MDA Made Progress during Fiscal Year 2005, but Some Activities Were Not Completed as Planned

MDA made progress during fiscal year 2005 in carrying out the fiscal year  plans of work established by the seven BMDS elements, but it was not able  to field all planned components or conduct all scheduled tests. Collectively,  prime contractors for the various elements overran their budgets by about  $458 million, or about 14 percent, with GMD accounting for approximately  80 percent of the collective overrun. However, over the course of the block, MDA  progressively reduced the number of components that it expected to field  and increased its cost goal, primarily to recognize the cost of sustaining  fielded assets. Officials  primarily attribute the increased cost to MDA’s sustainment of fielded  assets. Two of these tests were initiated. Time pressures caused MDA to stray from a  knowledge-based acquisition strategy, allowing the GMD program to  condense its acquisition cycle at the expense of cost, quantity, and  performance goals. For example, MDA has the flexibility to make trade-offs between BMDS  elements. That is not to say that DOD and Congress are  not kept informed of MDA’s progress or changes, but that the MDA  Director, by statute, has the discretion to determine which variations are  significant enough to be reported. Corrective Actions May Not Alleviate Pressures Associated with Schedule- Driven Block Approach

Although MDA is taking many actions to address quality assurance  problems, it has not taken any steps to ensure that all elements follow a  knowledge-based acquisition strategy or to ensure that the time is  available to follow such a strategy. To date, around $90 billion has been spent, and over the next   6 years, DOD expects that it will need about $58 billion more to enhance  the BMDS. Beyond that, more funding will be required if DOD is to reach  its ultimate goal of developing a system capable of countering ballistic  missile launches from any range during all phases of flight. Instead, MDA fielded assets before their capability was known. While  recognizing this approach did successfully accelerate fielding, to the  extent it continues to feature concurrency as a means for acceleration, it  may not be affordable for the considerable amount of capability that is yet  to be developed and fielded. It is possible for MDA to return to a knowledge-based approach to  development while still fielding capability in blocks. MDA’s experience during Block 2004 shows  that it may not always be possible to deliver a capability in a 2-year time  frame. Appendix I: Comments from the Department of Defense

Appendix II: Block 2004 Element Assessments

The Missile Defense Agency (MDA) developed and fielded in Block 2004  three Ballistic Missile Defense System (BMDS) elements for operational  use in the event of an emergency. Ground-Based Midcourse Defense

The GMD element is a missile defense system being developed to protect  the United States against ICBM attacks launched from Northeast Asia and  the Middle East. The first flight test (FT-1) was successfully  conducted in December 2005, 1 month later than planned. Quality control weaknesses also raise concerns about the performance of  GMD interceptors. Appendix V: Integrated Management Plan

Event 0 – Block Capability Alternative    Block planning process completed    Long lead targets, tests and exercises identified    Affordability analysis completed    Acquisition strategy approved    Preliminary block plan approved  Event 1 – Preliminary block definition    Block performance assessments updated    Detailed cost estimates/estimates at completions (EAC) available    Costs/benefit analysis updated    Risks assessed and mitigation programs established    Preliminary operational concept and operations architecture drafted    Preliminary designs for all elements/components/targets completed    Required funding identified for development   Integrated master schedule created    Preliminary block definition approved  Event 2 – Final block definition    Performance assessments updated    Detailed cost estimates/EACs available    Risks assessed and mitigation programs updated    Military utility characterized and operational concept refined    Preliminary integration test plan available    Final design for all elements/components/targets completed    Funding available for development    Block activation plan available    Block definition updated  Event 3 – First complete development article    Detailed cost estimates/EACs available    Operational concept defined and operations architecture available    Test range and support planning completed    Military utility assessment completed    First development article/targets built and initial tests completed  Event 4 – Element/Component development complete    Detailed cost estimates/EACs available    Block integration test planning completed    Element/component/targets development and testing complete    Support systems defined    Training systems defined    Fielding readiness assessed (initial defensive operations)

Appendix VI: Scope and Methodology

To examine the progress MDA made in fiscal year 2005 toward its Block  2004 goals, we examined the efforts of individual programs that are  developing BMDS elements under the management of MDA, such as the  GMD program.
Why GAO Did This Study

The Department of Defense (DOD) has spent nearly $90 billion since 1985 to develop a Ballistic Missile Defense System (BMDS). In the next 6 years, the Missile Defense Agency (MDA), the developer, plans to invest about $58 billion more. MDA's overall goal is to produce a system that is capable of defeating enemy missiles launched from any range during any phase of their flight. MDA's approach is to field new capabilities in 2-year blocks. The first--Block 2004--was to provide some protection by December 2005 against attacks out of North Korea and the Middle East. Congress requires GAO to assess MDA's progress annually. This year's report assesses (1) MDA's progress during fiscal year 2005 and (2) whether capabilities fielded under Block 2004 met goals. To the extent goals were not met, GAO identifies reasons for shortfalls and discusses corrective actions that should be taken.

What GAO Found

MDA made good progress during fiscal year 2005 in the development and fielding of two of the seven elements reviewed. Most of the others encountered problems that slowed progress. Meanwhile, contractors for the seven elements exceeded their fiscal year budget by about $458 million, or about 14 percent, most of which was attributable to cost overruns in developing the Ground-based Midcourse Defense (GMD) element. Accelerating Block 2004 allowed MDA to successfully field missile defense assets faster than planned. But, MDA delivered fewer quantities than planned and exceeded the cost goal of $6.7 billion by about $1 billion. The increased cost is primarily the added cost of sustaining fielded assets. However, the increase would have been greater if some development and other activities had not been deferred into Block 2006. Also, MDA has been unable to verify actual system performance because of flight test delays. Time pressures caused MDA to stray from a knowledge-based acquisition strategy. Key aspects of product knowledge, such as technology maturity, are proven in a knowledge-based strategy before committing to more development. MDA followed a knowledge-based strategy with elements not being fielded, such as Airborne Laser and Kinetic Energy Interceptor. But it allowed the GMD program to concurrently mature technology, complete design activities, and produce and field assets before end-to-end testing of the system--all at the expense of cost, quantity, and performance goals. For example, the performance of some GMD interceptors is questionable because the program was inattentive to quality assurance. If the block approach continues to feature concurrency as a means of acceleration, MDA's approach may not be affordable for the considerable amount of capability that is yet to be developed and fielded. MDA has unusual flexibility to modify its strategies and goals, make trade-offs, and report on its progress. For example, MDA's Director may determine when cost variations are significant enough to report to Congress. MDA is taking actions to strengthen quality control. These actions are notable, but they do not address the schedule-induced pressures of fielding or enhancing a capability in a 2-year time frame or the need to fully implement a knowledge-based acquisition approach.