MDA is the agency responsible for designing, developing, producing, and procuring targets for testing the nation’s ballistic missile defense system. In 2001, MDA initiated a Targets and Countermeasures Program Office. The MDA’s Targets and Countermeasures program oversees the design, development, fabrication, and production of ballistic missile targets and countermeasures to be used in the MDA flight test program. These targets must represent the full spectrum of threat missile capabilities (separating and nonseparating reentry vehicles, varying radar cross sections, countermeasures, etc.) and ranges. The appropriate targets are engaged by both strategic and tactical missile defense systems developed by MDA, the Army, and the Navy. MDA originally used numerous contractors to design and build the various targets; however in December 2003 Lockheed Martin was awarded a contract to be the lead systems integrator for most of the existing targets. The lead systems integrator was chosen to provide system-level management, implement a single organization and management structure, and to manage all processes. Additionally, MDA contracted with Lockheed Martin to plan and develop a new family of targets called the Flexible Target Family (FTF) because existing targets were deemed no longer able to meet test needs due to aging components and an evolving threat. MDA’s original goals for FTF included commonality of components across the family of short, medium and long-range targets, the purchase of inventory, reduced cycle time in the building of individual targets, increased complexity, cost savings, and ground, air, and sea launch capabilities. Although the development of FTF began in 2005, the first FTF target has yet to be delivered. While MDA manages the targets program, the Missile Defense Executive Board (MDEB), which was created in March 2007, provides advice and recommendations on the missile defense program. Specifically, the MDEB reviews the implementation of strategic policies and plans, program priorities, and investment options for protecting the United States and its allies from missile attacks. The MDEB is chaired by the Under Secretary of Defense for Acquisition, Technology and Logistics, who is authorized to make recommendations to the Deputy Secretary of Defense on missile defense issues. According to its charter, the board will provide to the Under Secretary a recommended strategic program plan and a feasible funding strategy for approval. Recommendations will be based on a business case analysis that considers the best approach to field integrated defense capabilities in support of joint objectives. A consistent business case analysis approach will facilitate the delivery of capabilities to the war fighter in a timely, efficient, cost-effective manner. The board will review the missile defense program and recommend changes in the missile defense strategic plan. In addition, Congress has mandated that DOT&E annually assess the adequacy and sufficiency of the BMDS test program. Congress has also mandated that DOT&E perform other BMDS program related test and evaluation responsibilities. The number of target failures and anomalies during flight tests has increased over time. From 2002 through 2005, 7 percent (3 of 42 launches) of the targets launched had in-flight target failures and anomalies, while from 2006 through 2007, 16 percent (6 of 38 launches) of the targets launched had in-flight failures or anomalies. Though problems providing reliable and timely targets have negatively affected many of the missile defense elements, THAAD and GMD missile defense elements have been affected the most. GMD experienced a target failure in 2007 in which the primary objectives failed to be achieved. THAAD experienced one failure and two anomalies between 2006 and 2007. The immediate effect of a target delay or problem is on an individual flight test. For example, unavailable targets have delayed tests such as FTT-08 and FTM-15. There are longer term effects of these delays on subsequent tests and demonstration of capability in the flight test program. Specifically, MDA’s flight test program has been restructured to reflect target deficiencies and availability. For example, validating GMD capability has been delayed due to target availability and a failure. The THAAD flight test program has decreased the amount of flight tests due to reduced availability of targets. Additionally, target failures and anomalies caused THAAD to replan key objectives in their flight test plan due to the inability to collect necessary information during flight tests. Since we briefed your staff in July 2008, MDA has experienced two additional target anomalies. The target flown in a recent sensor test (FTX- 03) under-flew the planned trajectory. Test reports indicate that target trajectory fell short of what was planned and thus did not reach the anticipated intercept area. While the anomaly did not prevent MDA from achieving the sensor test objectives, had this been an intercept attempt, the target anomaly would have precluded the launch of the interceptor due to safety restrictions on the test range. In September 2008, the THAAD element was unable to complete a planned flight test because the target missile malfunctioned and did not have enough momentum to reach the intercept area. Therefore, the two THAAD interceptors taking part in the flight test were not launched. At the same time, the unit cost of targets has grown exponentially, from $4.5 to $8.5 million from 2002 to 2006 to current estimates of $32 to $65 million for the targets planned from 2008 to 2010. Many factors contribute to this cost growth, including increased complexity of targets to better reflect an evolving threat and late changes to target requirements on contract. In addition, the shift to a lead systems integrator resulted in an increase in composite hourly labor rates. MDA has also encountered development problems with the FTF program and the total cost of FTF remains unclear. According to information provided by MDA in July 2008, nonrecurring engineering costs plus the cost to purchase some test assets is at least $1 billion, of which about $553 million has already been spent. Difficulties with target availability are traceable to (1) supplier base and problems incorporating requirements into the contracts and establishing program baselines for existing targets and (2) the lack of a sound business case for FTF development. Regarding existing targets, inventory is aging for key components. For example, motors used in some targets are now over 40 years old. In addition, vendors who previously supplied targets to MDA are leaving the market due to lack of business. MDA has also experienced program and requirements issues with the existing targets on contract. According to MDA officials, several target contracts did not capture all of the needed test requirements. Furthermore, target technical, cost, and schedule baselines were not always established in a timely manner. MDA officials acknowledged that they have only recently established these baselines for all missions planned to take place in the next 2 years. MDA began the FTF without establishing a sound business case. We have previously reported on the importance of using a solid, executable business case before committing resources to a new product development effort. A sound business case demonstrates that (1) the identified needs are real and necessary and are best met with the chosen concept and (2) the chosen concept can be developed and produced with existing resources—such as technical knowledge, funding, time and management capacity. According to a July 2006 MDA briefing, the decision to commit to a lead systems integrator and FTF was not based on a formal cost or business case analysis. The briefing further indicated that the FTF cost estimates considered at the time only included integration costs and did not address nonrecurring engineering costs, unit costs for FTF configured targets, or the costs to purchase existing target systems through the prime contract. Nor was there any indication that FTF costs had been reviewed by independent cost organizations within the Department of Defense. It is also unclear whether MDA evaluated all alternatives before committing to a lead systems integrator and the FTF. MDA did perform a study to identify requirements design attributes and candidate configurations for a family of targets by reviewing existing systems. However, in a July 2006 assessment, MDA stated that other alternatives for improving legacy targets were not considered at that time. We also could not identify an original approved FTF acquisition strategy. Originally, the lead systems integrator proposed using existing launch vehicles for short- and medium-range missions, and developing a new long-range launch vehicle family while maximizing the reuse of existing target system designs. However, MDA committed to a riskier strategy that required developing a single common architecture across three target system families. Early in the development of FTF, MDA underestimated the technical and design challenges involved in the development of a new target family. By May of 2006, MDA recognized that the funding set aside for FTF development was no longer adequate and made a decision to focus developmental efforts on the ground-launched 72-inch long-range target needed for near-term missions and defer other key capabilities. Despite the focus on the 72-inch ground-launched target, development problems have delayed the first launch from July 2008 to April 2009. The 72-inch target qualification process has been more difficult and costly than expected and development is still not complete. Of the 69 components in development, 24 had not passed the qualification process as of August 2008. In addition, according to the targets program director, the qualification process completion date has moved from early October to November 2008. Delays have also occurred because development of the 72-inch target began without a stable design. Eleven of the remaining unqualified components are considered critical technologies and are currently being redesigned. MDA acknowledged both underestimating the difficulty in using components never qualified for this shock and vibration environment and underestimating the complexity of combining multiple launch vehicle and mission requirements. Similarly, the 52-inch target’s first flight will occur no earlier than fiscal year 2012, representing a 3 year slip from the original expectations of first flight in fiscal year 2009. This slip has resulted in the need to initiate an interim target development effort to satisfy near-term target requirements of the Aegis flight test program.