The BMDS is designed to counter ballistic missiles of all ranges—short, medium, intermediate, and intercontinental. Short-range ballistic missiles have a range of less than 621 miles; medium-range ballistic missiles have a range from 621 to1,864 miles; intermediate-range ballistic missiles have a range from 1,864 to 3,418 miles; and intercontinental ballistic missiles have a range greater than 3,418 miles. Since ballistic missiles have different ranges, speeds, sizes, and performance characteristics, MDA is developing a variety of systems that, when integrated, provide multiple opportunities to destroy ballistic missiles in flight. The BMDS includes space-based sensors, ground- and sea-based radars, ground- and sea- based interceptor missiles, and a command and control system that provides communication links to the sensors and interceptor missiles. Once a ballistic missile has been launched, these sensors and interceptors are coordinated to track or engage the threat missile during its flight. DOD develops its major defense acquisition systems through an acquisition process in which programs move through significant phases in their life-cycle. DOD programs have a materiel solution analysis phase during which DOD analyzes and recommends materiel solutions for the identified need; a technology development phase, during which DOD reduces technology risk and determines the appropriate set of technologies to be integrated into the full system; a product development phase, formally known as engineering and manufacturing development, which represents program initiation, and during which the program focuses on integrating the system design, developing system capability, and demonstrating the manufacturing processes; a production and deployment phase for the purpose of achieving an operational capability that satisfies the mission need; and an operations and support phase, where DOD works to sustain the system in the most cost-effective manner. When MDA was established in 2002, the Secretary of Defense granted it exceptional flexibility to set requirements and manage the acquisition of the BMDS in order to meet a presidential directive to deliver an initial defensive capability against ballistic missiles in 2004. This decision postponed application of DOD acquisition policy for BMDS elements until they were mature enough to begin production and deployment. Because BMDS’s entrance into DOD’s acquisition cycle is deferred, MDA is exempt from certain laws and policies triggered by the phases of the acquisition life-cycle that generally require major defense acquisition programs to take steps such as the following: Prior to beginning the technology development phase and product development phase, conduct an analysis of alternatives to compare potential solutions and determine the most cost-effective weapon system to acquire. Before the program begins the product development phase, document key program performance, cost, and schedule goals in a baseline that has been approved by a higher-level DOD official. The baseline is considered the program’s initial business case—evidence that the concept of the program can be developed and produced within existing resources. The baseline provides decision makers with the program’s total cost for an increment of work, average unit costs for systems to be delivered, key dates associated with a capability, and the weapon’s intended performance parameters. Once a baseline has been approved, measure the program against the approved baseline or obtain the approval of a higher-level acquisition executive before making changes. Once a baseline has been approved, report certain increases in unit cost measured from the original and the current program baseline. Unit cost is the cost divided by the quantity produced. Prior to beginning the product development and/or production and deployment phases of the DOD acquisition cycle, obtain an independent life-cycle cost estimate. While these flexibilities give MDA latitude to manage the BMDS and enable it to rapidly develop and field new systems, we have previously reported that the agency has used these flexibilities to employ acquisition strategies with high levels of concurrency (that is, overlapping activities such as testing and production) and they have also hampered oversight and accountability. Congress and DOD have taken steps to address concerns over MDA’s acquisition management strategy, accountability, and oversight. Although MDA is not yet required to establish an acquisition program baseline pursuant to 10 U.S.C. § 2435 and related DOD policy because of the acquisition flexibilities it has been granted, Congress has enacted legislation requiring MDA to establish some baselines. MDA reported baselines for several BMDS programs to Congress for the first time in its June 2010 BMDS Accountability Report to respond to statutory requirements in the National Defense Authorization Act for Fiscal Year 2008. Most recently, the National Defense Authorization Act for Fiscal Year 2012 required MDA to establish and maintain baselines for program elements or major portions of such program elements. The act specified information to be included in the baselines such as total quantities and quantities by fiscal year, and required an annual report of these baselines to Congress. In 2010, MDA created a new review process in which the agency identified five phases of acquisition as seen in table 1. The agency has documented the key knowledge that is needed prior to the technology development, product development, initial production, and production phases. For example, as part of the process, MDA requires a program to identify alternatives to meet the mission’s needs before it can proceed to MDA’s technology development phase. MDA officials have stated in the past that they expect that aligning the development efforts with the phases will help to ensure that they obtain the appropriate level of knowledge before allowing the acquisitions to move from one phase to the next. One of the most significant new thrusts in BMDS acquisitions is the development and deployment of systems to aid in the defense of Europe and to augment the current protection of the United States. In September 2009, the president announced a new approach called the European Phased Adaptive Approach, which is structured around Aegis ship and Aegis Ashore systems in addition to other various BMDS sensors. The BMDS in Europe is planned to be deployed over time as the systems become more mature. The final phase of U.S. missile defense in Europe is planned to enhance the limited defense of the United States against intercontinental ballistic missiles currently provided by the U.S. based Ground-based Midcourse Defense (GMD) system. Towards the end of our audit work, in March 2013, the Secretary of Defense made an announcement that canceled the final phase of U.S. missile defense in Europe that had planned to use Aegis BMD SM-3 Block IIB interceptors, and announced several other plans including deploying additional ground based interceptors in Fort Greely, Alaska, and deploying a second AN/TPY-2 radar in Japan. Because this announcement occurred late in our audit, we were not able to assess the effects and incorporate this information into our report. The DOD 2010 Ballistic Missile Defense Review stated that other regional missile defenses are to be developed, each tailored to a specific region of the world and its particular threats and circumstances. The BMDS in Europe is the first such approach to missile defense to be developed. We reported in January 2011 that DOD was planning for additional regional defenses in East Asia and the Middle East. Table 2 describes BMDS elements discussed in this report, the defensive capabilities each currently provides or plans to provide for a particular mission, and their current MDA acquisition phase. Figure 1 depicts the BMDS elements that could be used to engage a threat missile during the course of its flight. An engagement scenario using the Aegis BMD element, for example, could occur as follows: After the launch of a threat missile, the Space Based Infrared System, an Air Force system of satellites that detect ballistic missile launches, detects the launch and sends a cue to the Command, Control, Battle Management, and Communications system. The Command, Control, Battle Management, and Communications system tells one or more Army Navy/Transportable Radar Surveillance and Control Model 2 radars to track the threat missile. The radars provide track information to the Command, Control, Battle Management, and Communications system which develops system track data to support Aegis BMD engagements. Relying on data provided by the Army Navy/Transportable Radar Surveillance and Control Model 2 radars and its own SPY-1 radar, the Aegis BMD ship uses SM-3 missiles to intercept and attempt to destroy the threat. A key challenge DOD and MDA’s new Director face is ensuring that the Department is getting the best value for its missile defense investments, particularly as MDA faces growing fiscal pressure as it develops new programs while supporting and upgrading its existing systems. We have frequently reported on the importance of establishing a sound basis before committing resources to developing a new product. We have also reported that part of a sound basis is a full analysis of alternatives (AOA). An AOA also helps ensure that key DOD and congressional decision makers understand why the chosen system was selected in order to prioritize limited investment dollars to achieve a balanced BMDS portfolio. Because of MDA’s acquisition flexibilities, its programs are not required to complete an AOA. While MDA has performed some limited analyses that consider alternatives, it has not conducted a robust AOA for its new programs. We have reported that without AOAs, programs may not select the best solution for the warfighter, are at risk for cost increases, and can face schedule delays. However, some progress was made in January 2013 when Congress directed DOD to conduct a comprehensive assessment of PTSS alternatives. An AOA can help establish a sound basis for an acquisition by comparing potential solutions and determining the most promising and cost-effective weapon system to acquire. As such, major defense acquisition programs are generally required by law and DOD’s acquisition policy to conduct an AOA before they are approved to enter the technology development phase. A robust AOA can provide decision makers with the information they need by helping establish a sound basis that is used to assess whether a concept can be developed and produced within existing resources and if it is the best solution to meet the warfighter’s needs.