Missile Defense: Delivery Delays Provide Opportunity for Increased Testing to Better Understand Capability
Released: 2019-06-06T00:00:00

Letter

Background

MDA is responsible for developing a number of systems, known as elements, with the purpose of defending against ballistic missile attacks. MDA’s mission is to combine these elements into an integrated system- of-systems, known as the Ballistic Missile Defense System. 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 list and description of elements included in our review.

MDA’s Acquisition Flexibilities and Steps to Improve Traceability and Oversight

When MDA was established in 2002, it was granted exceptional flexibilities to set requirements and 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. Some of the laws and policies include such things as: obtaining the approval of a higher-level acquisition executive before making changes to an approved baseline, reporting certain increases in unit cost measured from the original or current baseline, obtaining an independent life-cycle cost estimate prior to beginning system development and/or production and deployment, and regularly providing detailed program status information to Congress, including specific costs, in Selected Acquisition Reports.

In response to concerns related to oversight, Congress and DOD have taken a number of actions. For example, Congress enacted legislation in 2008 requiring MDA to establish cost, schedule, and performance baselines—starting points against which to measure progress—for each element that has entered the equivalent of system development or is being produced or acquired for operational fielding. MDA reported its newly established baselines to Congress for the first time in its June 2010 BMDS Accountability Report. Since that time, Congress has required more details for the content of these baselines. Additionally, to enhance oversight of the information provided in the BMDS Accountability Report, MDA continues to incorporate suggestions and recommendations from GAO. However, not all of our recommendations have been fully implemented. For example, in April 2013, we recommended that MDA stabilize its acquisition baselines so that meaningful comparisons can be made over time to support oversight. MDA stated that the information presented in the BAR is sufficient; however, we continue to find that the lack of stable baselines makes comparison difficult and in some instances, impossible.

MDA’s Process for Delivering Capabilities

MDA develops capabilities and then delivers them to the military services. Using this process, MDA declares an asset or capability ready for delivery for potential operational use while communicating the capabilities and limitations of the asset. Representatives from the receiving military service or combatant command then have the ability to assess this evidence and decide whether to accept the new capability. Because the military services conduct minimal missile defense testing of their own, this process is one of the only ways to convey vital performance information. The accuracy of this information is especially important as it informs training materials, doctrine, and deployment decisions and provides evidence supporting these assertions.

MDA supports its assertions of capabilities with evidence from three sources: models and simulations, ground testing, and flight testing. Ground tests and models and simulations permit more flexibility in scheduling and design, but both are dependent on logistically more difficult flight tests to provide real-world performance data. As a result, MDA’s ability to organize, conduct, and evaluate flight tests is one of the most important factors in whether MDA is able to adhere to its schedule and declare an asset or capability ready for delivery.

MDA’s Contracting Practices

Though MDA has flexibilities in managing the acquisition process, it must follow the same contracting regulations that apply to DOD, including the Federal Acquisition Regulation and the Defense Federal Acquisition Regulation Supplement (DFARS). For this report, we reviewed MDA’s use of a particular type of contract action that authorizes a contractor to begin work before contract terms, specifications, or price have been agreed upon. These “undefinitized contract actions” are permitted by the DFARS, with certain limitations. Undefinitized contract actions are generally used when negotiation of a definitive contract action is not possible in sufficient time to meet the government’s requirements and the government’s interest demands that the contractor be given a binding commitment so that contract performance can begin immediately. Under the DFARS, undefinitized contract actions must include a specific “not-to- exceed” price. Once the action’s terms, specifications, and price have been agreed upon or determined, a process known as definitization, the contract action converts to a “definitive” contract.

Under the DFARS, undefinitized contract actions must contain definitization schedules that provide for definitization by the earlier of (1) 180 days after issuance or (2) the date on which the amount of funds obligated under the action is more than 50 percent of the not-to-exceed price. Once the government has received a qualifying proposal from the contractor, however, the government can extend the undefinitized period another 180 days. Similarly, the government may obligate up to 75 percent of the not-to-exceed price, if the contractor submits the qualifying proposal before 50 percent of the not-to-exceed price has been obligated.

MDA’s Regional Efforts in Europe and Korea

DOD’s regional Ballistic Missile Defense (BMD) effort consists of a number of specific weapon systems or elements that compose the BMD system as a whole. According to DOD, various versions of these weapon systems are being deployed in Europe, Korea and other regions. The European effort known as the European Phased Adaptive Approach (EPAA) integrates the upgrades to Aegis BMD Weapon System, Aegis BMD interceptors, C2BMC and sensors, and was originally planned for delivery in four phases. Additionally, each phase is designed to rely on increasingly capable missiles, sensors, command and control, and integration to defend Europe against increasingly longer range ballistic missiles.

DOD delivered the first phase, for short- and medium-range defense of Europe, in December 2011, and delivered the second phase for medium- range missiles in December 2015. Its efforts for both of these phases were also characterized by schedule delays, technical challenges that led to reductions in the scope of capability delivered, as well as testing reductions, which reduced confidence in capabilities that had been delivered. According to its capability plans, the purpose of EPAA Phase 3 is to provide a “robust Intermediate-Range Ballistic Missile (IRBM) defense.” Figure 1 depicts the weapon systems that DOD deployed in support of the European Phased Adaptive Approach capability.

As we have previously reported, MDA encountered numerous challenges in an effort to meet its original EPAA goals and we have made several recommendations to improve MDA’s management of its integrated capability efforts, including EPAA, to reduce risk for individual elements and to improve testing practices overall. For instance: In January 2011, we recommended that DOD develop life-cycle cost estimates and establish an integrated schedule for EPAA. DOD partially concurred and concurred, respectively, to the recommendations. An independent life cycle cost estimate was prepared, however an integrated schedule that produced sufficient detail was never completed.

In April 2012, we recommended that DOD assess the extent to which the dates announced by the President in 2009 are contributing to concurrency and recommend schedule adjustments where significant benefits can be obtained. DOD did concur with this recommendation, however never included a specific assessment of the extent to which capability delivery dates for the European Phased Adaptive Approach announced by the president in 2009 were contributing to concurrency; instead, it asserts that BMDS technology development is fundamentally driven by completion of technical milestones, not schedule declarations.

In May 2017, we recommended that MDA address deficiencies in its testing scheduling policy to better align it with best practices for scheduling. DOD did not concur with this recommendation. Consequently, the department continues to allow MDA to schedule and plan its test program without risk analyses, or assigning resources to each test. Unless the department takes action to address these challenges, the department should continue to expect MDA to fall further behind in its test program.

In fiscal year 2018, MDA focused additional regional capability efforts on the Korean Peninsula. This new effort was requested by the United States Forces Korea in December 2017 to counter North Korean ballistic missiles. Capabilities for the Korean effort are currently planned for delivery between February 2018 and April 2021, and are based on element-level upgrades as well as integration enhancements between THAAD and Patriot.

MDA Made Progress Delivering Capabilities and Assets and Conducting Tests but Fell Short of Its 2018 Goals

MDA Delivered Several Important Capabilities According to Its Planned Baseline, but Did Not Meet Most of Its Asset Delivery Goals

In December 2017, MDA achieved a significant asset delivery milestone, completing the deployment of 44 operational ground-based interceptors (GBI). In deploying these interceptors, MDA also fulfilled a goal set by the Secretary of Defense in March 2013 to increase the inventory of GMD interceptors from 30 to 44 by the end of December 2017. Although MDA achieved this goal, it did not deliver two of the four GBIs planned for fiscal year 2018. One of the GBIs is intended for use in an upcoming flight test that was delayed to fiscal year 2019. The other delayed GBI delivery was the result of the boost vehicle contractor mishandling the booster avionics module—a critical component that houses the flight computer and navigation systems. The contractor is working on replacing the component but the rework has delayed delivery of the final GBI to fiscal year 2020.

Other on-time capability deliveries included the release of new software versions for several major BMDS elements, including C2BMC (Spiral 8.2- 3), BOA 6.1, THAAD (THAAD 3.0), AN/TPY-2 (CX 3.0), and GMD (GS 7A). Another expected software release was Aegis Weapon System (BL 9.2), but that was delayed to at least March 2019 to accommodate verification and validation of models and simulations and to accompany the delivery of the Aegis BMD SM-3 Block IIA. In terms of asset deliveries, specifically interceptors used to counter enemy missiles, MDA successfully delivered all 53 THAAD interceptors specified in the baseline for fiscal year 2018, as well as an additional five interceptors the delivery of which had been delayed from the previous year. For a summary of MDA’s asset delivery status for fiscal year 2018, see table 2.

Although MDA made a number of deliveries, including all planned THAAD interceptors, it did not meet its fiscal year 2018 asset delivery goals due to a variety of factors. The Aegis BMD SM-3 Block IB program, which received full production authority early in fiscal year 2018 after years of delays, delivered 12 of 36 planned interceptors in fiscal year 2018. This shortfall was due to the discovery of a parts quality issue that necessitated suspending deliveries until MDA could complete an investigation of the issue’s impact on the interceptor’s performance. In addition, the Aegis BMD SM-3 Block IIA program delivered one of four planned test interceptors due to a flight test failure early in the year suspending further deliveries pending completion of a failure review board.

Moreover, according to MDA officials, construction contractor performance issues will result in the Aegis Ashore Missile Defense System Complex—Poland not being delivered until at least 18 months after the planned December 2018 date. As discussed later in this report, this facility is central to MDA’s plans for the EPAA Phase 3, such that a delay in the completion of this facility resulted in a delay in the planned EPAA Phase 3 delivery to the warfighter.

MDA Conducted Seven of Eleven Flight Tests Planned for Fiscal Year 2018, One of Which Failed

MDA conducted seven fiscal year 2018 flight tests as planned, and during one of those seven the interceptor failed. According to MDA’s Integrated Master Test Plan, MDA scheduled eleven flight tests of the systems included in our review. MDA’s ability to adhere to its flight test schedule for fiscal year 2018 was hampered by several issues, including technical challenges, test failures requiring new tests to be inserted into the schedule, and range and target availability. Of the four tests not conducted, MDA delayed two to future fiscal years, and deleted two, with their objectives planned to be mostly fulfilled by separate events. Table 3 highlights MDA’s fiscal year 2018 flight tests.

MDA also added several test events to its schedule over the course of fiscal year 2018. They are listed below in table 4.

The two most significant flight tests scheduled for fiscal year 2018 were delayed into fiscal year 2019. Specifically, FTG-11, GMD’s first salvo test (launching multiple interceptors at a single target), was delayed until the second quarter of fiscal year 2019 to accommodate other BMDS testing priorities while GMD fixed software issues uncovered during pre-test planning. In addition, FTO-03 Event 1, a test designed to assess the Aegis BMD SM-3 Block IIA capability against an IRBM was to be the first (and only) operational test of the EPAA Phase 3 architecture before MDA delivered the capability. This test was delayed to accommodate the demand for range and test assets following the insertion of a new test into the schedule.

Mid-Year Budget Changes Significantly Affected MDA’s Future-Year Plans

Fiscal year 2018 legislation expanded and accelerated several MDA programs. In December 2017, Congress passed and the President signed into law the Department of Defense Missile Defeat and Defense Enhancements Appropriations Act, 2018 (MDDE), which increased missile defense appropriations. The MDDE provided approximately $2 billion in appropriations for missile defense. MDDE provided funds in support of plans that would expand and accelerate several missile defense programs beyond the agency’s previous baselines. According to MDA, the administration directed the Secretary of Defense to develop options for accelerating missile defense capabilities in response to North Korea flight testing a new intercontinental ballistic missile in July 2017. According to MDA, it collaborated with Office of the Secretary of Defense and the Joint Chiefs of Staff to identify programs and capabilities that could be accelerated and delivered within the current Future Years Defense Plan and directly address the North Korean missile threat. DOD then took those options back to the administration to finalize the MDDE plan, which was subsequently presented to Congress. These plans most significantly affected the GMD program and the Aegis BMD SM-3 Block IIA.

Under the plans and with the funds provided by MDDE, the GMD program will increase its inventory from 44 GBIs to 64 GBIs by 2023. Each of these new interceptors will be equipped with the Redesigned Kill Vehicle (RKV), accelerating the latter program’s schedule by approximately one year.

MDA also intends to use $451 million from MDDE to procure 16 additional Aegis BMD SM-3 Block IIA interceptors. The Aegis BMD SM-3 Block IIA program was still in development at the time, and these funds represented the first time Congress appropriated procurement funds, and not research and development, for the program.

Programs Accelerated and Expanded by the Fiscal Year 2018 Missile Defeat and Defense Enhancement Amendments Subsequently Experienced Challenges

The RKV program, in part to support the accelerated schedule, adopted a new program schedule that required concurrency in some areas. As we previously reported, the original RKV strategy avoided concurrency by aligning production decisions with flight testing. However, to accommodate the newly accelerated schedule, the program began procuring some components before completing qualification testing. Under this new plan, qualification testing would only be completed around the same time as the planned first flight test.

MDA’s contracting plans for the RKV have been closely aligned to the test schedule, to the point that MDA will have more than half of its planned RKV buy under contract before conducting a successful intercept test. The program planned to award a production contract for Lot 1 and the long-lead materials contract for Lot 2 following a major design review, but before the first flight test. Following the first flight test (CTV-03+) in first quarter fiscal year 2020, the program planned to award a production contract for Lot 2 and long-lead materials for Lot 3. Upon completion of the first intercept test (FTG-17) in the first quarter of fiscal year 2021, the program planned to award the production contract for the final planned lot, Lot 3.

Through the course of fiscal year 2018, the RKV program has been unable to meet its cost and schedule milestones. Specifically, the prime contractor has reported accumulating negative cost and schedule variances with no signs of arresting these trends. The contractor also reported inefficiencies stemming from bringing large numbers of new staff onto the project, as well as requiring more personnel for the project than they originally anticipated. According to MDA, as fiscal year 2018 progressed, the program discovered that some components would not meet performance requirements. MDA therefore postponed the critical design review from fiscal year 2018 to fiscal year 2021. Moreover, MDA no longer plans to achieve its goal of fielding 64 interceptors by 2023. In addition, MDA anticipates RKV’s total cost has increased by nearly $600 million as a result of the design issues. See appendix VI for information on RKV and the GMD program.

Aegis BMD SM-3 Block IIA

The Aegis BMD SM-3 Block IIA schedule planned for an initial production decision in fiscal year 2018, but one month after the MDDE’s enactment, the program experienced its second consecutive failure in a significant flight test—FTM-29—that introduced significant uncertainty into the Aegis BMD SM-3 Block IIA’s schedule. In an effort to maintain the program’s schedule, the Undersecretary of Defense for Acquisition and Sustainment in an Acquisition Decision Memorandum provided selective authorization to use procurement funds. The memorandum placed a cap on how much the program could spend, and had a list of approved “pacing items” (which excluded parts still under investigation for the test failure) on which the funds could be spent. Under the terms of the memorandum, MDA would have to meet a series of requirements to lift these limitations, such as completion of the failure review board and implementation and demonstration of corrective actions. MDA operated under these limitations for the remainder of the fiscal year.

MDA Relied on Undefinitized Contract Actions to Achieve Its Acquisition Goals

MDA used undefinitized contract actions (UCA) in fiscal year 2018, particularly in programs receiving MDDE appropriations. In May 2018, we found that MDA’s use of UCAs in recent years had increased in both total not-to-exceed value and in the length of the undefinitized period. While MDA improved its performance in timely definitization of these contract actions in fiscal year 2018, the total not-to-exceed value of the undefinitized contract actions MDA initiated in 2018 far exceeded previous years we reviewed.

UCAs allow work to begin on a program before the government and contractor have agreed to all contract terms, such as price or scope. MDA states that undefinitized contract actions are necessary, particularly in the case of programs accelerated by the MDDE appropriation, because they allow work to begin immediately. Coming to agreement on all terms before beginning work would have added months to program schedules that, MDA stated, could not accommodate such a delay. Undefinitized contract actions are permitted under the Defense Federal Acquisition Regulation Supplement, but we have found in the past that the use of these contracts can pose particular risks for the government.

Examples of recent UCAs follow: In October 2017, MDA issued a sole source undefinitized contract action for $60 million (according to DOD and MDA, the value was later increased to $88 million) for the purposes of transitioning the Aegis BMD SM-3 Block IIA program from development to production. This work will improve the manufacturing readiness of the contractor’s production facilities, with the goal of eventually supporting a production rate of two interceptors per month.

According to MDA officials, definitizing this contract action proved difficult. The contractor’s initial cost and fee position were substantially higher than MDA’s and independent government estimates, even after those estimates were revised upwards when they were found not to include costs specific to the Aegis BMD SM-3 Block IIA. MDA initially planned for a definitization in April 2018. By that time, all terms had been agreed to except for the contractor’s fee. According to MDA officials, the parties deadlocked until August 2018, when, with the authorization of the Director, MDA, contracting officials “unilaterally definitized” the contract. MDA officials told us that when a unilateral definitization occurs, the government essentially imposes its terms on a “take-it-or-leave-it” basis, effectively halting negotiations. According to MDA officials, in this case, the contractor acceded to the government’s terms and continued work on the project. When asked about possible consequences to this action, MDA officials stated that it is possible for contractors in this situation to seek administrative relief, but in this case, they stated such an appeal would be unlikely to succeed, and believed the contractor would be unlikely to pursue it. It is also possible, officials said, that the contractor would either be reluctant or refuse to accept an undefinitized contract action from MDA in the future.

In fiscal year 2017, MDA issued a sole source undefinitized contract action for the design and initial production of the RKV. This contract had a not-to-exceed value of $1.1 billion. MDA issued the contract with an estimated definitization date of May 14, 2018. Despite the issues encountered by the RKV program described above, MDA reported that it definitized this contract action on schedule in May 2018, for the same price as the original not-to-exceed value, $1.1 billion.

MDA issued several undefinitized contract actions in 2018. For example, in April 2018, MDA issued a sole source undefinitized contract action for the production of Aegis BMD SM-3 Block IIA “pacing items”, with a not-to-exceed value of $387 million. The Undersecretary of Defense for Acquisition and Sustainment issued a memorandum stating the circumstances under which MDA could obligate additional procurement, defense wide funds. MDA officials stated that “pacing items” were those items whose lead times were not long enough to qualify for long-lead procurement, but which were still substantial enough (more than 2 years) to cause delays if their production waited until the successful completion of operational testing. These officials also explained that the pacing items excluded any components which were still under investigation for the failure of FTM-29. Before that test’s failure and the ensuing involvement of the Undersecretary, MDA planned for a not-to-exceed value of $672 million. MDA initially planned for a definitization date of December 2018, but it has since been delayed.

MDA issued its largest undefinitized contract action for the fiscal year (as measured by its not-to-exceed value of $6.56 billion) in January 2018. For the past several years, the GMD program planned to transition away from its all-inclusive contract to a structure involving three new contracts: one for systems engineering, integration, and testing; one for ground systems readiness, operations, and support; and one for all-up round interceptors. This Development, Operations and Sustainment, and Production approach would have been a significant undertaking. It would have required that MDA take control of the technical baseline for the entire program. MDA also believed that this strategy would provide for enhanced competition and reduced organizational conflicts of interest.

With the MDDE appropriation and associated program acceleration, the Director, MDA decided that managing the transition to this new contracting strategy, in addition to fielding 20 new ground-based interceptors was too risky. Thus, MDA issued an undefinitized contract action that provided a six-year extension to the main development and sustainment contract for GMD. The contract action has a not-to-exceed value of $6.56 billion, a value higher than that for all undefinitized contract actions issued by MDA in the previous 5 years combined. MDA was able to definitize most elements of this contract in March 2019. Figure 2 illustrates MDA’s increasing use of undefinitized contracts as measured by the sum of their not-to-exceed values.

MDA Completed Some Key Milestones for Integrated Regional BMDS Capabilities, but Key Aspects of Its European Effort Have Been Deferred and Testing De-scoped

In fiscal year 2018, MDA delivered regional capabilities to counter threats from North Korea, but did not meet all of its 2018 goals for its effort in Europe to counter intermediate-range ballistic missile (IRBM) threats from Iran, known as the European Phased Adaptive Approach (EPAA) Phase 3. Specifically, the agency delivered planned upgrades and additional assets for the Korean Peninsula—an effort it began in 2017. However, the delivery of the third and final phase of the EPAA has been delayed by 18 months. Despite this delay, testing intended to demonstrate EPAA Phase 3 capability has been significantly reduced and de-scoped or deferred past the new delivery date, which reduces the warfighter’s insight on the system’s capabilities and limitations.

MDA Met Its Fiscal Year 2018 Goals for Capabilities in the Korean Peninsula

MDA delivered upgrades on time to the Korean Peninsula in February and September 2018. Notably, the upgrades provided initial integration between THAAD and Patriot—key elements of the effort in Korea— improving THAAD and Patriot’s ability to coordinate during engagements. MDA also delivered element-level upgrades for THAAD, including additional interceptors, as well as a new software release that expanded THAAD’s ability to counter new threats and improved its performance in the presence of debris. These upgrades were assessed in an April 2018 flight test that demonstrated interoperability between THAAD and Patriot by exchanging Link-16 messages over tactical data links while tracking a missile target, and an April 2018 BMDS-level ground tests that provided further performance data for these upgrades in a simulated environment. MDA plans to deliver additional capabilities for the Korean Peninsula in the future. We currently have ongoing work related to these areas. Details will be included in a future report.

European Phased Adaptive Approach Capability against Intermediate-Range Threats Has Been Delayed

MDA’s effort to deliver the third and last phase of the EPAA has been delayed from December 2018 to May 2020. MDA planned to deliver the EPAA Phase 3, for defense against IRBM threats, at the end of calendar year 2018, but construction delays for Aegis Ashore, the linchpin of Phase 3, delayed its completion by 18 months.

In fiscal year 2018, the delay for EPAA Phase 3 was caused by challenges at the construction site for Aegis Ashore in Poland. According to MDA officials, delays to the Aegis Ashore were primarily driven by military construction contractor performance issues. As these delays continued to accumulate, MDA initially planned to make up for them by increasing concurrency between the construction phase and the installation and checkout phases of the project, and concurrently working at the sites in Romania and in Poland. As we previously reported, these increasing levels of concurrency posed a growing risk for the program and its ability to achieve its target delivery date. In March 2018, MDA officials recognized that plans for Aegis Ashore had become untenable, and the project’s schedule would have to be extended. This plan required the development of a new delivery schedule for EPAA Phase 3 resulting in delivery in May 2020.

Despite the Delays, Delivery of EPAA Phase 3 Will Occur with Less Robust Testing than Originally Planned

MDA experienced testing disruptions throughout the EPAA Phase 3 development, including delays and failures, but overcame some of them in fiscal year 2018. The consequence of the testing disruptions is that EPAA Phase 3 will be delivered to the warfighter with less data than planned about performance against planned threats. According to DOD’s acquisition guidance and the BMDS Warfighter Capability Acceptance document, testing is fundamental to ensuring that DOD acquire a system that works, and to provide data necessary to characterize the system’s effectiveness in operational settings. Thus, the warfighter relies on testing to understand the system’s capabilities and limitations and therefore how to fight with what MDA has built.

As we previously found, EPAA Phase 3 testing disruptions started in 2016, when MDA delayed the first and second intercept flight tests of the Aegis BMD SM-3 Block IIA, the interceptor planned for fielding in EPAA Phase 3. Although this test was successfully conducted in February 2017, testing difficulties continued when it failed the second intercept flight test.

MDA continued to experience challenges with testing necessary to demonstrate the EPAA Phase 3 capability in fiscal year 2018, which resulted in less robust testing. Specifically, as we discussed earlier in this report, the interceptor failed its first intercept test, FTM-29, against an intermediate range target, EPAA Phase 3’s intended threat. Following a failure investigation, and developmental work, MDA rectified the Aegis BMD SM-3 Block IIA design flaws and successfully demonstrated them against a medium-range ballistic missile target in October 2018, during FTM-45. MDA decided to use a medium range target in this test and concluded that it was sufficient to assess Aegis BMD SM-3 Block IIA fixes. However, according to MDA documentation, the test against a medium range target does not provide the same challenges as an intermediate range target. In December 2018, it successfully demonstrated for the first time an intercept of an IRBM during a test called FTI-03, previously called FTO-03 Event 1. While this test was successful, its scope was reduced from an attempt against a raid of two targets to instead a single intercept, in part, due to a test range safety asset malfunction. With these flight tests, according to MDA officials, it completed its flight testing requirements for EPAA Phase 3 delivery and that adding additional tests would be disruptive to their overall test plan.

Our analysis indicates that flight testing to demonstrate EPAA Phase 3 performance against IRBMs—the goal of Phase 3—has been reduced by 80 percent and even with the added 18-month delay, MDA no longer plans to conduct a flight test against a raid prior to delivery in fiscal year 2020. Figure 3 shows both the original and current plans for demonstrating EPAA Phase 3 performance through flight testing.

Figure 3 above shows that the original plan included five IRBM intercepts across three tests, including tests to assess capability against small raids requiring simultaneous intercepts of multiple missiles—a likely tactic in a real-world attack— prior to delivery of EPAA Phase 3. However, as figure 3 also depicts, the current plan reduces the number of intercept tests against an IRBM and does not include a flight test against a raid until after EPAA Phase 3 capability is declared. Although the delivery has been delayed 18 months, in part due to the delay in construction at the Aegis Ashore site in Poland, the current plan significantly reduces the amount of data needed to support the EPAA Phase 3 capability and limitation assertions. As we previously reported, test and evaluation activities are an integral part of developing and producing weapon systems, as they provide knowledge of a system’s capabilities and limitations as it matures and is eventually delivered for use by the warfighter. Consequently, the 18-month delay provides an opportunity to add in additional tests and an ability to provide further data to the warfighter or to make any design changes discovered during testing. As we previously reported, delivering capability before testing is complete has led to performance unknowns and increases the likelihood of cost increases if future testing discovers any design flaws.

Conclusions

MDA made further progress in fiscal year 2018 in its mission to defend the United States and its allies from enemy ballistic missiles, including achieving a significant integrated capability milestone for defending the United States. However, MDA did not meet all of its goals for the fiscal year. Specifically, not all programs delivered all planned assets in fiscal year 2018 and shortfalls were attributed to developmental delays and testing challenges. The acceleration of several programs following a budget increase in December 2017 introduced concurrency, which indicates a familiar risk: accounting for insufficient margin in an effort to meet schedule-driven milestones, rather than pursuing a knowledge- based approach. Construction delays related to another integrated capability, EPAA Phase 3, may, in fact, present an opportunity to build more knowledge in that area. EPAA Phase 3 intends to provide a robust defense against IRBM and raids of multiple targets, but tests to demonstrate that capability have been reduced from five to one with the test against the raid scenario not occurring before the capability is delivered. Our prior work has shown that proceeding with limited test data can result in late, and costly, discovery of performance problems. More thorough assessment of the capabilities and limitations of the system could mitigate that risk by building a more solid base of knowledge.

Recommendation for Executive Action

We are making one recommendation to MDA: The Director, MDA, should utilize additional schedule margin afforded by the EPAA Phase 3 delay to conduct additional testing necessary to thoroughly assess the capabilities and limitations of Phase 3 against IRBMs and a raid scenario prior to delivery. (Recommendation 1)

Agency Comments and Our Evaluation

We provided a draft of this report to DOD for comment. DOD’s comments are reproduced in appendix IX. DOD and MDA also provided technical comments, which were incorporated as appropriate.

In its comments, DOD partially concurred with our recommendation to utilize additional schedule margin afforded by the 18-month delay to the EPAA Phase 3 delivery to conduct additional testing necessary to thoroughly assess the capabilities and limitations against IRBMs and a raid scenario prior to delivery. DOD stated that all EPAA Phase 3 BMDS functions requiring a flight test environment were already successfully demonstrated and MDA has addressed the intent of our recommendation by adding ground tests to further assess EPAA Phase 3 capabilities. However, in order for the agency to meet the full intent of our recommendation, additional flight testing to demonstrate capability against EPAA Phase 3 threats is necessary.

Flight testing against IRBM threats and raid scenarios could provide additional confidence in modeled performance, even for aspects of the model that have the achieved accreditation threshold. Our finding is supported by MDA’s own assessment of testing needed for EPAA Phase 3, which originally included five IRBM intercepts and two raid flight tests. These testing requirements were reduced even after EPAA Phase 3 flight test failures and delays. Specifically, our analysis indicates that flight testing to demonstrate EPAA Phase 3 performance against an IRBM has been reduced 80 percent. Moreover, MDA will not conduct a flight test against a raid—a likely tactic in a real-world attack—prior to delivery.

As we identified in this report, MDA experienced testing disruptions throughout the EPAA Phase 3 development, which resulted in significant data collection reductions, especially regarding performance against planned threats. According to the Director, Operational Test and Evaluation (DOT&E), these testing challenges, in large part, precluded MDA from testing Aegis BMD against some expected threat types, ranges, and raid sizes. Consequently, the use of models and simulations- based ground tests to supplement such significant reduction in real-world data collections could be problematic. Specifically, we have previously reported that some of MDA’s models and simulations used in its ground tests do not provide realistic representation of the BMDS, the environments it encounters, or the modeled threats. This year, we found that as a result of testing perturbations, certain aspects of Aegis BMD 5.1 will not be validated until after EPAA Phase 3 delivery. Relying on unaccredited models increases chances for modeling errors, and a single undetected modeling error can distort the results for the entire assessment.

Lastly, DOD stated that the demands on the test program due to the evolutionary nature of the BMDS acquisition leave no margin (cost or schedule) for adding additional flight tests. While we agree that adding a flight test requires additional costs and coordination, the reductions to EPAA Phase 3 testing constitute a significant reduction in performance data and decreases warfighter’s knowledge base about how best to deploy a system under operationally realistic conditions, such as raids. We continue to believe the 18-month delay affords the schedule to conduct additional flight testing.

We are sending copies of this report to the appropriate congressional committees, the Acting Secretary of Defense, the Undersecretary of Defense for Research and Engineering, and to the Director, MDA. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-4841 or chaplainc@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix X.

Appendix I: Aegis Ballistic Missile Defense (BMD) Weapons System

Key findings for Fiscal Year 2018 Aegis Ballistic Missile Defense (BMD) demonstrated integration with allies. Aegis BMD 5.1 demonstrated increased capability, but testing disruptions delayed its delivery to March 2019 and deferred raid assessment to 2020.

MDA re-planned schedules for some future Aegis capabilities due to funding challenges.

Program Overview:

Aegis Ballistic Missile Defense is the naval component of the Missile Defense Agency’s (MDA) Ballistic Missile Defense System. It consists of the Aegis combat system, including a radar, and Standard Missile-3 (SM- 3) interceptors. MDA is developing the Aegis BMD in versions called spirals that expand on preceding capabilities. Since 2015, MDA has been delivering Aegis BMD spirals that are integrated with capabilities developed by the Navy. These jointly developed Aegis Weapons System Baselines (AWS BL) allow for Integrated Air and Missile Defense (IAMD) where ballistic missiles and air threats (i.e., cruise missiles) can be engaged at the same time. Table 5 identifies Aegis BMD spirals, associated integrated Aegis Weapons System Baselines and key capabilities, and their delivery date.

The first suite of integrated ballistic missile defense and anti-air warfare (AAW) capabilities was delivered with AWS Baseline 9.C1/B1, which included an overhaul of Aegis computing architecture. However, in order to expand the number ships with IAMD, MDA also began a program to integrate Aegis BMD 5.0 CU capabilities with the legacy AWS architecture. While initially scheduled for delivery in 2015, Aegis BMD 4.1 was delayed multiple times, and finally in 2017 the delivery was split into two phases. The first interim phase was completed in 2017, but did not provide integration between BMD and AAW capabilities. The second phase will integrate BMD and AAW, and is currently planned for delivery in 2020. Additional upgrades capitalizing on Navy’s improvements to the AWS Baseline 5.4 computing architecture are planned for delivery in 2023.

The program is also developing Aegis BMD 5.1 with capabilities to support the final phase of European Phased Adaptive Approach. This spiral is designed to control the new Standard Missile-3 Block IIA and to intercept intermediate-range ballistic missiles. It also includes the Engage on Remote (EOR) capability, where Aegis BMD intercepts a threat before it is visible to its own radar, based entirely on tracks from a forward-based sensor. Aegis BMD 5.1 is integrated with AWS Baseline 9.C2/B2. Additionally, MDA and the Navy are developing AWS Baseline 10.0, which will capitalize on the Navy’s effort to replace the Aegis SPY-1 radar with a more capable SPY-6, and to overhaul the entire Aegis combat system. AWS Baseline 10.0 includes Aegis BMD 6.0 capabilities, which is planned to counter more threat types, larger raids, better discrimination, and improved communication with its interceptors. AWS Baseline 10.0 is planned for delivery in 2023. For specifics on Aegis Ashore and the Aegis SM-3 interceptors, see appendixes II, III and IV, respectively. Table 6 provides key fiscal year 2018 AWS program facts.

Aegis BMD demonstrated integration with allies

In fiscal year 2018, MDA demonstrated the ability of Aegis BMD to engage some simple and complex threats as well as integration with European and Asia-Pacific allies for new and legacy spirals. As table 5 above shows, Aegis BMD participated in a number of flight tests and exercises, which provided additional information about its capabilities and interoperability with allies in two regions, where MDA is currently focusing its regional integrated capability efforts. For example:

Formidable Shield-17 demonstrated the ability of Aegis BMD 4.0.3, which was delivered in fiscal year 2015, to interoperate with North Atlantic Treaty Organization partners using communication architectures during cruise missile and ballistic missile engagements, and to use remote data provided by NATO partners to conduct remote engagements.

Pacific Dragon demonstrated interoperability between U.S. Aegis BMD assets, Japanese destroyers, and Republic of Korea naval assets.

JFTM-05 Event 2 demonstrated coordination between U.S. and Japanese destroyers using communications architecture to conduct ballistic missile engagements.

Aegis BMD 5.1 demonstrated increased capability, but testing disruptions delayed its delivery to March 2019 and deferred raid assessment to 2020

MDA demonstrated some aspects of Aegis BMD EOR, as well as the ability of Aegis BMD 5.1 to engage a medium range and an intermediate range ballistic threat, but testing disruptions delayed data available to inform capabilities and limitations of the Aegis BMD 5.1, contributing to a 3-month delivery delay. MDA encountered challenges during tests for Aegis BMD 5.1, which resulted in a reduction of flight tests and delays in collecting data needed to accredit models for a system-level assessment. Specifically, during the conduct of FTM-29, Aegis BMD partially demonstrated EOR capability, lacking full demonstration because the weapon system did not exercise all aspects of communication in the later stages of the engagement due to an Aegis BMD SM-3 Block IIA malfunction. MDA decided not to retest FTM-29 and adjusted its test plan to only demonstrate the fixes to the SM-3 Block IIA in a new test called FTM-45, deferring a full EOR assessment by about a year to the subsequent test named FTI-03.

This reduction in flight tests affected MDA’s ability to collect data for model verification which in turn, delayed the delivery of Aegis BMD 5.1. A model is a representation of an actual system that involves computer simulations and is used to predict how the system might perform or survive under various conditions. MDA, as well as independent DOD testing organizations, and the warfighter rely heavily on models to test operational performance that cannot be completely assessed using intercept flight tests because of the system’s scope and complexity and safety constraints. Flight tests, however, provide important information about real-world performance that is used to verify models. In order to ensure that key aspects of Aegis BMD 5.1 performance are well understood at delivery, MDA delayed the spiral from December 2018 to March 2019. This was done in part to allow for analysis from FTM-45 (conducted in October 2018) and FTI-03 (conducted in December 2018). According to the BMDS Operational Test Agency, data from these tests provided key information about Aegis BMD EOR performance— a key capability for Aegis BMD 5.1—that was used to verify its models, which were used to more thoroughly assess the extent of that capability.

While EOR data will support Aegis BMD 5.1 delivery, another key aspect of its performance will not be verified until late in fiscal year 2020. Specifically, MDA planned to assess Aegis BMD 5.1 raid performance for the first time in December 2018, but the test was de-scoped to a single intercept due, in part, to a test range safety asset malfunction. The next planned raid assessment is scheduled for the fourth quarter of fiscal year 2020, well after Aegis BMD 5.1 delivery.

According to the Director, Operational Test and Evaluation (DOT&E) these testing challenges, in large part, precluded MDA from testing Aegis BMD against some expected threat types, ranges and raid sizes. While some of them were outside of MDA’s control, others stem from decisions about its test plan. For instance, MDA’s inability to assess Aegis BMD 5.1 against an IRBM raid resulted from the malfunction of test range safety assets; however, according to DOT&E, FTM-29 failure is an example of insufficient development testing that should have discovered the SM-3 Block IIA issue prior to the flight test. DOT&E officials told us that they are currently working with MDA to ensure sufficient developmental testing is scheduled and conducted prior to undertaking operational tests.

Funding challenges contributed to the delay for certain Aegis BMD capabilities

In fiscal year 2018, funding challenges contributed to the delay of MDA and the Navy’s effort to develop integrated AWS Baseline 5.4 and AWS Baseline 10.0. According to MDA program documentation, the delays resulted from funding reductions in fiscal year 2018. However, while AWS Baseline 5.4—which includes BMD 4.1—was delayed entirely from 2019 to 2020, AWS Baseline 10.0 – which includes BMD 6.0—delayed completion of some technical content, but its delivery timeframe did not change. Specifically: Integrated AWS Baseline 5.4 was originally planned to be completed in September 2019, but MDA and the Navy delayed its certification to March 2020. While MDA delivered Aegis BMD 4.1 capabilities in fiscal year 2017, subsequent efforts focused on integrating the ballistic missile defense with the remaining suite of AWS Baseline 5.4 capabilities. According to MDA, the delay to this effort was driven by a $14 million funding reduction to the Navy’s Program Executive Office Integrated Warfare System, which is jointly funding this baseline. As a result of the reduction, MDA received $16 million from the Navy, rather than $32 million it was expecting, to continue work on Baseline 5.4. According to Aegis BMD program officials, to mitigate the nine month delay, MDA renegotiated the associated contract, but it is anticipating approximately $1.5 million increase in fiscal year 2019 and approximately $4 million to fiscal year 2020 costs.

MDA and the Navy re-planned AWS Baseline 10.0, after a funding reduction of $31.45 million against BMD 6.0. According to Aegis BMD program documentation, the BMD 6.0 development efforts stopped between January 2018 and May 2018. Program officials indicated that MDA renegotiated the associated contract to reflect the reduced funding, but the stop work and consequent restart incurred additional costs. Specifically, the program estimated that the disruption resulted in cost growth of approximately $51 million across the development timeline between fiscal year 2019 and 2024.

Appendix II: Aegis Ashore

Key findings for Fiscal Year 2018 According to Missile Defense Agency officials, deficiencies in the performance of the military construction contractor resulted in a significant delay and increased cost for the Aegis Ashore facility in Poland. The program continues to make progress despite challenges at both the Poland and Romania sites.

Program Overview

Aegis Ashore is a land-based, or ashore, version of the ship-based Aegis Ballistic Missile Defense (BMD). Aegis Ashore is designed to track and intercept ballistic missiles in the middle of their flight using Aegis BMD Standard Missile-3 (SM-3) interceptors. Key components include a vertical launching system, interceptors, and an enclosure, called a deckhouse, that contains the SPY-1 radar and command and control system.

Aegis Ashore will share many components with the sea-based Aegis BMD and will use future versions of the Aegis weapon system currently in development, including the SM-3 Block IIA interceptor. The Missile Defense Agency (MDA) plans to equip Aegis Ashore with a modified version of the Aegis weapon system software that will share many components with the sea-based Aegis BMD. DOD constructed an Aegis Ashore test facility in Hawaii in April 2014. The test facility has been used to flight test Aegis Ashore, and in some cases, Aegis BMD SM-3 interceptors. MDA deployed its first operational site in Romania in fiscal year 2016 as part of the European Phased Adaptive Approach (EPAA) Phase II. A second site in Poland was scheduled for delivery in 2018 as part of EPAA Phase III. Both operational sites are intended to provide additional coverage for the defense of Europe.

The Poland site experienced construction delays over several years until March 2018, when MDA determined with stakeholders that the site would not be complete in time for the EPAA Phase III deadline. MDA has since established a new schedule baseline which delays the delivery of the site by 18 months, to May 2020.

For further details on the Aegis Weapon System and Aegis BMD interceptors, see appendixes I, III and IV. Table 7 provides key fiscal year 2018 Aegis Ashore program facts.

According to Missile Defense Agency officials, deficiencies in the performance of the military construction contractor resulted in a significant delay and an increased cost for the Aegis Ashore facility in Poland

According to MDA officials, construction of the Aegis Ashore site in Poland has failed to meet schedule milestones from the start of the contract. According to officials, prior to this year, MDA and the Army Corps of Engineers, which manages military construction at the site, have undertaken a number of measures to mitigate or reverse these delays, including modifying contracts to permit joint occupancy of the site, modifying the main contract to provide more granular project data to the Army Corps of Engineers, moving key personnel on site, and adding a second shift. Program officials stated that they also withheld some award fees from the contractor as a result of these delays. Despite these efforts, MDA has found the contractor’s performance is still particularly poor in the areas of construction management, identification, procurement, timely delivery of important materials, and timely hiring of staff with appropriate skills.

To make up for these delays, MDA introduced increasing levels of concurrency into its schedule, and shortened key phases of the delivery process. Activities such as Installation and Checkout were shortened from 16.5 months to 6.5 months, and would occur concurrently with the final phases of construction at the site. As recently as last year, GAO reported that additional delays or concurrency at the site would threaten the scheduled delivery date.

Through the first quarter of fiscal year 2018, the contractor’s performance did not improve. According to program officials, in December 2017, MDA participated in a meeting with the Army Corps of Engineers, the Navy, and other government stakeholders, and concluded that the schedule for delivery had become untenable and schedule recovery was not possible. MDA later concluded that the site would not be ready for delivery until May 2020, a delay of 18 months.

The costs of this delay will be significant. Following the determination of the new delivery date, MDA developed a new project schedule that, officials stated, incorporated historical data from the Romania site, independent outside analysis, trends in the contractor’s performance over time, and the resources that would be required at each stage of the schedule. MDA estimated that the additional efforts by MDA, the Army Corps of Engineers, and the Navy to mitigate the delay and provide assistance through the completion of the project totaled at least $90 million. According to program officials, the construction contract provides for significant liquidated damages, with the current daily assessment in excess of $125,000.

The program continues to make progress despite facing challenges at both the Romania and Poland sites

MDA continues to oversee work at the Aegis Ashore site in Romania, despite the Navy’s acceptance of the site for operational use. MDA continues work on a variety of remaining items such as seismic hardening, shielding electrical infrastructure against high-energy electro- magnetic pulses, and cooling systems. In the case of cooling systems, the work is the result of the system failing to perform to specifications. MDA has yet to assess the full cost, schedule, and performance impacts of the necessary repairs and modifications, but MDA reported that none of the above issues had any impact on the Romania sites operational availability or performance.

In the case of the Poland site, MDA sought to secure the permission of the Polish government to operate the facility’s SPY-1 radar in the 3.1 to 3.5 GHz radio frequency spectrum. This section of the spectrum is important to the full functioning of the Aegis Ashore system, but portions of it have been allocated for commercial use in Poland. MDA was able to de-conflict the operations of its radar with other systems on these frequencies, and in March 2018 secured the approval of the Polish government to operate the SPY-1 radar across the full range of frequencies.

Appendix III: Aegis Ballistic Missile Defense (BMD) Standard Missile-3 (SM-3) Block IB

Key findings for Fiscal Year 2018 The Aegis Ballistic Missile Defense (BMD) Standard Missile-3 Block IB program received authorization for full production this year and performed successful intercepts in flight tests. Discovery of a parts quality issue partway through the year forced the program to suspend deliveries and thus miss most of its delivery target for fiscal year 2018.

Program overview

The Aegis Standard Missile-3 (SM-3) Block IB is a ship- and shore-based missile defense interceptor designed to intercept short- to intermediate- range ballistic missiles during the middle stage of their flight. The SM-3 interceptor has multiple versions in development or production: the SM-3 Blocks IA, IB, and IIA. Compared to the SM-3 Block IA, the Block IB features an enhanced seeker for improved target discrimination, better engagement coordination capabilities, an improved throttleable divert and attitude control system for adjusting its course, and increased range. The SM-3 Block IB interceptor is linked with Aegis Ballistic Missile Defense (BMD) Weapons System, and Aegis Ashore. For additional information about the Aegis Weapon Systems, see Appendix I and for Aegis Ashore, see Appendix II.

Since fiscal year 2015, Aegis BMD SM-3 Block IB production has been delayed by several technical issues. Program officials, in 2015, delayed the decision to enter full-rate production until they could implement further testing and design changes, a decision consistent with a GAO recommendation at the time. In fiscal year 2016, two failures during testing forced a suspension of interceptor deliveries, though the program made up for this backlog in fiscal year 2017. Table 8 provides key fiscal year 2018 Aegis BMD SM-3 Block IB program facts.

The Aegis BMD SM-3 Block IB program received authorization for full production this year and performed several successful intercepts in flight tests

In February 2017, the Undersecretary of Defense for Acquisition, Technology, and Logistics issued an Acquisition Decision Memorandum requesting an additional flight test for the Aegis BMD SM-3 Block IB before authorizing a full production decision, as well as several independent supporting analyses. The memorandum issued these requirements in support of a planned full production decision in the first quarter of fiscal year 2018. As we previously reported, MDA has delayed full production multiple times over the life of the Aegis BMD SM-3 Block IB which was initially scheduled for fourth quarter, fiscal year 2012.

MDA completed the requested intercept test, known as FS-17-4 in October 2017. The test was undertaken as part of NATO’s Formidable Shield naval exercises. In this test, an Arleigh Burke-class destroyer in the northern Atlantic fired an Aegis BMD SM-3 Block IB Threat Upgrade at an MRBM target and successfully intercepted it. With this result, the interceptor was approved for full production. In September 2018, MDA participated in JFTM-05 Event 2, a joint flight test with the Japanese navy, in which a Japanese ship successfully fired an Aegis BMD SM-3 Block IB Threat Upgrade interceptor at a simple separating short-range ballistic missile. MDA participated in and supported the engagement.

Upon full production authorization, MDA sought to pursue a multi-year procurement with the prime contractor for 204 interceptors through 2023. While MDA requested and the 2019 National Defense Authorization Act and the Defense Appropriations Act, 2019 authorized this procurement, the program did not receive the funding to support the request. Program officials state that they are still evaluating the impacts on their plan. MDA estimates the procurement will have a projected price of $2.021 billion.

Discovery of a parts quality issue partway through the year forced the program to suspend deliveries and thus miss most of its delivery target for fiscal year 2018

During routine component testing, MDA discovered an issue with the Aegis BMD SM-3 Block IB’s throttleable divert and attitude control system (TDACS) resulting in delays of interceptors in fiscal year 2018. According to program officials, MDA employs a “manufacturing surveillance unit” whose purpose is to pro-actively assess component performance and quality at various stages of unit production. Program officials stated that the unit discovered, in January 2018, that one of several thrusters on the TDACS did not perform to specification. In response to this finding, MDA suspended deliveries of the interceptor until it could determine the impact of the deficiency on the interceptor’s performance.

According to program officials, MDA contracted with the Applied Physics Laboratory to act as an independent technical authority for the investigation, which took approximately six months. Once concluded, the investigation found that the performance of the component, while below the defined specification, did not endanger the overall operation of the system. The component’s performance was accommodated within the margin the government and contractor built into the overall design, and was acceptable as built as a result. The investigation reached this conclusion in August 2018. MDA closely monitored the function of the component in JFTM-05, during which the system performed nominally.

Program officials reported that the prime contractor has experienced similar issues defining and communicating important specifications to subcontractors at various levels of its supply chain. Similarly, the contractor has also had difficulty ensuring that all subcontracted components meet defined specifications. Program officials stated that they continue to take measures to mitigate these issues, including using the manufacturing surveillance team.

Appendix IV: Aegis Ballistic Missile Defense (BMD) Standard Missile - 3 (SM-3) Block IIA

Key findings for Fiscal Year 2018 A mid-year funding increase accelerated the program's schedule and increased the number of interceptors. The Aegis Ballistic Missile Defense (BMD) Standard Missile - 3 (SM-3) Block IIA experienced a test failure, leading to significant changes to the test plan.

Program Overview

The latest development in the Aegis BMD Standard Missile – 3 (SM-3) family, the Aegis BMD SM-3 Block IIA interceptor provides increased speed, more sensitive seeker technology, and a more advanced kinetic warhead as compared to previous versions of the Aegis BMD interceptors. It is expected to defend against short-, medium-, and intermediate-range ballistic missiles, and will have significantly increased range compared to earlier Aegis BMD SM-3 models. Additionally, most of the Aegis BMD SM-3 Block IIA components will differ from other standard missile versions and therefore require new technology being developed specifically for them. For additional information on the Aegis BMD SM-3 Block IB interceptor, see appendix III.

Initiated in 2006 as a cooperative development program with Japan, the Aegis BMD SM-3 Block IIA program is an essential component of the European Phased Adaptive Approach (EPAA) Phase 3 architecture, particularly its ability to defend against longer-range threats. According to program officials, the Aegis BMD SM-3 Block IIA interceptor’s range exceeds that of its native radar, thus, the only way to make full use of its extended range is by relying on remote sensor data. For additional information on Aegis Weapon Systems, see Appendix I. Table 9 provides key fiscal year 2018 Aegis BMD SM-3 Block IIA program facts.

A mid-year funding increase accelerated the program’s schedule and increased the number of interceptors

In December 2017, Congress passed and the President signed the “Department of Defense Missile Defeat and Defense Enhancements Appropriations Act, 2018”, as part of a larger continuing resolution which significantly increased missile defense appropriations. According to program officials, the impetus for seeking these additional appropriations was increased levels of missile development and testing activity from North Korea. MDA intends to use $451 million in procurement funds for the purchase of 16 additional Aegis BMD SM-3 Block IIA interceptors. These were the first procurement funds the program had received. The program had yet to receive an initial production authorization, so all previous manufacturing activity occurred using research and development funds.

To this point, however, the Aegis BMD SM-3 Block IIA interceptor had succeeded in only one of its two intercept flight tests, and its ability to engage a longer-range target using remote sensor data, known as “engage on remote”, had yet to be tested.

The following month, in January 2018, the interceptor failed an important intercept test, causing significant disruption to the program’s schedule which is discussed below. The Undersecretary of Defense for Acquisition and Sustainment subsequently released an acquisition decision memorandum which laid out near-term limitations on the use of procurement funds for the Aegis BMD SM-3 Block IIA, as well as providing for a series of steps MDA needed to take in order to obligate the remaining funds. These measures included the completion of an independent cost estimate, independent technical risk assessment, the successful completion of a replacement flight test, and the successful completion of the planned operational flight test scheduled for the first quarter of fiscal year 2019.

Until MDA could meet these requirements, the Undersecretary authorized MDA to obligate only $162 million for the purchase of a limited subset of “pacing items.” According to program officials, “pacing items” are those with longer lead times for production, but which fall short of the threshold for long-lead procurement. Program officials also stated that the list of pacing items was restricted to components not implicated in the recent test failure.

Program officials stated that they expected the Undersecretary to certify that these requirements had been met in the third quarter of fiscal year 2019.

The Aegis BMD SM-3 Block IIA experienced a test failure, leading to significant changes to the test plan

In January 2018, MDA conducted flight test FTM-29. In this test, the Aegis Ashore facility in Hawaii fired an Aegis BMD SM-3 Block IIA interceptor at an intermediate-range ballistic missile (IRBM), using remote sensor data, for the first time. After the interceptor launched, its third- stage rocket motor (TSRM) failed to ignite. As a result, the interceptor had inadequate thrust to complete the engagement and failed its objective to intercept the target. As a result of this test failure, MDA faced two challenges: first, identifying and remedying the source of the failure through a failure review board, and second, adjusting the program’s schedule to provide opportunities to confirm these mitigations.

MDA and the government of Japan convened a failure review board (FRB) to investigate the causes of the test failure. The board’s conclusions found that the TSRM failed to ignite due to a combination of a faulty arm-fire device (AFD), which initiates the TSRM’s firing, and incorrect programming of the TSRM ignition sequence. In the case of the Aegis BMD SM-3 Block IIA, the AFD contains two linear “chains” of explosive pellets, which then ignite the rocket motor. MDA documents state that the AFD’s manufacturer expects a missile to ignite both chains simultaneously to ensure the highest degree of reliability.

The FRB found that the Aegis BMD SM-3 Block IIA’s programming did not fire the AFD’s two chains simultaneously, but one after the other, or “sequentially”. When fired in this manner, quality issues with the AFD that would not have any material impact in a simultaneous firing can cause the AFD to malfunction when firing one after the other. The FRB concluded that the most likely cause of the AFD’s failure was a missing explosive charge in the first explosive chain. When this chain ignited, it fizzled and failed to ignite the TSRM. The fizzle was powerful enough to disrupt the functioning of the second explosive chain, however, which subsequently failed to ignite the TSRM as well.

To correct for this error, MDA has changed the programming of the Aegis BMD SM-3 Block IIA to fire the AFD simultaneously. MDA has also instituted new quality measures at the assembly line for the AFD. These measures include additional quality assurance checks to ensure that all explosive pellets are present in both chains, as well as the use of X-ray- like scanners which can look inside a completed AFD to confirm the presence of all of the explosive pellets.

Having identified the source of the failure, MDA had to choose what form any new test would take, and how it would impact the remaining schedule, in particular the first operational test of the Aegis BMD SM-3 Block IIA, which also happened to be the first operational test of the European Phased Adaptive Approach (EPAA) Phase III, and the only such test scheduled before MDA declared it ready for delivery. This test, then known as FTO-03 Event 1 (and subsequently re-named FTI-03) was scheduled for the first quarter of fiscal year 2019.

One option was for MDA to schedule a scaled-back test, known as FTM- 45, of an Aegis BMD SM-3 Block IIA against a medium-range target. MDA stated that though FTM-29 failed, analysis of sensor data and missile telemetry indicated that the Engage on Remote capability would have succeeded had the interceptor reached the target. Therefore, FTM- 45 could be an “organic” engagement, using only the radar co-located with the interceptor. FTM-45 would need only to test that the mitigations identified by the FRB worked, as well as testing the final phases of the interceptor’s operations which had been interrupted in FTM-29. MDA had a medium-range ballistic missile (MRBM) target it could repurpose for this test, which would limit testing disruptions by not further delaying FTO-03 E1/FTI-03. FTM-45 was MDA’s preferred course of action FTM-45 lacked the support of several external, Department of Defense stakeholders, such as the Deputy Assistant Secretary of Defense for Developmental Test and Evaluation, Joint Functional Component Command Integrated Missile Defense, and Office of the Director, Operational Test and Evaluation. These offices asserted that a complete re-test of FTM-29, known as FTM-29a, provided the most risk reduction in advance of FTO-03 / FTI-03. .

MDA opted not to pursue FTM-29a, and cited several reasons. MDA acknowledged the differences between intermediate-range and medium- range engagements, but determined that the actual differences between FTM-45 and FTM-29a were within acceptable margins. FTM-29a would also prove more expensive and more logistically difficult. MDA concluded that FTM-45 met the requirements for risk reduction at the least disruption to the program’s schedule.

MDA conducted FTM-45 in October 2018 and FTI-03 in December 2018. Initial reports indicate both were successful.

Appendix V: Command, Control, Battle Management, and Communications (C2BMC)

Appendix V: Command, Control, Battle Management, and Communications (C2BMC)

Key findings for Fiscal Year 2018

MDA re-planned schedules for some future Aegis capabilities due to funding challenges. MDA delivered Spiral 8.2-1 providing significant performance and cyber improvements, but some fixes were required after fielding.

MDA mitigated prior challenges with Spiral 8.2-3 and demonstrated capability upgrades. Uncertainty in Ballistic Missile Defense System-level requirements could disrupt Spiral 8.2-5 schedule.

Program Overview

C2BMC is a global system of hardware—workstations, servers, and network equipment—and software that integrates all missile defense elements of the Ballistic Missile Defense System (BMDS). Specifically, it allows users to plan operations, see the battle develop, and manage BMDS sensors. As the integrator, C2BMC enables the defense of a larger area than the individual BMDS elements operating independently and against more missiles simultaneously, thereby conserving interceptor inventory. C2BMC is fielded at U.S. Strategic Command, U.S. Northern Command, U.S. European Command, U.S. Indo-Pacific Command and U.S. Central Command.

MDA is developing C2BMC in spirals, or software and hardware upgrades that build upon prior capabilities to improve various aspects of the integrated BMDS performance. The spiral delivered in fiscal year 2018 includes BMDS Overhead Persistent Infrared Architecture (BOA) — a system within the C2BMC enterprise. BOA receives spaced-based sensor information on boosting and midcourse ballistic objects and feeds that data to C2BMC for use in cueing BMDS sensors and weapon systems, and for situational awareness. The agency completed fielding and transition to operations of Spiral 8.2-1 with BOA 5.1 to U.S. Northern Command and U.S. Indo-Pacific Command in January 2018, and Spiral 8.2-3 with BOA 6.1 to U.S. European Command and U.S. Central Command in December 2018. Spiral 8.2-3 will replace Spiral 8.2-1 at the U.S. Northern Command and U.S. Indo-Pacific Command in the third quarter of Fiscal Year 2019. Table 10 provides an overview of C2BMC Spiral upgrades, planned fielding timeframes and associated capabilities, and Table 11 provides key fiscal year 2018 C2BMC program facts.

MDA delivered Spiral 8.2-1 providing significant performance and cyber improvements, but some fixes were required after fielding

In January 2018, C2BMC completed fielding and transition to operations of Spiral 8.2-1 providing a significant overhaul of the BMDS command and control hardware infrastructure. Spiral 8.2-1, replaced the legacy Spiral 6.4, at the U.S. Northern Command and U.S Indo-Pacific Command. Spiral 8.2-1 improves sensor coverage, ballistic missile track management, and cyber security, optimizing raid size tracking capability and capability for processing new threats to support the defense of United States. Further details on these capabilities follow:

Spiral 8.2-1 delivery includes the BOA 5.1, which provides improvements in early missile launch detection, allowing more time for all subsequent BMDS actions. It cues land-based sensors allowing them to acquire threats sooner, allowing them longer time to track and thus improving engagement probability.

Spiral 8.2-1 expands the capability for processing of threat tracks, called System Track, from a single sensor—the Army/Navy Transportable Radar Surveillance-2 (A/N TPY-2) —to include additional sensors for homeland defense and BOA. This allows for additional data sources about threat characteristics that C2BMC subsequently provides to other BMDS elements.

The delivery of Spiral 8.2-1 also improves cybersecurity. Spiral 8.2-1 replaced Spiral 6.4, which, as we found in May 2018, had cyber vulnerabilities that, if exploited, could have degraded mission capabilities like BMD planning, radar control, track reporting, and situational awareness.

Lastly, the program also delivered additional upgrades, to specifically augment BMDS capabilities for the Korean Peninsula. These upgrades were delivered in December 2017 and June 2018, to provide improvements in communication between THAAD and Patriot, and improved cybersecurity in that region.

MDA demonstrated Spiral 8.2-1 upgrades in Ground Test-07a and Ground Test-18 Sprint 1. Table 11 above provides an unclassified overview of C2BMC testing completed in support of fiscal year 2018 deliveries.

While MDA delivered these upgrades and overcame development challenges, some fixes had to be implemented after deployment. Specifically, as we found in May 2018, MDA identified performance risks for Spiral 8.2-1 that could have affected interoperability with other elements and threat tracking and delayed the delivery to address these challenges. According to MDA’s fiscal year 2018 program management documentation, the program implemented the necessary mitigations to address these challenges; however fixes were also needed to be implemented after the Spiral was delivered. Moreover, the post- deployment fixes required diversion of resources from the subsequent Spiral 8.2-3, delaying demonstration of a certain aspect of that effort.

MDA mitigated prior challenges with Spiral 8.2- 3, and demonstrated capability upgrades

In fiscal year 2018, MDA completed most of its development effort for its next spiral named Spiral 8.2-3. In addition, MDA completed a test, demonstrating new capabilities and mitigations to earlier development challenges. As we found in May 2018, in fiscal year 2017, the program was tracking two element level risks to C2BMC capability needed for EPAA Phase 3 called Engage on Remote. Specifically, program documentation indicated that processing of data about threat missile flight paths, known as threat tracks, had issues that could reduce the likelihood of the successful engagements utilizing Aegis BMD in Engage on Remote scenarios. C2BMC has faced similar challenges with threat tracking capabilities for prior spirals, which required delaying certain aspects of integration with Aegis BMD until fixes were implemented.

While the program was addressing the aforementioned performance risks in fiscal year 2018, it encountered additional challenges. First, it needed to divert some resources from Spiral 8.2-3 to implement fixes to Spiral 8.2-1 that were needed after it was deployed. Second, the program needed to divert additional resources to meet a new Warfighter request for geographic redundancy. Specifically, while the original concept was to have 8.2-3 for Central and European Command at the same location, MDA met the Warfighter request by installing the spiral at different locations so that losing one location would not result in the loss of all capability for the Warfighter. Finally, once a key mitigation was completed, the program encountered delays in availability of laboratories needed to assess it. As result, MDA decided to test the mitigation during the GT-07b campaign, along with other Spiral 8.2-3 capabilities. While assessing mitigations for the first time in a large scale campaign is risky – should the mitigation be insufficient or have underseen downstream effects – initial results from GT-07b campaign indicate they were successful. The test demonstrated successful collaboration between Spiral 8.2-3 and Aegis BMD in support the Engage on Remote, as well as other capabilities. Table 11 provides additional information on capabilities demonstrated during GT-07b.

Uncertainty in Ballistic Missile Defense System- level requirements could disrupt Spiral 8.2-5 schedule

While C2BMC program has identified element level requirements for Spiral 8.2-5, requirements for BMDS-level capabilities associated with this spiral are still under development. This Spiral is intended to integrate the Long Range Discriminating Radar (LRDR) and provide additional BMDS- level planning, track processing, and battle management capabilities, in the fiscal year 2021 timeframe, and its acquisition baselines are expected to be included for the first time in the upcoming BMDS Accountability Report. However, according to the November 2018 program execution review, emerging BMDS-level requirements may delay efforts to complete the development of the spiral in time to support LRDR functionality in 2021. Program documentation also indicates that some BMDS capabilities as well as future C2BMC spirals could be at risk of deferral, including the subsequent Spiral 8.2-7.

Appendix VI: Ground-based Midcourse Defense (GMD)

Appendix VI: Ground-based Midcourse Defense (GMD)

Key findings for Fiscal Year 2018

MDA continues to increase GMD capacity and reliability.

GMD issues uncovered during salvo test planning demonstrate the value of rigorous and frequent testing.

MDA recently uncovered major design concerns with the Redesigned Kill Vehicle.

Program Overview

GMD is a missile defense interceptor system designed to defend the United States against a limited intermediate and intercontinental ballistic missile attack from rogue states, such as North Korea and Iran. To counter such threats to the homeland, GMD, in conjunction with a network of ground-, sea-, and space-based sensors, launches interceptors from missile fields based in Fort Greely, Alaska and Vandenberg Air Force Base, California. After launching from in-ground silos, the interceptor boosts towards the incoming enemy missile and releases an Exoatmospheric Kill Vehicle to find and destroy the threat. GMD also has ground support and fire control capabilities that the warfighter uses to operate the system. Table 12 provides key fiscal year 2018 GMD program facts.

MDA fielded three new upgraded interceptors in early fiscal year 2018, meeting its directive from the Secretary of Defense to increase the total number of fielded interceptors to 44 by the end of 2017. The new interceptors are equipped with an upgraded version of the kill vehicle, called the Capability Enhancement (CE)-II Block I, and boost vehicle, called the Configuration 2. MDA completed production and fielded eight of these new interceptors after successfully conducting its first intercept flight test of the upgraded interceptor in May 2017.

Although the program encountered some production challenges with the C2 boost vehicle, such as multiple components initially failing qualification testing, the issues were not significant enough to prevent the program from meeting its December 2017 fielding goal. The upgraded interceptors were designed to be more reliable than their predecessors and their addition to the fleet is intended to improve overall system reliability, as the older interceptors have a greater risk of experiencing in-flight reliability failures. Table 13 below describes the current fleet of 44 fielded interceptors and plans to field an additional 20 interceptors equipped with the Redesigned Kill Vehicle (RKV) and modified Configuration 2 boost vehicle. MDA also successfully completed two ground tests in fiscal year 2018 to provide performance assessment data; develop interceptor shot doctrine and tactics, techniques, and procedures; and assess recent performance upgrades to GMD’s fire control software.

In addition to adding more CE-II Block I interceptors, in fiscal year 2018, MDA accelerated RKV development and initiated plans to increase the total number of fielded interceptors to 64 by the end of 2023 in response to a North Korean missile threat escalation in 2017. In November 2017, DOD requested $2 billion for what it called the Missile Defeat and Defense Enhancements, $774 million of which was designated for GMD to: (a) build a new 20-silo missile field at Fort Greely, Alaska; (b) procure long-lead components for four additional interceptors; (c) continue booster development; (d) accelerate RKV development; and (e) add a target to an initial non-intercept RKV flight test. MDA subsequently issued an undefinitized contract action in the form of a sole-source contract modification to Boeing in January 2018 to extend the current GMD development and sustainment contract. The contract modification was awarded with a total maximum value not to exceed $6.565 billion for efforts pertaining to the Missile Defeat and Defense Enhancements and extended the current contract’s period of performance 2023. In March 2019, MDA definitized $4.141 billion of the contract to build the new missile field, among other items, but deferred the production of 20 additional interceptors. According to MDA, this contract modification brings the total cumulative value of the GMD development and sustainment contract, including options, to $10.8 billion.

MDA conducted its first salvo flight test of the GMD system, called Flight Test Ground-based Interceptor (FTG)-11 on March 25, 2019 after nearly three decades of GMD development. GMD demonstrated a salvo intercept by firing a CE-II Block I-equipped interceptor followed by a CE- II-equipped interceptor. The leading interceptor destroyed the target representing an intercontinental ballistic missile equipped with countermeasures designed to complicate missile defense operations. With the target reentry vehicle destroyed, the trailing interceptor struck one of the remaining objects, as it was designed to do. Demonstrating a salvo capability is particularly important because, during a ballistic missile attack, the warfighter intends to launch a number of interceptors to increase the probability of successfully intercepting the incoming missile(s).

FTG-11 was further delayed from the end of fiscal year 2018 to mid-fiscal year 2019 to accommodate other BMDS testing priorities while GMD fixed software issues uncovered during pre-test planning. MDA initially planned to conduct the salvo test in fiscal year 2006 but subsequent test failures, developmental challenges, and fielding priorities delayed the salvo test to fiscal year 2018. Figure 4 below provides an overview of the multiple times MDA has delayed the salvo test over the years. By mid-2017, GMD began experiencing delays developing a software upgrade that is intended to provide the kill vehicle with the functionality needed for FTG- 11. Around that same time, MDA also realized that its BMDS-level integrated test schedule could not be executed as planned due to a lack of test range and asset availability. According to a May 2018 report MDA submitted to Congress, the agency delayed FTG-11 from the fourth quarter of fiscal year 2018 to the second quarter of fiscal year 2019 to de- conflict the integrated test schedule. Around the time MDA submitted the report to Congress, the GMD program also uncovered performance concerns with the kill vehicle software upgrade that further delayed the software’s completion. As such, the delay to FTG-11 to accommodate other BMDS testing priorities also afforded MDA the time necessary to complete the software improvements and pre-test planning.

The performance issues MDA uncovered in pre-test planning for FTG-11 demonstrate the value of rigorous and frequent GMD testing. Congress and DOD have recognized the need for rigorous, operationally realistic GMD testing, including conducting a salvo test. Congress also passed legislation and the president signed into law a requirement for an annual GMD flight test, subject to several exceptions. However, GMD has historically averaged less than 1 test per year whereas Aegis Ballistic Missile Defense (BMD) Standard Missile (SM)-3 averaged over 2.5 tests per year (see figure 5 below). Moreover, GMD’s prior tests achieved less than 50 percent operational realism whereas Aegis BMD SM-3 averaged over 70 percent, according to Director for Operational Test and Evaluation assessments. The warfighter relies on testing to understand GMD’s capabilities and limitations. Without this knowledge, the warfighter lacks the information to operate GMD effectively and efficiently.

MDA recently uncovered major design concerns with the Redesigned Kill Vehicle

Although MDA attempted to accelerate RKV development as part of the Missile Defeat and Defense Enhancements, the program accepted too much risk and has since experienced development challenges that set the program back likely by over two years and increased the program’s cost by nearly $600 million, according to the agency. In response to advancements in the North Korean missile threat, MDA accelerated RKV development by concurrently performing development and production and reducing the number of necessary flight tests to produce and field new RKV-equipped interceptors. Moreover, the RKV had already experienced development delays prior to the acceleration and was operating with no schedule margin for any further delays as it approached a critical design review in October 2018. The program subsequently encountered design, systems engineering, quality assurance, and manufacturing issues, which resulted in the program postponing the critical design review.

The most significant development issue that emerged in 2018 pertained to RKV’s performance and its planned use of commercial off-the-shelf hardware and re-use of Aegis SM-3 Block IIA components. In multiple previous reports, we raised concerns regarding MDA’s use of these components as well as RKV’s aggressive development schedule. In our May 2017 report, we also recommended that DOD perform a comprehensive review of the RKV. Although such a review could have potentially provided DOD with a better understanding of RKV’s technical and schedule risks, DOD indicated in its response that the comprehensive review we recommended was unnecessary and therefore did not perform the review. Even though some of these risks have since manifested, we continue to believe an independent, thorough vetting of RKV’s acquisition risks is necessary, as we previously recommended.

Although RKV continued to carry significant acquisition risks, MDA implemented a recovery plan that attempted to minimize the addition of further risks by opting to prioritize controlling technical risks over preserving the 2023 fielding goal via an aggressive schedule. At the time of our review, the program projected that it would conduct a critical design review for RKV in early fiscal year 2021 followed by a non-intercept flight test in fiscal year 2022, an intercept test in fiscal year 2023, and deployment starting a few months later. The extended design period provided the program additional time to source or design new components before moving forward with testing and production. Production decision gates also remained aligned to the critical design review and subsequent flight tests. The recovery plan also placed greater emphasis on addressing technical risks rather than fielding deadlines to determine RKV’s path forward. Our prior work has shown that stabilizing system design before making major production commitments and relying on knowledge rather than deadlines to make acquisition decisions at key milestones are best practices of successful product developers. MDA’S Deputy Director stated during a March 2019 press briefing that “the best thing to do was to go back and assess that design and take the time to do it right.” The Deputy Director also acknowledged that it would have been the wrong step to do “what the Missile Defense Agency did years ago, which is to go ahead and produce what we’ve got and then deal with reliability issues in the fleet and erode the confidence of the warfighter.”

On May 24, 2019, MDA directed the GMD prime contractor, Boeing, to stop all work for the RKV. This action occurred a few days before the issuance of our report and, as such, we were not able to assess the effects and incorporate this information into our report.

Appendix VII: Targets and Countermeasures

Key findings for Fiscal Year 2018 Targets program met some of its fiscal year 2018 goals. Target availability will be a risk for the Missile Defense Agency's aggressive test schedule through 2021.

Medium Range Ballistic Missile T1/T2 target's continued cost growth and schedule delays have led to limited testing.

Program Overview

The Missile Defense Agency’s (MDA) Targets and Countermeasures program (hereafter referred to as Targets program) procures missiles to serve as targets during the developmental and operational testing of independent or integrated ballistic missile defense system (BMDS) elements. Specifically, this program supplies MDA with short-, medium-, intermediate-, and intercontinental-range targets to test, verify, and validate the BMDS elements’ performance in threat relevant environments. As targets are solely test assets, they are not operationally fielded.

The number of targets that the program supplies vary based on each element’s requirements and testing schedule. While some targets have been used for years, others have been recently added or are now being developed to more closely represent current and future threats. The quality and availability of these targets is instrumental to the execution of MDA’s flight test schedule. Table 14 provides information on the Targets program’s performance in fiscal year 2018.

Targets program met some of its fiscal year 2018 goals

The Targets program delivered four of eight targets as planned for fiscal year 2018, and delayed the remaining targets based on test schedule requirements and developmental complexities. One target, the intercontinental-range ballistic missile, was delayed 9 months, from the third quarter of fiscal year 2018 to the first quarter of fiscal year 2019, to align with changes to the test schedule for the Ground-based Midcourse Defense (GMD) program. The GMD program discovered some software issues with its system during pre-test planning that had to be resolved prior to moving forward with flight test FTG-11, which will use the intercontinental-range ballistic missile. According to Targets program officials, the Targets program requested that the contractor delay the delivery of the intercontinental-range ballistic missile to avoid dealing with sensitive aspects of the target, such as fueling, that would necessitate special storage of the target. The two intermediate-range ballistic missiles for the BMDS-level operational test FTO-03 E1 were delayed from the second quarter of fiscal year 2018 to the first quarter of fiscal year 2019 to accommodate a new test for the Aegis Ballistic Missile Defense (BMD) Standard Missile-3 Block IIA program following the failure of one of its interceptors during flight test FTM-29. MDA’s decision to conduct a new test—FTM 45—to ensure the cause of failure had been resolved created test range and asset availability issues that necessitated delaying the BMDS-level operational test FTO-03 E1, and the targets for the test, to a later point in time. The one medium-range ballistic missile for flight test FTM-31 was delayed due to developmental complexities and test range availability.

The Targets program flew a total of six targets in fiscal year 2018 to support MDA’s flight test schedule, including four short-range, one medium-range, and one intermediate-range, all of which performed nominally. The risk of a target malfunction or failure was lower in fiscal year 2018 than it has been in previous years, because all of the targets had flown in flight tests previously (i.e., none of the targets were new). However, the Targets program is currently planning to fly two new medium-range targets in fiscal year 2019, and the flight tests with these targets either precede or are adjacent to other important tests in MDA’ test plan. We have previously reported that, new, untested targets introduce higher risk for malfunction or failure that can mean costly and time-consuming retests. Accordingly, we recommended that MDA add a non-intercept flight test for each new target type to verify its performance and reduce risks for future flight tests. MDA has not implemented this recommendation and has continued to use new targets during flight tests.

The Targets program conducted one of two critical design reviews in fiscal year 2018. A critical design review assesses the final design of a target to ensure that it can proceed into production and testing and can meet its stated performance requirements within cost, schedule, and risk. The Targets program conducted a critical design review for the medium- range ballistic missile type 3 configuration two (MRBM T3c2) target in the third quarter of fiscal year 2018. The MRBM T3c2 is a new target that Targets program officials said involves minimal design because it leverages flight-proven hardware and a significant amount of heritage software from the intermediate- and intercontinental-range targets currently in production. However, the Targets program plans to conduct another critical design review for the MRBM T3c2 target in the first quarter of fiscal year 2019 due to the addition of hit detection software which will enable real-time feedback on the target’s impact points. The Targets program did not complete the critical design review for the short- range ballistic missile type four G (SRBM T4-G) in the third quarter of fiscal year 2018, after it had been delayed a year, from the third quarter of fiscal year 2017. The Targets program subsequently delayed the critical design review for the SRBM T4-G target another year, to the third quarter of fiscal year 2019. According to the Targets program, the delay in the critical design review for the SRBM T4-G is due to some technical challenges associated with developing the target and the contractor’s limited staffing and workload.

Target availability will be a risk for MDA’s aggressive test schedule through 2021

The Targets program may face challenges providing some targets to support MDA’s test schedule due the aggressiveness and volatility of the test schedule. We have previously found that MDA’s test schedule is aggressive, in that it includes too many tests and little to no margin between tests to ensure executability. Thus, when setbacks occur, such as target or system malfunctions, the margin between tests erodes. MDA relieves pressure in its test schedule by delaying and canceling tests instead of including sufficient schedule margin to ensure executability, as we previously recommended. When the schedule slips for one test, there are often reverberating impacts to other tests. Consequently, MDA’s test plan has continued to be volatile, with frequent delays, cancellations and other changes, which make it challenging for the Targets program to manage all of the resources and schedules for its various targets to ensure successful, on-time availability and execution. When targets are not available for testing as planned, the tests either receive substitute targets which can mean trade-offs in the performance aspects demonstrated during the test or the test is delayed, which prolongs the demonstration of systems for the warfighter.

One way that the Targets program has tried to ensure the availability of targets for MDA’s aggressive test schedule is through the use of concurrency—overlap between development, testing, and production—for some targets. We have previously reported that some concurrency is understandable, but committing to production before development and testing is complete is a high-risk strategy that often results in performance shortfalls, unexpected cost increases, schedule delays, and test problems. The Targets program is using concurrency for the MRBM T3c2 target. According to the Targets program, it is using concurrency for the MRBM T3c2 target due to the urgent need to support essential testing within MDA’s test schedule. The first flight test with the MRBM T3c2 target is FTM-31, which is scheduled for the fourth quarter of fiscal year 2019. Qualification testing and production are ongoing and scheduled to be completed in April 2019 (third quarter of fiscal year 2019). The target must be delivered in advance of the planned test date to complete final preparations for transport to the test site. Thus, the Targets program has very little to no time to resolve any issues prior to delivering it for FTM-31, as shown in figure 6. According to the Targets program, late completion of qualification testing or failures that result in major redesigns may delay FTM-31, as well as significantly impact the cost and schedule for this target.

Another way that the Targets program tries to ensure availability of targets for MDA’s aggressive test schedule is to maintain aggressive delivery schedules for some targets. For example, the Targets program has an aggressive delivery schedule for its intermediate- and intercontinental-range targets through fiscal year 2021. According to the contractor for the intermediate- and intercontinental-range targets, there are specific time-spacing requirements that the contractor needs in order to produce and configure targets for a test in relation to the production and configuration of targets for other tests. The contractor said that these specific time-spacing requirements are needed due to limitations with the testing, storage, movement, and transport of these targets. Specifically, we observed that the facility where these targets go through final assembly prior to use in a flight test can currently hold two fully assembled intermediate-range targets and the component for one intercontinental-range target which is assembled at the launch site due to its size.

As shown in figure 7, almost all of the tests through fiscal year 2021 are at risk of the target not being available as planned. One of the most severe risks to target availability is in fiscal year 2020 when an intermediate-range target is scheduled for a test in the third quarter, followed by a test using dual (i.e., two) intermediate-range targets in the following quarter. According the contractor’s specific time-spacing requirements, it needs five months, but the approximate amount of time between these tests is three months. According to the Defense Contract Management Agency (DCMA), if MDA includes multiple intermediate- and intercontinental-range missions in the test plan within close proximity without accounting for the contractor’s specific time-spacing requirements, it will be, at best, very challenging for the contractor, and at worst, unachievable.

MRBM T1/T2 target’s continued cost growth and schedule delays have led to limited testing

The Targets program has a target—the medium-range ballistic missile type one/type two (MRBM T1/T2)—that continues to have cost growth and schedule delays, which we have previously reported. However, this target’s costs have continued to be unstable, and despite changes and rebaselines, the contractor has been unable to meet projections. Figure 8 below shows the cost growth from 2014 through 2018. In 2017, the Targets program conducted a review of the MRBM T1/T2 target to address significant cost growth and set new projections. Again, in 2018, the Targets program and the contractor planned to conduct another review to address additional cost growth since the prior year’s rebaseline. Despite relatively steady periods of performance following a rebaseline, DCMA officials believe that this contractor will continue to have cost growth. The DCMA established that some of the root causes for the cost growth are incomplete contract requirements and program requirements changes. Additionally, MDA and DCMA officials have acknowledged that the contractor did not adequately account for the costs associated with this target at the outset. How much cost growth there will be moving forward is unknown.

In addition to cost growth, the MRBM T1/T2 target has continued to have schedule delays due to technical failures, which has led to the decision to forego some testing as a cost-cutting and time-saving measure. For example, the contractor’s first flight of this target has been delayed approximately 5 years beyond the original plan, from third quarter fiscal year 2014 to fourth quarter fiscal year 2019. The primary reason for this delay has been an unusually high number of failures during pre-test qualification testing, according to the DCMA. The DCMA believes that the test failures are due to the elimination of sub-section testing, which it understands the program and contractor initiated as a cost-cutting and time-saving measure. According to DCMA, sub-section testing involves piecing together different components of the target and then testing that sub-section before the target is fully assembled. This type of testing can help the contractor isolate any integration issues between components in a specific area of the target. However, DCMA said that the contractor is testing the components and then fully assembling the target. Once fully assembled, they are conducting testing and experiencing the unusually high number of failures. When these types of failures occur, according to DCMA, the contractor conducts root cause analysis to make corrections and resolve the issue; however, DCMA officials noted that there is no commonality in the root causes. Thus, the contractor may not understand what steps to take to resolve the issue and ensure that the target performs as expected during a flight test.

It is currently unclear how the MRBM T1/T2 target will perform during upcoming tests, because of the Targets program’s decision to forego some qualification testing and not confirming the target’s performance through a non-intercept test, as we have previously recommended. However, the Targets program stated it considers the MRBM T1/T2 performance a minimal risk because the MRBM T1/T2 is largely based on a prior target’s design which, according to the program, was successfully flown twice. The MRBM T1/T2 is currently scheduled to fly in two critical tests in fiscal year 2019 and 2020. The first is an intercept flight test for the Terminal High Altitude Area Defense (THAAD) program in the fourth quarter of fiscal year 2019, which supports the delivery of an urgent capability to the warfighter. After this first flight test with this target, the next test with this target is MDA’s third and largest operational flight test of the BMDS to-date—FTO-03 E2—with five targets flying simultaneously and, three interacting weapon systems—THAAD, Patriot, and Aegis BMD. This test is currently scheduled for the fourth quarter of fiscal year 2020. Both of these tests are important and the use of this new target in these tests increases the risk that the tests will not go as planned and that retests may be necessary; however, a retest for FTO-03 E2 would be extremely costly and very difficult to replan.

Appendix VIII: Terminal High Altitude Area Defense (THAAD)

Appendix VIII: Terminal High Altitude Area Defense (THAAD)

Key findings for Fiscal Year 2018 THAAD met most of its fiscal year 2018 delivery and testing goals. THAAD is rebaselining to address Joint Emergent Operational Needs for Korea. THAAD may face challenges meeting its aggressive flight test schedule through 2021.

MDA and Army closer to resolving the impasse regarding the transfer of THAAD.

Program Overview

THAAD is a rapidly-deployable, globally-transportable, ground-based system able to defend against short-, medium-, and limited intermediate- range ballistic missile attacks through a threat missile’s middle to end stages of flight. A THAAD battery is comprised of five major components: (1) launchers, (2) a fire control unit, (3) communications system, (4) a radar, and (5) interceptors. The current program of record includes a total of seven batteries and 660 interceptors.

THAAD has delivered all seven batteries to the Army for operational use and plans to continue production through fiscal year 2029 for remaining items, such as interceptors and software upgrades. The Army has THAAD batteries deployed in Guam and South Korea. Table 15 provides key fiscal year 2018 THAAD program facts.

THAAD met its fiscal year 2018 goals for deliveries and flight testing. THAAD exceeded the number of interceptors it had originally planned to deliver in fiscal year 2018 because it is recovering from a parts quality issue. The parts quality issue was with a connector in the interceptor, and although THAAD stopped interceptor deliveries in order to resolve the issue, it did not stop interceptor production. Consequently, there was a stockpile of interceptors just awaiting a redesigned connector in order to be delivered. We previously reported on this parts quality issue and noted that interceptor deliveries, with the redesigned connector, resumed in April 2017 and interceptor production and deliveries have been steady since. In addition to delivering the interceptors, THAAD delivered the seventh, and final, battery of equipment. The delivery was later than previously planned to accommodate the Army’s operational timelines and a new software upgrade to improve THAAD’s performance against certain threats and in the presence of debris during the intercept of a threat missile.

Although THAAD was successful in delivering its planned assets for fiscal year 2018, it only conducted one of two planned non-intercept tests. Specifically, FTX-36 was canceled due to target availability from an external vendor and its objectives were reassigned to FTX-35, which was successfully conducted in April 2018. FTX-35 supported the material release of the THAAD 3.0 software (i.e., it is available for use by the warfighter) and the requirement for interoperability testing.

THAAD is rebaselining to address Joint Emergent Operational Needs for Korea

THAAD is in the process of rebaselining from two separate acquisition efforts, known as THAAD I and II, to a single acquisition effort, known as THAAD III, to incorporate changes to address the United States Forces Korea (USFK) Joint Emergent Operational Needs (JEON). The purpose of a rebaseline is to update a program’s established plans (i.e., baseline) due to a change in requirements, costs, or schedule. USFK JEON is a rapid acquisition effort to field ballistic missile solutions within the next 3 years to improve the defensive posture of Korea. Specifically, the USFK JEON’s ballistic missile solutions are focused on improving integration between THAAD and Patriot as shown in figure 9, which could enable the defense of larger areas and more assets and provide the warfighter greater flexibility in planning and executing defensive actions.

In fiscal year 2018, THAAD delivered software upgrades that provided the initial integration between THAAD and Patriot to improve their ability to coordinate when engaging a threat missile, in support of USFK JEON. These upgrades were assessed in an April 2018 flight test—FTX-35—that demonstrated interoperability between THAAD and Patriot by exchanging messages over tactical data links while tracking a missile target, and an April 2018 BMDS-level ground test which provided further performance data in a simulation environment. THAAD currently plans to deliver USFK JEON upgrades through fiscal year 2021. We currently have ongoing work related to this and details will be included in future reports.

MDA has nearly tripled THAAD’s flight tests—from three to eight— between fiscal years 2019 and 2021 to support both USFK JEON, an urgent operational need for the Army, and interoperability testing. Consequently, the schedule margin between each test has decreased from more than a year to three to six months. According to our best practices for scheduling, a practical amount of schedule margin is needed to account for risks and uncertainties. In addition, schedule margin can provide time to analyze the results from the preceding test and correct any identified issues before moving forward with further testing which may be reliant on the results of the preceding test. We have previously reported that MDA leaves little to no schedule margin in its flight test schedule to ensure executability and the test schedule is success- oriented, in that it does not plan for failures which makes it difficult to absorb test failures when they occur.

In addition to the reduced schedule margin between THAAD’s tests, some of its tests in this timeframe are higher risk. For example, one test will be flying a new, untested target which increases the risks for that test, and another test will be the largest and most complex operational test to- date, flying five targets simultaneously. Therefore, the test schedule is aggressive, complex, and is at risk of not being completed as planned. However, THAAD has not identified its flight test schedule as a risk. Also, THAAD officials and an official from DOD’s Director of Operational Test and Evaluation have asserted that the flight test schedule is doable, if everything goes according to plan, and that the biggest risk is fatigue among the personnel supporting the tests. While THAAD has a generally successful record for conducting flight tests, its current flight test schedule includes almost as many flight tests in 3 fiscal years as it did for the prior 9 fiscal years. Figure 10 below details the changes in THAAD’s flight testing from its previous plan to its current plan.

In addition to the increase in testing and lack of margin between tests, another risk to THAAD’s flight test schedule is that some tests have not yet been funded, as shown in figure 10 above. Funding is essential to enable the planning and execution of each flight test. While THAAD is tracking the lack of funding for these tests as a risk, there is no mitigation strategy if all testing to support USFK JEON remains unfunded. If a single test is not funded or executed, the Army will perform a risk-based assessment using the available data to decide whether or not to deploy the capability for use by the warfighter. If THAAD does not conduct the testing as planned, it will forego the demonstration and confirmation of capability performance which leaves the warfighter with the decision to either not use the capability or use it with an increased risk that it may not perform as intended. THAAD officials noted, however, that the Army’s decision to deploy a capability is based on multiple sources of data such as laboratory and ground testing, not just flight testing.

MDA and Army closer to resolving the impasse regarding the transfer of THAAD and the Army Navy/Transportable Radar Surveillance and Control Model-2 (AN/TPY-2)

MDA and the Army are nearing a resolution regarding the transfer of the THAAD and AN/TPY-2 programs to the Army; however, the resolution will likely resemble the current arrangement wherein MDA maintains primary responsibility through production and the Army operates and sustains them. We previously reported that MDA and the Army were at an impasse over the transfer of the THAAD and AN/TPY-2 programs because MDA was willing to transfer them as-is, but the program cannot meet the Army’s mission requirements and it would take an estimated $10.1 billion to do so. Table 16 lists the differences between the programs of record and the Army’s requirements.

When MDA was established in 2002, it was tasked with using existing and new technologies to rapidly develop weapon systems for the warfighter, and once mature, the weapon systems were to be handed over to a military service for production, operation, and sustainment. At this point, MDA has some weapon systems where production is either nearing completion or is complete. Consequently, Congress set forth a requirement in the National Defense Authorization Act for 2018 that MDA transfer all programs in production to the military services by 2021, which includes THAAD and AN/TPY-2. As part of this requirement, Congress requested a status report on MDA’s transfer of programs in production to military services not later than December 12, 2018. MDA prepared a report for the Under Secretary of Defense Acquisition and Sustainment who then requested the deadline be extended to June 2019 to enable further analysis and development of a viable option. However, according to program officials, at a March 2018 meeting between MDA and the Army, the Army stated that it prefers that THAAD and AN/TPY-2 remain with MDA. According to officials, they discussed transferring the sustainment only because MDA is best suited to maintain primary responsibility through production in order to integrate the BMDS and keep pace with the threat, as well as protect resources through the budgetary process.

Appendix IX: Comments from the Department of Defense

Appendix X: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, LaTonya Miller, Assistant Director; Matthew Ambrose; Pete Anderson; James Bennett; Jon Felbinger; Kurt Gurka; Helena Johnson; Joe Kirschbaum; Wiktor Niewiadomski; Steven Stern; Brian Tittle; Hai V. Tran; and Alyssa Weir made key contributions to this report.

Related GAO Products

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: 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.