship availability and  fleet priorities. Program officials told us that the tests were rescheduled  when the contractor was unable to meet the planned test dates. The funds  budgeted for these tests will be used to conduct the tests at the  rescheduled dates.
The delayed test events also caused the contractor to fall slightly behind  schedule. In addition, the contractor could not complete some planned  work because hardware deliveries were late, delaying related integration  activities. Despite these delays, the program asserts that the contractor  has met most of its contractual delivery dates thus far, and the program  expects the contractor to meet future delivery obligations.
section_title: Despite Restructure, ABL Contractor Experiences Cost and Schedule Growth
paragraphs: Our analysis of ABL CPRs indicates that the prime contractor’s cost and  schedule performance declined during fiscal year 2005 despite the  program’s restructuring efforts in the spring of 2004. The program  restructured the contract to give the contractor a more realistic budget  and schedule to do work that is needed to get ready for and complete a  lethality demonstration of the ABL element. Despite these adjustments,  the contractor was unable to complete fiscal year 2005 activities within  budget or on schedule. As illustrated in figure 4, the ABL contractor  incurred a negative cost variance of $23.1 million and a negative schedule  variance of $23.6 million during fiscal year 2005.
The program planned to complete two major activities during fiscal year  2005—passive flight tests of ABL’s Beam Control/Fire Control component  and duration tests of the system’s high-energy laser.  However, technical  challenges associated with these activities increased costs and delayed  scheduled work. Changes had to be made to Beam Control/Fire Control  software, and additional work was needed on the Beam Control/Fire  Control Hard Wire Abort System to support test activities. In addition, the  program also reprioritized activities throughout the program.  Furthermore, the contractor informed the ABL program office that  negative cost variances caused by technical problems related to the  element’s Active Ranger System and Beacon Illuminator Laser  components cannot be recovered. These problems and their potential  impact on the program are outlined in table 8.
According to program officials, the late delivery of the Active Ranger  System will not affect ABL’s planned 2008 lethality demonstration because  the test will not require ABL to estimate the target missile’s launch or  impact point. Neither will the test include more than one target. However,  the delay could affect the contract’s schedule and cost because planned  work related to the Active Ranger System may not be completed and the  cost of unplanned work needed to resolve the technical problems was not  included in the contractor’s budget.
Despite program challenges, program officials noted that the contractor  still believes it can complete the contract within the current contract  ceiling. However, based on our analysis of the program’s fiscal year 2005  performance, we estimate a contract overrun of between $43.8 million and  $231.7 million.
section_title: Lack of Reporting Limits Knowledge of C2BMC Contractor’s Performance
paragraphs: Our analysis of the performance of the contractor developing the C2BMC  element was limited because the program did not deliver CPRs for   6 months during fiscal year 2005. Program officials cited the dynamics of  the program as the primary reason for the suspension. In 2004, the C2BMC  program office directed the contractor to add requirements to integrate a  Forward-Based X-band—Transportable radar into the program’s  architecture, adjust its schedule to absorb funding reductions, and make  several high-priority engineering changes. The contractor was unable to  update its work plan and realign its budget quickly enough to reflect these  changes. Without changes, CPRs would have compared the work under  way with an outdated schedule and budget and would not have reflected  the contractor’s true performance. The contractor completed all activities  needed to replan its work in May 2005 and began to deliver CPRs in June  2005. By the close of fiscal year 2005, the contractor reported that it was  performing work within budget and slightly behind schedule. The  cumulative cost and schedule variances for the contract were  approximately positive $1.7 million and negative $ 0.9 million, respectively.  Our analysis shows that based on its performance so far, the contractor  should be able to complete all scheduled contract work within the  contract’s negotiated cost.
section_title: GMD Contractor’s Performance Continues to Decline
paragraphs: The GMD prime contractor’s cost and schedule performance continued to  erode during fiscal year 2005. By September 2005, the cumulative cost of  all work completed was $713 million more than expected, and the  contractor had incurred a cumulative negative schedule variance of   $228 million. In fiscal year 2005 alone, work cost about $365 million more  than budgeted. Furthermore, CPRs show that the contractor incurred a  negative schedule variance of approximately $39 million during the fiscal  year. However, officials in MDA’s Office of Business Management told us  that the schedule variance does not capture some work planned for fiscal  year 2005 that was deferred. The officials said that if the contractor  deferred fiscal year 2005 work to another fiscal year before the work was  begun, the CPR would not show that the contractor was behind schedule  in completing that work.
Judging from the contractor’s cost and schedule performance in fiscal year  2005, we estimate that at the contract’s completion, the contractor will  have overrun the budgeted cost of the contract by between $1.0 billion and  $1.4 billion. Figure 5 shows the unfavorable trend in GMD fiscal year 2005  performance.
Developmental issues with the interceptor continue to be the leading  contributor to cost overruns and schedule slips for the GMD program.  Interceptor-related work cost $240 million more than budgeted in fiscal  year 2005, with the kill vehicle accounting for more than 42 percent of this  overrun. Poor quality control has led to a number of technical problems  with the kill vehicle—such as foreign object debris in wiring harnesses and  leaks in thermal batteries—that have increased manpower and rework  costs. Additionally, the contractor for the BV+ booster incurred increased  costs as a result of inefficiencies related to its transition to a new supplier.  New requirements and redesign efforts related to the BV+ booster also  contributed to the prime contractor’s negative cost performance.
The program’s schedule variance grew as flight and ground tests were  delayed. During fiscal year 2005, several flight tests were deferred after the  interceptors in two flight tests failed to launch. The GMD program has  restructured its test plan, and the first flight test was successfully  conducted in December 2005. Program officials noted that the contractor  expects to reduce its schedule variance in fiscal year 2006. However, the  program’s negative performance forced the program to restructure its  future work efforts and extend its prime contract by 1 year.
section_title: Kinetic Energy Interceptors
paragraphs: In March 2005, we reported that plans to restructure the KEI contract  prompted program office officials to suspend CPRs. The contract has  since been restructured, and the contractor began delivering CPRs in  March 2005. As of September 2005, the KEI prime contractor had  completed approximately 4 percent of its planned work and was  performing within its budgeted costs, but slightly behind schedule. The  program incurred a positive cost variance of $3.0 million and a negative  schedule variance of $3.9 million during the fiscal year. Because the  contractor has completed a small percentage of the work required by the  contract, the contractor’s performance to date cannot be used to estimate  whether the contract can be completed within its estimated cost.
The KEI program is undergoing several contract modifications to address  additional requirements. In July 2005, the program modified the contract  to require that KEI be capable of intercepting enemy missiles in the  midcourse of their flight. Consequently, the program plans to extend the  prime contract to better align its cost and schedule objectives with the  new work content. Future CPRs will compare the contractor’s  performance with the new cost and schedule objectives. Program officials  plan to begin work on the midcourse capability in fiscal year 2008 and will  continue to develop this capability through the end of the contract, which  is expected to be September 2015.
section_title: STSS Contractor’s Performance Declines
paragraphs: Our analysis of contractor performance reports shows that the STSS  program continued to experience a decline in contractor performance  during fiscal year 2005. As depicted in figure 6, the contractor incurred  cumulative negative cost and schedule variances of $97 million and   $20 million, respectively. If the contractor’s performance continues to  decline, we estimate that at its completion the contract will exceed  budgeted cost by between $248 million and $479 million. However,  program officials noted that more than 90 percent of the contractor’s past  performance can be attributed to a subcontractor whose work will be  completed in fiscal year 2006.
Quality issues with the subcontractor were the primary reason that the  STSS prime contractor overran its fiscal year 2005 budget. For example,  poor workmanship caused a satellite’s sensor payload to fail a vibration  test because fasteners—designed to hold the sensor steady—were not  tightened according to specifications. Additionally, poor workmanship at a  third-tier vendor led to difficulties in manufacturing payload cables.
Program officials told us that the prime contractor had to direct  management attention and considerable effort to rectify the effects of the  subcontractor’s poor quality control procedures. In addition to citing  quality issues, program officials told us that they continue to encounter  integration-related problems as the program progresses with testing the  payload at successively higher levels of integration.
Program officials noted that the subcontractor has made some  improvements to its quality control program that should minimize future  quality-related problems. For example, the subcontractor instituted an on- site Quality Assurance Council to develop improvements to the quality  process at all levels of the organization. Additionally, quality personnel  increased the number of inspections and supervision of all processes to  ensure quality control.
section_title: Overall Performance of THAAD Contractor Declines
paragraphs: During fiscal year 2005, the THAAD program incurred cumulative cost  overruns on its prime contract. As of September 2005, the contractor was  overrunning its budgeted costs for the fiscal year by approximately   $19 million, but it was still ahead of schedule. Because the cost  performance of the contractor prior to fiscal year 2005 was positive, the  cumulative overrun through September 2005 was about $15 million. Figure  7 illustrates the cumulative cost and schedule variances incurred by the  program during the fiscal year. Judging from the contractor’s cost  performance to date, we estimate that the contract could exceed its  budgeted cost by about $48 million.
During fiscal year 2005, the missile component continued to be the lead  cause of the contractor’s negative performance. Major factors contributing  to the missile’s cost variance include delays in activating a test facility at  the Air Force Research Laboratory, redesign of faulty valves, performance  issues related to vibration and shock testing, and unplanned hardware  fabrication, assembly, and support costs. Redesign, material growth, and  integration issues related to the missile also contributed to the program’s  unfavorable cost performance.
section_title: Appendix IV: MDA’S Audit of GMD Interceptor Contractors
paragraphs: In 2005, MDA’s Office of Safety, Quality, and Mission Assurance conducted  audits of the contractor developing the interceptor’s exoatmospheric kill  vehicle and the Orbital Boost Vehicle. In its audit of the EKV contractor, a  number of quality control weaknesses were documented. First, the MDA  auditors found evidence that the prime contractor had not correctly  communicated all essential EKV requirements to its subcontractor and the  subcontractor had not communicated complete and correct requirements  to its suppliers. For example, the prime contractor did not require the EKV  contractor to use space-qualified parts—parts that have been proven to  reliably withstand the harsh environment of space. Similarly, the auditors  found that the subcontractor had not always provided its suppliers with  correct parts, materials, and processes requirements. For example, the  auditors found multiple incidents in which the subcontractor required one  supplier to abide by incorrect or outdated compliance documents.
The audit also identified numerous instances in which the EKV  subcontractor had not exercised good configuration control. In some  cases, drawings did not reflect current changes. In others, assembly  records did not agree with build records. For example, the assembly  record for one component showed that it included a different part from  the one recorded in its build record. In another, the assembly tag showed  that a component was not built in the same configuration shown in the  build record.
Auditors found that the reliability of the EKV’s design cannot be  determined and any estimates of its serviceable life are likely  unsupportable. The audit team established that the results from a March  2004 failure modes effects and criticality analysis were not fully used to  influence the design of the EKV and that the contractor has not planned or  performed a reliability demonstration, a maintainability analysis or  demonstration, and does not plan reliability growth testing. Additionally,  major requirements waivers approved on the basis of a short-term, limited- life mission significantly limit service life and have not been fully vetted,  accepted, and mitigated for longer-term operational use.
Further, auditors determined that the contractor has no written policy  involving qualification testing and does not require that its EKV  subcontractor follow requirements established by industry, civilian, and  military users of space and launch vehicles. For this reason, tests of the  EKV under thermal vacuum conditions representative of those found in  space are not being conducted. The auditors also identified numerous  issues with EKV shock and vibration testing and found that the contractor  performs no formal qualification or acceptance tests on the EKV.
Finally, the audit showed that because the contractor’s production  processes are immature, the contractor cannot build a consistent and  reliable product. For example, auditors found instances where work  instructions were not followed and a number of deficiencies in the build  books that lay out the plans and processes for manufacturing the EKV.
Similarly, the auditors found that the contractor producing the Orbital  Boost Vehicle needed to improve quality control processes and adherence  to those processes. According to deficiency reports, the contractor, did  not always, among other things, flow down requirements properly;  practice good configuration management to ensure that the booster met  form, fit, and function requirements; implement effective environmental  stress screening; or have an approved parts, material, and processes  management plan.
section_title: Appendix V: Integrated Management Plan
paragraphs: Event 0 – Block Capability Alternative    Block planning process completed    Long lead targets, tests and exercises identified    Affordability analysis completed    Acquisition strategy approved    Preliminary block plan approved  Event 1 – Preliminary block definition    Block performance assessments updated    Detailed cost estimates/estimates at completions (EAC) available    Costs/benefit analysis updated    Risks assessed and mitigation programs established    Preliminary operational concept and operations architecture drafted    Preliminary designs for all elements/components/targets completed    Required funding identified for development   Integrated master schedule created    Preliminary block definition approved  Event 2 – Final block definition    Performance assessments updated    Detailed cost estimates/EACs available    Risks assessed and mitigation programs updated    Military utility characterized and operational concept refined    Preliminary integration test plan available    Final design for all elements/components/targets completed    Funding available for development    Block activation plan available    Block definition updated  Event 3 – First complete development article    Detailed cost estimates/EACs available    Operational concept defined and operations architecture available    Test range and support planning completed    Military utility assessment completed    First development article/targets built and initial tests completed  Event 4 – Element/Component development complete    Detailed cost estimates/EACs available    Block integration test planning completed    Element/component/targets development and testing complete    Support systems defined    Training systems defined    Fielding readiness assessed (initial defensive operations)
section_title: Appendix VI: Scope and Methodology
paragraphs: To examine the progress MDA made in fiscal year 2005 toward its Block  2004 goals, we examined the efforts of individual programs that are  developing BMDS elements under the management of MDA, such as the  GMD program. The elements included in our review collectively  accounted for 73 percent of MDA’s fiscal year 2005 research and  development budget requests. We compared each element’s completed  activities, test results, demonstrated performance, and actual cost  achieved in fiscal year 2005 with those planned for fiscal year 2005. In  making this comparison, we examined System Element Reviews, test  schedules, test reports, and MDA briefing charts. To assess each element’s  progress toward its cost goals, we reviewed Contract Performance  Reports and Defense Contract Management Agency’s analyses of these  reports (if available). We applied established earned value management  techniques to data captured in Contract Performance Reports to  determine trends and used established earned value management formulas  to project the likely costs of prime contracts at completion. We also  developed data collection instruments, which were submitted to MDA and  each element program office, to gather detailed information on completed  program activities, including tests, design reviews, prime contracts, and  estimates of element performance. In addition, we discussed fiscal year  2005 progress with officials in MDA’s Business Management Office and  each element program office, as well as the office of DOD’s Director,  Operational Test and Evaluation.
To determine whether MDA achieved the quantity, cost, and performance  goals it set for Block 2004 in February 2003, we examined fielding  schedules, System Element Reviews, test reports, budget estimate  submissions, and the U.S. Strategic Command’s Military Utility  Assessment. We also held discussions with the Aegis BMD, GMD, and  C2BMC program offices; MDA’s Office of Safety, Quality and Assurance;  and the Office of the Director, Operational Test and Evaluation.
We determined the conditions that prevented MDA from achieving its  Block 2004 goals by examining MDA’s implementation of its Integrated  Management Plan, the Secretary of Defense 2002 memo establishing the  Ballistic Missile Defense Program, and audits conducted by MDA’s Office  of Safety, Quality, and Mission Assurance. We also held discussions with  MDA’s Offices of Business Management and Safety, Quality, and Mission  Assurance and the GMD Program Office.
In determining the actions MDA is taking to address problems that  affected the outcome of Block 2004, we reviewed MDA Assurance  Provisions, recommendations of the Mission Return to Flight Task Force,  memorandums of agreement between MDA and the Defense Contract  Management Agency and MDA and the National Aeronautics and Space  Administration, GMD award fee letters, and directives issued by MDA’s  Director. We also discussed MDA’s plans with members of the Mission  Readiness Task Force and officials in the agency’s Office of Safety,  Quality, and Mission Assurance.
To ensure that MDA-generated data used in our assessment are reliable,  we evaluated the agency’s management control processes. We discussed  these processes extensively with MDA upper management. In addition, we  confirmed the accuracy of MDA-generated data with multiple sources  within MDA and, when possible, with independent experts. To assess the  validity and reliability of prime contractors’ earned value management  systems and reports, we analyzed audit reports prepared by the Defense  Contract Audit Agency. Finally, we assessed MDA’s internal accounting  and administrative management controls by reviewing MDA’s Federal  Manager’s Financial Integrity Report for Fiscal Years 2003, 2004, and 2005.
Our work was performed primarily at MDA headquarters in Arlington,  Virginia. At this location, we met with officials from the Kinetic Energy  Interceptors Program Office; Aegis Ballistic Missile Defense Program  Office; Airborne Laser Program Office; Command, Control, Battle  Management, and Communications Program Office; Business Management  Office; and Office of Safety, Quality, and Mission Assurance. In addition,  we met with officials from the Space Tracking and Surveillance System  Program Office, El Segundo, California; and the Ground-based Midcourse  Defense Program Office and Terminal High Altitude Area Defense Project  Office, Huntsville, Alabama. We also interviewed officials from the office  of the Director, Operational Test and Evaluation, Arlington, Virginia.
We conducted our review from May 2005 through March 2006 in  accordance with generally accepted government auditing standards.
section_title: Appendix VII: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the individual named above, Barbara Haynes, Assistant  Director, Ivy Hübler, LaTonya Miller, Karen Richey, Adam Vodraska, and  Jonathan Watkins made key contributions to this report.