Shift in Approach to European Missile Defense

Another significant change that took place in 2009 was the new  administration’s shift in its approach to European missile defense. MDA Undertook Steps to Improve Transparency and Accountability

Throughout 2010, MDA continued to make significant changes to its key  acquisition processes in order to increase transparency and accountability  and reflect acquisition best practices. While the steps taken  are significant and positive, our analysis identified shortcomings in cost,  schedule, and testing baselines that limit the extent to which cost and  schedule growth as well as system performance can be tracked. DOD  concurred with all of these recommendations. In 2010, MDA made progress in implementing these recommendations by  finalizing a new baseline phase review process in which the agency set  detailed baselines for several BMDS elements, or portions of elements, for  the first time. Specifically, MDA established resource, schedule, test,  operational capacity, technical, and contract baselines for several  BMDS components. As a  result of MDA’s new baseline phase review process, its 2010 BAR is more  comprehensive than its 2009 BAR. For the remaining 6, we found that the documentation that MDA provided  contained insufficient evidence to meet the characteristics of a high- quality cost estimate. While the new IMTP still represents a  significant improvement in test planning and transparency for MDA,  frequent revisions to the test baseline due to test failures and/or target  availability, hinders external oversight of MDA’s test baseline and the  funding allocated for testing. To  assist Congress in its review of this policy shift and its implications, we  were asked to assess DOD’s efforts to implement the phased adaptive  approach for Ballistic Missile Defense in Europe. With  respect to acquisition management for the European PAA, our December  2010 report found that DOD has not fully implemented a management  process that synchronizes European PAA acquisition activities and  ensures transparency and accountability. The consequences of these issues have included limited means  of independently assessing progress and a limited basis for oversight and  the department entering into production before fully demonstrating  system performance, leading to rework, cost increases, delays, and  uncertainties about delivered capabilities. We were mandated by the Congress in 2009 to examine a DOD assessment  and plan related to the GMD system, that included issues related to  acquisition, sustainment and refurbishment. We found that while the GMD  system has demonstrated a limited capability, DOD has not yet determined  the system’s full capabilities and limitations. However, in certain cases, the agen is just beginning to collect necessary sustainment data that would suppo the service life. This plan  was undertaken in response to GAO findings regarding cost, schedule and  performance problems with the previous targets acquisition approach. MDA  officials stated that this action was in response to the target failure in the  FTT-11 flight test, and was not related to the cancellation of the medium- range solicitation. In addition, as with previous years, failures and delays in testing have  continued to delay the validation of the models and simulations used to  assess the overall performance of the BMDS. Recommendations for Executive Action

We recommend that the Secretary of Defense direct MDA to undertake the  following 10 actions to strengthen its baselines, facilitate external and  independent reviews of those baselines, ensure effective oversight of the  BMDS, and further improve transparency and accountability of its efforts. Appendix I: Comments from the Department of Defense

Appendix II: Assessment of MDA Resource Baselines

We reviewed 12 resource baselines for Ballistic Missile Defense System  (BMDS) elements’ efforts as presented in the June 2010 BMDS  Accountability Report (BAR) including:    Aegis Ashore;    Aegis Ballistic Missile Defense (BMD) Standard Missile 3 (SM-3) Block  IB missiles and associated software upgrades for ship sets;  future Aegis BMD ship software upgrades;  two capability deliveries for Army Navy/Transportable Radar  Surveillance (AN/TPY-2);    Command and Control, Battle Management, and Communications  (C2BMC) Spiral 6.4;    Ground-based Midcourse Defense (GMD);  two capability deliveries for the Sea Based X-Band (SBX) Radar;  current Terminal High Altitude Area Defense (THAAD) capability  configuration; and    Targets and Countermeasures program short-range ballistic missile;    Targets and Countermeasures program medium-range ballistic missile;    Targets and Countermeasures program intermediate-range ballistic    Targets and Countermeasures program intercontinental ballistic  missile target efforts. A cost estimate is considered:    Comprehensive: when it accounts for all possible costs associated with  a project, details all cost-influencing ground rules and assumptions, is  technically reasonable, is structured in sufficient detail to ensure that  costs are neither omitted nor double-counted, and the estimating  teams’ composition is commensurate with the assignment;    Well-documented: when supporting documentation for the estimate is  accompanied by a narrative explaining the process, sources, and  methods used to create the estimate and contains the underlying data  used to develop the estimate;    Accurate: when the estimate is not overly conservative or too  optimistic and is based on an assessment of the costs most likely to be  incurred; and    Credible: when the estimate has been cross-checked with independent  cost estimates, the level of confidence associated with the point  estimate has been identified, and a sensitivity analysis has been  conducted—that is, the project has examined the effect of changing  one assumption related to each project activity while holding all other  variables constant in order to identify which variable most affects the  cost estimate. However, testing will not be completed for many years. consistent with GAO-recommended best practices. Decisions on Acquisition of Targets Made in Fiscal Year 2010

intercontinental-range targets in September 2010, also as part of its 2009  acquisition plan, but it was later canceled as well. previously reported that conducting work through the prime contractor  had increased target costs. Likewise, MDA may also make a decision on its strategy for procuring  medium-range targets. Also during the test, the program was able to successfully  demonstrate THAAD’s performance against a simulated mass raid  scenario. As a result, we were unable to assess this material as part of  this year's annual review.
Why GAO Did This Study

Since 2002, Congress has directed GAO to assess the Missile Defense Agency's (MDA) annual fiscal year cost, schedule, testing, and performance progress in developing the Ballistic Missile Defense System (BMDS). This year's report specifically assesses MDA's progress in (1) delivering missile defense assets as scheduled (2) improving accountability and transparency over the past year (3) implementing the European Phased Adaptive Approach (4) implementing changes to the Ground-based Midcourse Defense program (5) implementing the targets revised acquisition strategy identified in 2009, and (6) testing the BMDS and developing its modeling and simulations to assess performance. To accomplish this, GAO reviewed MDA's progress reports to the Congress, pertinent Department of Defense (DOD) policies and reports including a DOD assessment and plan related to the Ground-based Midcourse Defense system.

What GAO Found

In 2010, MDA made progress in delivering assets as well as increasing transparency and accountability. While many significant, positive steps were taken, GAO also found issues limiting the extent to which cost, schedule, and system performance can be tracked. Stabilizing the new acquisition approach, improving execution and increasing transparency are key steps for DOD. Asset Delivery: In 2010, MDA was able to meet or exceed its delivery goals for several MDA activities, such as missile defense upgrades to Aegis ships. However, the agency was unable to meet all of its goals for Terminal High Altitude Area Defense, a system used to defend against targets in their last phases of flight. Transparency and Accountability: MDA finalized a new process in which detailed baselines were set for several missile defense systems. As a result of the new process, its 2010 progress report to the Congress is more comprehensive than it was in 2009. Although the information in MDA's progress reports to the Congress increased, GAO found its unit and life-cycle cost baselines had unexplained inconsistencies and documentation for six baselines had insufficient evidence to be a high-quality cost estimate. As a result, GAO could not evaluate cost progress. European Phased Adaptive Approach for Missile Defense: The September 2009 shift in focus for European missile defense represents a significant change in U.S. policy and a substantial investment for DOD. However, DOD has not fully implemented a management process that synchronizes European missile defense acquisition activities and ensures transparency and accountability. Without key management and oversight processes, there is a limited basis for oversight, and there is a risk that key components will start production before demonstrating system performance. In the past, similar deficiencies in missile defense acquisition oversight have led to rework, cost increases, delays, and doubts about delivered capabilities. Ground-based Midcourse Defense (GMD): While the GMD system---which is primarily designed to engage longer-range targets in the midcourse range of flight--has demonstrated a limited capability, DOD has not yet determined the system's full capabilities and limitations. In January and December 2010, GMD experienced two flight test failures. In addition, GMD is just beginning to take actions necessary to sustain the capability through 2032. Targets Acquisition, Testing, and Performance: MDA made a targets acquisition decision in 2010 in response to a target failure. This decision was not consistent with its 2009 acquisition plan which envisioned competitive contract awards that would reduce reliance on its prime contractor. The cost of this action remains unknown. Also, as in previous years, failures and delays in testing have continued to delay validation of models and simulations used to assess BMDS performance.

What GAO Recommends

GAO makes 10 recommendations for MDA to strengthen its resource, schedule and test baselines, facilitate baseline reviews, and further improve transparency and accountability. GAO is also making a recommendation to improve MDA's ability to carry out its test plan. In response, DOD fully concurred with 7 recommendations. It partially concurred with 3, contending that its current actions are sufficient and that the test recommendation is also not affordable. GAO continues to believe that additional action is needed.