Missile Defense: Lessons Learned From Acquisition Efforts
Released: 2020-03-12T00:00:00

Letter

Background

MDA is responsible for developing a number of systems, known as elements, with the purpose of defending against ballistic and hypersonic missile attacks. MDA’s mission is to combine these elements into an integrated system-of-systems known as the Ballistic Missile Defense System (BMDS). The goal of the BMDS is to combine the abilities of two or more elements to achieve objectives that would not have been possible for any individual element. These emergent abilities are known as integrated capabilities or BMDS level capabilities. Table 1 provides a brief description of selected BMDS elements.

MDA was established in 2002 with exceptional flexibilities to manage the acquisition of the BMDS—developed as a single program—that allow MDA to expedite the fielding of assets and integrated ballistic missile defense capabilities. These flexibilities allow MDA to diverge from DOD’s traditional acquisition life cycle and defer the application of certain acquisition policies and laws designed to facilitate oversight and accountability until a mature capability is ready to be handed over to a military service for production and operation.

In addition, MDA has been operating in an environment of tight timeframes for delivering capabilities—beginning with a presidential directive in 2002 to field a limited capability by 2004. This was followed by a presidential announcement in 2009 to begin deploying U.S. missile defense in Europe in 2011 finishing in 2020. This schedule required concurrency among technology, testing and other development activities. More recently, MDA has been directed to develop and deploy defenses against hypersonic and cruise missile threats as soon as technologically able. These schedule pressures compound challenges associated with complex technology, design, and integration associated with the missile defense mission that normally require careful planning, disciplined engineering practices, extensive coordination, and effective management and oversight to be successful.

MDA Has Taken Steps to Improve Management Practices, Reduce Acquisition Risks, and Deliver Capability

MDA has taken important actions to increase transparency, reduce high- risk approaches in its management of BMDS elements, and test and deliver BMDS capability. Specifically, MDA has improved reporting in its annual progress reports to the Congress and made advances across a broad range of management activities, including the involvement of stakeholders, reducing concurrency, and continued efforts to improve key aspects of testing necessary to demonstrate delivered capability.

Increased Transparency: MDA, consistent with several of our recommendations has increased the ability to track progress over time in the BMDS Accountability Report (BAR). This is MDA’s annual report that presents the current estimate of the BMDS programs’ baselines. To increase insight into MDA’s management of the BMDS, MDA implemented significant changes to its key acquisition processes and for the first time developed and reported detailed baselines for each element in the BAR in 2010. As we found in March 2011, MDA’s prior approach limited the ability for DOD and congressional decision makers to measure MDA’s progress on cost, schedule, and testing. While MDA’s changes were positive, over the years, we made additional recommendations to further improve MDA’s reporting. In response to our recommendations, MDA made improvements to the BAR that include providing details on variances to its test plan from year to year and including information on its use of contract actions known as an Undefinitized Contract Actions (UCA) and Unpriced Change Orders (UCO).

Improved Stakeholder Outreach: MDA has increased its outreach to DOD stakeholders over the past few years. Our prior work on defense acquisitions has shown that establishing buy-in from decision makers is a key factor in achieving better acquisition outcomes because DOD components provide varying perspectives due to their unique areas of expertise and experience. For example, as we reported in December 2019, MDA has recently increased its interaction with the defense intelligence community. Specifically, MDA engaged the defense intelligence community on an analysis of alternatives the agency completed in February 2017 that assessed future sensor options for the BMDS. In addition, MDA reached out to the defense intelligence community on another analysis of alternatives pertaining to defense against hypersonic missiles. In fact, officials from several DOD organizations we met with over the past two years observed that MDA’s engagement with their organizations was improving.

Reducing Concurrency: MDA continues to take steps to reduce concurrency, an issue we have reported on for many years. Concurrency is broadly defined as the overlap of development, testing, and production; coupled with an aggressive testing schedule. MDA’s concurrent development has often left the agency committing to production and fielding before development is complete. This approach has resulted in performance shortfalls, cost increases, and schedule delays. MDA has taken steps to mitigate this risk consistent with our recommendations. For example, as we found in May 2017, MDA took steps to reduce concurrency in the Aegis BMD SM-3 Block IB by adding in tests and delaying the full-rate production decision until the tests were completed. Figure 1 represents a highly concurrent acquisition schedule as compared to an approach based on gaining knowledge before proceeding to the next acquisition phase.

Improving BMDS Testing: MDA has improved the accuracy of tools it uses to assess integrated BMDS capabilities. The BMDS is a system of systems that cannot be completely assessed using intercept flight tests because of the system’s scope and complexity, and because of safety constraints. Consequently, MDA, independent DOD testing organizations, and the warfighter must rely heavily on representations of the integrated BMDS called models and simulations in ground testing. This approach is used, rather than live tests, to test the operational performance of the whole BMDS against attacks with more threats represented. Our preliminary observations for fiscal year 2019 are that the number of accredited models and simulations that are needed to assess the integrated performance of the BMDS has steadily risen over the last 3 years.

Over the past several years, we have reported on MDA’s progress in delivering assets and capabilities to counter attacks as well as cyber threats. MDA delivered important BMDS capabilities for architectures in the United States as well as those defending U.S. troops and allies in Europe, the Middle East, and the Eastern Pacific. For example:

Homeland Defense: In fiscal year 2017 and 2018, MDA delivered a significant integrated capability for defending the United States, including improvements in the ability to discriminate lethal objects in targets, and increased capacity. This was a key achievement in fulfilling a directive from the Secretary of Defense to increase inventory of ground-based interceptors by the end of 2017.

Regional BMD: In fiscal year 2016, MDA delivered capabilities for the second phase of its effort in Europe, called European Phased Adaptive Approach (EPAA). This effort required coordinated development of a number of elements and their integration to provide integrated BMDS-level integrated capabilities against short and medium range ballistic missiles. More recently, in fiscal years 2018 and 2019, MDA rapidly delivered capabilities for its effort to meet an urgent regional need.

In addition, preliminary observations from our review covering fiscal year 2019 indicate that cybersecurity assessments in fiscal year 2019 informed the network defense posture in U.S. Northern Command and provided data on how to reduce mission risk for these elements operating in a cyber-contested environment. Moreover, the agency is incorporating lessons learned from prior cyber activities, and continues to address issues discovered in prior testing, improving its overall cybersecurity survivability. However, our preliminary observations indicate much remains to be done to ensure cyber resiliency of the BMDS including the completion of cybersecurity testing for capabilities delivered in 2017 and 2018, along with conducting element-level operational cooperative and adversarial assessments.

MDA Faces Ongoing Challenges to Improve Transparency and Reduce High-Risk Acquisition Practices

MDA has made efforts to put some programs on a more sound footing and it has taken actions to address the issues I just mentioned. However, MDA can go further to align itself with best practices for acquisitions. Today, I will highlight certain acquisition challenges MDA still faces.

Stakeholder involvement: While MDA has increased its outreach to the stakeholders over the past few years, opportunities remain for further engagement on key decisions. For instance, as we found in December 2019, although MDA has been increasing its engagement with the intelligence community, MDA provides the defense intelligence community with limited insight into how the agency uses threat assessments to inform its acquisition decisions. MDA is not required to obtain the defense intelligence community’s input; however, the community is uniquely positioned to assist MDA keep pace with rapidly emerging threats. Moreover, this limited insight has, in part, prevented validation of threat models designed to assess BMDS capabilities. Without validation, any flaws or bias in the threat models may go undetected, which can have significant implications for the performance of MDA’s weapon systems. MDA and the defense intelligence community recently began discussing a more suitable level of involvement in the agency’s acquisition processes and decisions. As we recommended in May 2017 and December 2019, MDA also needs to strengthen its collaboration with other stakeholders, including the warfighting community and independent cost and technical experts. In the early stages of the RKV program, concerns raised about the design—which ultimately was a key reason for the cancellation of the RKV—went unheeded. For example, preliminary observations for our assessment covering fiscal year 2019 showed that MDA and contractors did not adequately address technical risks despite numerous warnings from stakeholders about the performance issues. However, MDA officials indicate they are working with stakeholders more closely as they plan for the Next Generation Interceptor, a new more advanced interceptor.

Concurrency: Although MDA has taken steps to reduce concurrency as we have previously recommended, the agency still turns to this practice when experiencing developmental delays or schedule pressures. For example, we reported in June 2019 that delays to construction resulted in MDA’s introduction of increasing levels of concurrency into the delivery schedule for the Aegis Ashore site in Poland. We found that key phases of the delivery process had been shortened from 16.5 months to 6.5 months. While overlapping acquisition activity, in theory, could speed up the construction process, this risky practice ultimately failed to mitigate the effects of problematic construction practices. However, program plans indicate that the site has experienced further delays and will not be ready for operational use until at least 2022—a 4 year delay from the original 2018 delivery date. In addition, the recently canceled Redesigned Kill Vehicle (RKV) program originally sought to avoid concurrency by aligning production decisions with flight testing. However, later—in response to the advancement of the North Korean missile threat—the program accelerated RKV development by concurrently performing development and production and reducing the number of necessary flight tests. This acceleration altered the schedule for the previously aligned flight tests and production decisions.

Contracting: Although MDA has flexibilities in managing its acquisition process, it must follow the same contracting regulations that apply to DOD, including the Federal Acquisition Regulation and the Department of Defense Federal Acquisition Regulation Supplement. These regulations allow MDA to use a particular type of contract action called an undefinitized contract action when the negotiation of a definitive contract is not possible in sufficient time to meet the government’s requirements and government interests demand that the contractor be given a binding commitment so that contract performance can begin immediately. These actions authorize contractors to begin work before an agreement on terms, specifications, or price have been agreed upon. In May 2018, we found that the average length of the undefinitized period and the not- to-exceed price of MDA’s undefinitized contract actions had increased over the past 5 years. While MDA policy permits use of undefinitized contracts on a limited basis, we and others have found that they can place unnecessary cost risks on the government. As we reported in June 2019, while MDA improved its performance in timely definitization of these contract actions, the total not-to-exceed value of the undefinitized contract actions MDA initiated in 2018 far exceeded previous years we reviewed.

Transparency in test cost estimates: As we reported in May 2017, MDA requests more than $1 billion in funding each fiscal year for the tests outlined in its integrated test schedule based on MDA’s internally developed test cost estimates. However, our analysis found these estimates were inconsistent and lacked documented traceability. A cost estimate is the summation of individual costs using established methods and valid data. Developing and maintaining reliable cost estimates ensures the appropriate amount of funds are needed when requested and for the expressed purpose. We found, however, in May 2017, MDA’s testing budget lacked transparency and could be improved. Specifically, we found that MDA’s annual budget submission did not provide insight into the funding for each specific test. MDA regularly makes changes to its test schedule without reporting the impacts to its costs and funding needs. Without a breakout of MDA’s costs by test in its annual budget submission and BAR, how many times or how much funding has been requested, received, or used for a specific test will continue to be unclear. Therefore, we recommended that MDA break out funding request by test. DOD did not concur with our recommendation and stated that MDA’s current approach for assigning resources prior to the test execution, is adequate. We continue to believe that breaking out funding requests by test will improve transparency into planned versus actual test costs and aid departmental and congressional decision makers as they make difficult choices of where to invest limited resources.

Changes to MDA’s Test Schedule Persist, Reducing Knowledge to Support Asset and Capability Deliveries

MDA also continues to struggle with fully achieving its annual flight testing goals. After MDA revised its approach to developing the annual Integrated Master Test Plan in 2009, in February 2010, we recognized the new test schedule’s potential to address prior issues with shifting testing requirements or test dates, and adding or deleting tests. MDA also focused its testing to collect data necessary to support the development of models and simulations.

However, MDA’s test plan has not stabilized. Since it formalized its approach in 2010, MDA has continued to revise its test schedule frequently by adding new tests, and deleting or delaying tests, in some cases, multiple times and further into future fiscal years. As a result, less testing is being conducted prior to delivery than originally planned, which means less data are available to understand BMDS capabilities and limitations. Specifically, preliminary observations from our fiscal year 2019 review show that from fiscal year 2010 through fiscal year 2019, MDA has conducted only 37% of its planned testing as originally scheduled, while the remainder has been either been delayed, deleted or conducted in a later fiscal year, as shown in figure 2.

In addition, we reported in June 2019 that European Phased Adaptive Approach (EPAA) Phase 3 testing against intermediate range ballistic missiles (IRBM) had been reduced by 80 percent and MDA no longer planned to conduct a flight test against a raid—a likely tactic in a real- world attack—prior to delivery. The lack of raid flight testing prevented the accreditation of Aegis BMD models for assessment under those circumstances in all fiscal year 2019 ground tests that included Aegis BMD.

Balancing New Efforts with Existing Portfolio Needs will be Challenging

MDA is currently at a pivotal crossroads, needing to balance its ability to pursue new and advanced efforts while also maintaining its existing portfolio of BMDS elements that have not transferred to the military services as originally planned. The new and advanced efforts, such as hypersonic defense and a Next Generation Interceptor (NGI) for GMD, are research and development-intensive tasks, which carry significant technical risks and financial commitments. If MDA’s elements are not transferred as originally intended, as they move further into production and operations and sustainment these elements will continue to consume a growing portion of the agency’s budget.

MDA and military services have taken some actions to prepare for transferring the BMDS elements; however, the actions have not enabled transfer primarily due to a lack of early and frequent coordination, according to officials from the Undersecretary of Defense for Research and Development and Acquisitions and Sustainment. Consequently, there are overarching concerns related to transfer such as who funds the sustainment of the elements which have not been resolved. Congress and the Secretary of Defense have directed multiple reviews to determine how to address these concerns and chart a path forward for MDA.

Chairman Cooper, Ranking Member Turner, and members of the Subcommittee, this concludes my prepared statement. I would be happy to respond to any questions you may have at this time.

GAO Contact and Acknowledgements:

If you or your staff members have any questions about this testimony, please contact Cristina T. Chaplain, Director, Contracting and National Security Acquisitions, at (202) 512-4841 or Chaplainc@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement.

GAO staff who made key contributions to this testimony are LaTonya Miller (Assistant Director), Steven Stern (Analyst in Charge), Matthew Ambrose, Pete Anderson, Helena Johnson, Michael Moran, Wiktor Niewiadomski, Miranda Riemer, Brian Tittle, and Alyssa Weir.

Related GAO Products:

Missile Defense: Delivery Delays Provide Opportunity for Increased Testing to Better Understand Capability. GAO-19-387. Washington, D.C.: June 2019.

Missile Defense: The Warfighter and Decision Makers Would Benefit from Better Communication about the System’s Capabilities and Limitations. GAO-18-324. Washington, D.C.: May 2018.

Missile Defense: Some Progress Delivering Capabilities, but Challenges with Testing Transparency and Requirements Development Need to Be Addressed. GAO-17-381. Washington, D.C.: May 2017.

Missile Defense: Ballistic Missile Defense System Testing Delays Affect Delivery of Capabilities. GAO-16-339R. Washington, D.C.: Apr. 2016.

Missile Defense: Opportunities Exist to Reduce Acquisition Risk and Improve Reporting on System Capabilities. GAO-15-345. Washington, D.C.: May 2015.

Missile Defense: Mixed Progress in Achieving Acquisition Goals and Improving Accountability. GAO-14-351. Washington, D.C.: Apr. 2014.

Missile Defense: Opportunity to Refocus on Strengthening Acquisition Management. GAO-13-432. Washington, D.C.: Apr. 2013.

Missile Defense: Opportunity Exists to Strengthen Acquisitions by Reducing Concurrency. GAO-12-486. Washington, D.C.: Apr. 2012.

Missile Defense: Actions Needed to Improve Transparency and Accountability. GAO-11-372. Washington, D.C.: Mar. 2011.

Defense Acquisitions: Missile Defense Transition Provides Opportunity to Strengthen Acquisition Approach. GAO-10-311. Washington, D.C.: Feb. 2010.

Defense Acquisitions: Production and Fielding of Missile Defense Components Continue with Less Testing and Validation Than Planned. GAO-09-338. Washington, D.C.: Mar. 2009.

Defense Acquisitions: Progress Made in Fielding Missile Defense, but Program is Short of Meeting Goals. GAO-08-448. Washington, D.C.: Mar. 2008.

Defense Acquisitions: Missile Defense Acquisition Strategy Generates Results but Delivers Less at a Higher Cost. GAO-07-387. Washington, D.C.: Mar. 2007.

Defense Acquisitions: Missile Defense Agency Fields Initial Capability but Falls Short of Original Goals. GAO-06-327. Washington, D.C.: Mar. 2006.

Defense Acquisitions: Status of Ballistic Missile Defense Program in 2004. GAO-05-243. Washington, D.C.: Mar. 2005.

Missile Defense: Actions Are Needed to Enhance Testing and Accountability. GAO-04-409. Washington, D.C.: Apr. 2004.

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