and ranges. Specifically, MDA’s flight test program has been restructured to reflect  target deficiencies and availability. 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. Several Factors Contribute to Problems with Targets

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. It is  also unclear whether MDA evaluated all alternatives before committing to  a lead systems integrator and the FTF. MDA Is Undertaking A Series of Initiatives To Address Problems with Targets Development, but Challenges Remain

MDA recently began implementing a series of management initiatives to  improve the targets program, such as establishing technical, cost, and  schedule baselines for all missions in the 2-year integrated master test  plan. The new program director and staff have also begun drafting long- term target capability requirements, and developing and implementing a  new cost model for targets. In addition, plans have been made to improve  risk management by (1) considering program-wide issues, and (2)  including programmatic risks, cost and schedule in the risk assessments. Overall, the success of the flight test program depends on the success of  FTF. The difficulties with executing  FTF are due, at least in part, to the fact that a sound business case was not  established before proceeding with the program and the attendant  contracting strategy. Because of the importance of an ample supply of  reliable targets to the success of the Ballistic Missile Defense System, we  continue to believe that the Secretary of Defense needs to ensure that  MDA takes a fresh look at alternatives when it establishes a revised  acquisition strategy and business case. We focused our review on the following three objectives: (1) Is the  Missile Defense Agency (MDA) meeting the need for reliable and  timely targets for the flight test program? (3) What are the prospects for  resolution of any problems identified? Recurring Target Unit Costs Growing

	Factors Affecting Target Cost Growth

increasing complexity of targets (including existing targets) late changes to target requirements on contract schedule delays shift to Lead Systems Integrator – higher labor rates,  additional oversight of subcontractors  Cost increases associated with recent target failures and  anomalies are only partially estimated.~$87 M cost increase associated with FTG-03 failure ~$80 M associated with target availability and affordability  Unknown cost implications for Radar Data Collection  “anomalies”

		Cost of Flexible Target Family Unclear; Cost

MDA has estimated some cost for FTF, but total  nonrecurring development remains unclear because some  cost figures include the purchase of test assets. Flight test costs. Objective 2: Causes of Problems

We could not identify an original approved FTF acquisition strategy. THAAD flight test program extended. GMD flight test objectives delayed. We also analyzed  program directives and acquisition policies and procedures.
Why GAO Did This Study

The Missile Defense Agency (MDA) is likely to spend $460 million annually on missiles used as targets for flight tests. Executing these tests depends on the quality and availability of targets. Congress asked GAO to assess (1) if MDA is providing reliable targets; (2) the causes of any deficiencies; and (3) if resolutions exist for any problems identified. To do this, GAO analyzed acquisition policies and procedures; flight test data; and budget, program execution, and acquisition materials; and interviewed MDA and DOD officials.

What GAO Found

MDA has difficulty in both supplying targets for missile defense testing as well as in developing a new family of short, medium and long-range targets. The number of target failures and anomalies (failing to achieve one or more non-critical mission objective or partially achieving a critical mission objective) during flight tests has increased since 2006, contributing to delays in flight tests and modification of flight test objectives. In addition, the average unit cost of targets has grown significantly, from $4.5 million to $8.5 million from 2002 to 2006 to current estimates of $32 million 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. MDA's difficulty in supplying existing targets is driven by diminishing sources for components, unanticipated costs, and problems incorporating requirements into contracts and establishing program baselines. MDA has also encountered problems developing the new family of targets, an effort currently estimated to cost at least $1 billion. The problems are due, at least in part, to the fact that a sound business case was not established before proceeding with the program and the attendant contracting strategy. The decision to pursue this new family of targets was made without a formal cost analysis and it is unclear whether MDA evaluated all alternatives before making this commitment. GAO also could not identify an original approved acquisition strategy for the new family of targets. Consequently, developmental problems have arisen in the new family of targets, leading to cost growth, delayed flight tests, and deferral of several key capabilities. MDA is taking a series of actions to address these problems, such as: (1) establishing technical, cost, and schedule baselines for all missions in the 2-year integrated master test plan; (2) drafting long-term target capability requirements; (3) developing a new cost model for targets; (4) making plans to improve risk management by considering program-wide issues, and including programmatic risks, cost and schedule in risk assessments. However, the prospects for resolution of the target acquisition problems are unclear and the overall success of the Ballistic Missile Defense System flight test program depends on the success of a new family of targets under development.