In 1989, the Army recognized that it needed to replace some of its aging air defense systems, including the Homing All-the-Way to Kill (HAWK) missile. The Army wanted the HAWK’s replacement to be rapidly deployable, capable against weapons of mass destruction, and able to defeat a wide range of targets. The Under Secretary of Defense for Acquisition and Technology approved concept exploration for a new surface-to-air missile but stated that the Army needed a draft agreement for allied participation before system development would be approved. The Army was successful in finding U.S. allies that were interested in jointly acquiring a new air and missile defense system. In February 1994, the United States officially invited Germany to participate in the system’s development and production. Because of Germany’s desire to make the program a U.S.-European cooperative initiative, the program was subsequently expanded to include France and then Italy. Representatives of the four countries signed a multilateral statement of intent in February 1995 to collaborate in the development of a system capable of meeting the requirements of all four countries. The effort became known as the MEADS program. Before DOD allows a military service to negotiate for the acquisition of a weapon system in cooperation with another country, DOD generally requires the program’s sponsor to assess the likely impact of the proposed program by developing a summary statement of intent. The statement should include information on the benefits of an international program to the United States, potential industrial base impacts, funding availability and requirements, information security issues, and the technologies that will likely be involved in the program. Various officials within the Office of the Secretary of Defense are responsible for reviewing the statement of intent and recommending whether an international agreement should be negotiated. Because of budget problems, France dropped out of the MEADS program before the memorandum of understanding was signed in May 1996. The other nations proceeded with the project definition and validation phase. The countries agreed that, during this phase, the U.S. cost share would be 60 percent; Germany, 25 percent; and Italy, 15 percent. According to the memorandum of understanding, new agreements would be negotiated before initiating other phases of the program, cost share percentages could change, and any of the countries could drop out of the program at the start of any new program phase. MEADS, as envisioned by the Army, is part of the lower tier of a two-tier umbrella of air and missile defense. The Theater High Altitude Area Defense (THAAD) and Navy Theater Wide systems are upper tier systems that provide protection primarily against theater ballistic missiles. Existing and planned lower tier systems, such as the Patriot Advanced Capability 3 (PAC-3) and Navy Area systems, will engage shorter range theater ballistic missiles, fixed- and rotary wing aircraft, unmanned aerial vehicles, and cruise missiles. The Ballistic Missile Defense Organization (BMDO) has responsibility for the MEADS program. DOD believes the MEADS program represents a new and innovative approach to the acquisition process. If the program is successful, DOD expects that MEADS will be a model for future collaborative efforts because it addresses problem areas associated with past transatlantic cooperative endeavors. The program reflects the mission needs of all countries, involves technologies from all participants, and requires competition between two transatlantic contractor teams. MEADS is being designed to add capabilities to the battlefield that currently fielded and planned air and missile defense systems do not provide. It will be more mobile than current systems, counter a wider range of targets, and intercept incoming missiles from any direction. Because of its unique capabilities, warfighting commands with theater ballistic missile defense missions support MEADS. The Army plans to use MEADS to protect important access points on the battlefield, troop forward area assembly points, and maneuver force assets (such as refueling points and stores of ammunition) that must travel with troops as they move toward the enemy. To move with the maneuver force, MEADS must transition from defensive operations to a traveling configuration and return to defensive operations quickly. Similar to the maneuver force, MEADS must also be able to travel over unimproved roads and cross country. In addition, the Army wants to be able to move MEADS within theater aboard small transport aircraft, such as the C-130. Combatant commanders control the use of C-130s and can use them to move MEADS as necessary. MEADS must be able to defend against a wide range of targets. It must counter short-range, high-velocity theater ballistic missiles carrying conventional explosives or weapons of mass destruction. The system is also required to detect and destroy low- and high-altitude cruise missiles launched from land, sea, or air platforms and carrying various types of offensive weapons. MEADS is required to counter remotely piloted vehicles and unmanned aerial vehicles carrying observation equipment or weapons and defend against slow, low-flying rotary wing aircraft and maneuvering fixed-wing aircraft employed in a variety of missions. MEADS is expected to be the only land-based theater missile defense system designed to defend against targets approaching from any direction. The system will counter slow and low-flying cruise missiles that take advantage of terrain features to mask their approach and attack from virtually any direction. No other existing or planned air and missile defense system meets all of the MEADS requirements. The Patriot system cannot keep pace with the maneuver force because it takes too long to assemble and disassemble for movement, and it cannot travel cross country. Also, Patriot was not designed to provide protection from all directions, and will require more aircraft to reach a theater of operation because of the system’s size. Even though the Army plans to use large transport aircraft, such as the C-141, C-17, or C-5, to transport both Patriot and MEADS to a conflict, MEADS requires fewer aircraft. For example, the Army will need 77 C-5 aircraft sorties to transport 1 Patriot battalion but only 36 sorties to transport 1 MEADS battalion. In addition, Patriot can only be transported within theaters of operation aboard the larger transport aircraft. The ability of other systems to meet MEADS requirements is also limited. The Navy Area system may not be capable of protecting the maneuver force because its defended area will be limited by the distance from which it must stand off shore and the range of its interceptor. The THAAD and Navy Theater Wide systems are being designed to engage primarily medium-range ballistic missiles but cannot defend against theater ballistic missiles launched from very short ranges, aircraft, or low-altitude cruise missiles. Table 1 shows the capabilities of existing and planned air and missile defense systems in meeting MEADS requirements. Combatant commanders whose forces are most vulnerable to theater ballistic missile attacks identify MEADS as a priority system. Each year the Commander in Chief of each unified combatant command lists, in order of importance, key program shortfalls that adversely affect the capability of their forces to accomplish assigned duties. All commanders with a theater missile defense mission—the U.S. Central, European, and Pacific Command—believe that a shortfall exists in their ability to perform this mission. Each of these commanders either lists MEADS as a system needed to correct the shortfall or, according to command officials, considers MEADS a high priority. A U.S. Central Command official said that, although the Commander in Chief considers MEADS a high priority, he does not want to acquire that system at the expense of other theater missile systems. The official said that PAC-3, THAAD, and Navy Area systems are expected to be fielded sooner than MEADS and that the Commander does not want those systems delayed. BMDO will be unable to acquire MEADS without impacting higher priority missile defense programs unless DOD or the Army provide additional funds. BMDO’s budget plan does not include funding for MEADS after fiscal year 1999 because the organization’s budget is dedicated to missile systems that will be available sooner. Over the next 6 years, for which BMDO is currently budgeting, the organization needs $1.4 billion to execute the planned MEADS program. Because it has had difficulty funding MEADS, BMDO is considering various program options to find a less costly acquisition program. In March 1998, BMDO developed, in cooperation with the Army, a cost estimate for a MEADS system that would meet Army requirements. According to this estimate, the United States expects MEADS total design and development cost to be about $3.6 billion. The United States expects to pay about one-half of this amount, or $1.8 billion. In addition, BMDO estimates that the United States needs approximately $10.1 billion more to procure eight battalions of system hardware. BMDO is interested in the MEADS’ design and development cost because it is developing budget plans for the years when many related activities are scheduled. During design and development, engineers will work out the details of MEADS’ design, perform engineering tasks that are necessary to ensure the producibility of the developmental system components, fabricate prototype equipment and software, and test and evaluate the system and the principal items necessary for its support. In addition, the contractor will fabricate and install equipment needed to produce hardware prototypes and develop training services and equipment. BMDO expects the system radars to be the most costly system components to design and develop. Army engineers said that they believe two separate radars—a surveillance and fire control radar—will be required and that three prototypes of each radar are needed for adequate test and evaluation. The fire control radar will be expensive because it contains thousands of transmit and receive modules that send and receive messages with the missile and simultaneously determine the target’s location. Engineers believe the efficiency of existing transmit and receive modules must be improved to meet the MEADS hit-to-kill requirement. The surveillance radar is expensive because, to fulfil MEADS’ mission requirements, it must accurately detect targets at long ranges.