In 2001, DOD conducted missile defense reviews to determine how best to fulfill the nation’s need to defend the United States, deployed forces, allies, and friends from ballistic missile attacks. The findings of these reviews led the Secretary of Defense to declare the need for a new strategy to acquire and deploy missile defenses and to issue direction in January 2002 to improve the leadership, management, and organization of missile defense activities. Specifically, the Secretary delegated to MDA the authority to manage all ballistic missile defense systems under development and shifted programs being executed or developed by the military services to MDA. Figure 1 below describes some of the missile defense programs whose execution or development was transferred from the military services into MDA. The Secretary also instructed MDA to develop a single integrated system, to be called the Ballistic Missile Defense System, capable of intercepting enemy missiles launched from all ranges and in all phases of their flight. The systems transferred from or executed by the services and new systems whose development MDA initiates are considered to be elements of the BMDS and are managed by MDA. In 2002, drawing on research and development efforts that were ongoing for years, MDA established the Command, Control, Battle Management, and Communications system as an element to provide connectivity between other BMDS elements and to manage their operation as an integrated, layered missile defense system. In his direction to MDA and the military services, the Secretary called for a capabilities-based requirements process and an evolutionary development program. In a capabilities-based program, the system developer—MDA— designs a system based on the technology available, rather than designing a system to meet requirements established by those that will use the system. Additionally, in an evolutionary program, a baseline capability is developed that is improved over time. Therefore, the BMDS has no fixed design or final architecture. Each evolution, or block, as MDA calls such increments, is meant to take advantage of advancing technology so that over time the BMDS is enhanced. MDA’s capabilities-based evolutionary approach to development is meant to provide a capability to the users as quickly as possible while also maintaining flexibility. MDA is in the process of developing the first BMDS block, which is known as Block 2004. This block consists of the Ground-Based Midcourse Defense, Aegis Ballistic Missile Defense, Patriot Advanced Capability–3, and Command, Control, Battle Management, and Communications elements, as well as the Forward-Based X-Band Radar. The Secretary also established a procedure for making developmental assets available for operational use. On the basis of assessments of the BMDS’s military utility, progress in development, and a recommendation by the Director, MDA, and the military services, the Secretary, with input from the DOD Senior Executive Council, decides whether assets whose development is ongoing should be fielded. When such a decision is made, the Secretary directed that the military departments provide forces to support the early fielding and budget resources to procure and operate the planned force structure. In December 2002, the President directed DOD to begin fielding an initial set of missile defense capabilities to meet the near- term ballistic missile threat to our nation. MDA responded by emplacing Block 2004 developmental assets for use against limited attacks. However, the Secretary has not yet activated this capability by placing it on alert. The Secretary’s 2002 direction intended that acquisition of missile defense elements and components be completed in three phases. In the first phase, MDA develops ballistic missile defense elements and components using research, development, test, and evaluation funds. When appropriate, the MDA Director recommends and the Senior Executive Council approves the entry of an element or major component into the second phase, known as the transition phase. This phase allows the military services to prepare for the element’s or component’s transfer. During the third phase, a military service—using procurement, operation and maintenance, and personnel funds—procures, operates, and sustains the element or component. Figure 2 includes some of the activities, such as those carried out by the Joint Air and Missile Defense Organization (JTAMDO) that DOD envisioned taking place during each of the three phases. Military services begin full-scale production. Military services formalize capability-based Operational Requirements Document for element/component being transferred. Military services operate and maintain element or major component. Military services lead effort to assess element's operational suitability. Combatant Commanders conduct and assess BMDS exercises. MDA and user community address logistics and maintenance support. Military services support operational test and evaluation. Combatant Commanders and military services identify desired operational capabilities for future increments. Finally, the Secretary’s 2002 direction effectively allowed MDA to defer application of many of the requirements that are generally applied to the development of major systems under DOD’s traditional acquisition system regulations. For example, the requirements for acquisition program baselines and independent cost estimates, generally applicable by statute to major defense acquisition programs and implemented by the DOD regulations, will not be applied until a BMDS element or component is transferred to a military service concurrent with Milestone C. Milestone C, the point at which a decision is made to begin initial production, is the point at which the service is to assume management and funding responsibility for an element or component of the BMDS. Once elements or components are transferred, the Secretary directed MDA to continue to fund modifications to fielded systems and to manage development activities for new missile defense capabilities. The Secretary also gave MDA approval authority over any engineering changes that the military services might want to make to transferred BMDS elements. This process, known as configuration control, is meant to ensure that changes do not degrade the interoperability of the BMDS. MDA has recommended and DOD approved the transfer of one missile defense element to a military service since 2002. DOD transferred the Patriot Advanced Capability–3 program to the Army in 2003. MDA continues to exercise configuration control and provide funding for the development of Patriot Advanced Capability-3 missile defense-related upgrades. In December 2002, the Under Secretary of Defense for Acquisition, Technology and Logistics established criteria for deciding when to transfer acquisition responsibility from MDA to the military services. The specified criteria are (1) testing demonstrates that an element or component is mature, (2) plans and resources are in place to ensure that facilities are available to support production, and (3) funds are programmed in DOD’s Future Years Defense Program to carry out production plans. After the Under Secretary established these criteria, one BMDS element—the Patriot Advanced Capability-3—was transferred to a military service. However, officials across DOD now recognize that the transfer criteria are neither complete nor clear and believe that revised criteria are needed for deciding to move an element or component into the transition phase. These officials told us that when the Under Secretary established transfer criteria in 2002, DOD did not fully understand the complexity of the BMDS and how it could affect transfer decisions. MDA’s Director testified earlier this year that MDA will use several models to transfer system elements to the military services and that it may not be appropriate to transfer some elements or components. In such cases, he envisions the services and MDA sharing responsibilities for the assets. Further, he said that MDA will continue to work with the Secretary of Defense, the military services, and the Combatant Commanders to arrange appropriate transfers on a case-by-case basis. There is currently uncertainty as to when and under what conditions DOD will transfer management and funding responsibility for elements and major components from MDA to the military services. The acquisition model directed by the Secretary in 2002 is now viewed by many in DOD as needing modifications to meet the evolving needs of a complex ballistic missile defense system. Although MDA began to emplace Block 2004 developmental assets for the warfighters’ potential use, it is not ready to transfer management responsibility for some of these assets to the military services. According to officials in MDA’s Business Management Office, continued management of some system elements and components by MDA may be necessary to fully develop the overall effectiveness of the BMDS. For example, if the missile-tracking capability of the Space Tracking and Surveillance System is going to be added to the BMDS, MDA will need to test it with other BMDS elements to determine how to make all elements work together most effectively. To do this, MDA believes it must have the authority to pull back elements or components that are fielded so that the elements and components can be utilized in developmental efforts. The MDA officials also indicated that full transfer of elements and components could threaten the priority that the President and DOD have given to missile defense. The officials told us that the military services could subordinate missile defense missions to service missions, funding service programs at the expense of the missile defense program. Service acquisition officials and officials in the Office of the Secretary of Defense agreed that the military services have many competing priorities and that should missile defense programs be transferred to a service, those programs would likely have to compete with service programs for procurement, operations, and sustainment funds. Officials in MDA’s transition office offered examples of how management and funding responsibility of elements and components currently in development might be handled. Management responsibility for some elements and components might never be transferred to a military service because these assets are not integrated on service platforms or do not perform core service missions. Examples include the Cobra Dane radar, the Forward-Based X-Band radars, and the Sea-Based X-Band radar. MDA officials suggested that these components could be operated by either contractors or military personnel, and MDA might fund their operation and sustainment. However, discussions are still ongoing as to whether these components will eventually be transferred to the military services. MDA and a military service might be collaboratively involved in the management of other assets, such as the Airborne Laser, the Kinetic Energy Interceptor, the Space Tracking and Surveillance System, and Terminal High Altitude Area Defense because these elements are not yet technically mature and MDA needs to manage their development.