DOD programs have a materiel solution analysis phase during which DOD analyzes and  recommends materiel solutions for the identified need; a technology development phase, during which DOD reduces  technology risk and determines the appropriate set of technologies to  be integrated into the full system; a product development phase, formally known as engineering and  manufacturing development, which represents program initiation, and  during which the program focuses on integrating the system design,  developing system capability, and demonstrating the manufacturing  processes; a production and deployment phase for the purpose of achieving an  operational capability that satisfies the mission need; and an operations and support phase, where DOD works to sustain the  system in the most cost-effective manner. Congress and DOD have taken steps to address concerns over MDA’s  acquisition management strategy, accountability, and oversight. We have reported that without AOAs, programs may  not select the best solution for the warfighter, are at risk for cost  increases, and can face schedule delays. MDA could look to that office for  support should it decide to undertake more robust analyses of  alternatives. While MDA has conducted some analyses that consider alternatives, it  has not conducted robust AOAs for its new programs—the Aegis BMD  SM-3 Block IIB and PTSS programs. Challenge: Expand on Steps Already Taken to Place Investments on a Sound Footing

MDA gained important knowledge through its test program and took some  positive steps to reduce acquisition risks for two of its programs. In addition, we reported in April 2012 that risk reduction flight  tests are conducted the first time a system is tested in order to confirm  that it works before adding other test objectives and that MDA’s flight test  program had been disrupted by the lack of those risk reduction flight  tests. By delaying the start of product development, the  program increased the amount of technical knowledge it plans to  achieve prior to committing to development. Using  these new targets puts this major test at risk of not being able to obtain  key information should the targets not perform as expected. Challenge: Ensure Program Baselines Support Oversight

While MDA made substantial improvements to the clarity of its reported  cost and schedule baselines in fiscal year 2012, the information  underlying these baselines is not yet sufficiently reliable. Until MDA’s baselines are  based on reliable information and are comprehensive, they will not be  useful for decision makers to understand progress. By  not including military service costs, the life cycle costs for some MDA  programs could be significantly understated. However, MDA has not yet had time to fully  address our recommendations. MDA still needs to deliver some of  the capability planned for the first phase of the U.S. missile defense in  Europe and is grappling with delays to some systems and/or capabilities  planned in each of the next three major deployments. MDA also is  challenged by the need to develop the tools, the models and simulations,  to understand the capabilities and limitations of the individual systems  before they are deployed. MDA officials stated they are  working to resolve this issue. MDA continues to have difficulty credibly assessing operational  performance using models and simulations. MDA declared the first phase  of U.S. missile defense in Europe operational in December 2011, but did  so without the benefit of all planned supporting data because of problems  with a key modeling and simulation event. Second, our 2012 recommendation to make adjustments to acquisition  schedules to reduce concurrency could help reduce the acquisition risks  in the U.S. missile defense in Europe. Recommendations for Executive Action

In order to strengthen investment decisions, place the chosen  investments on a sound acquisition footing, provide a better means of  tracking investment progress, and improve the management and  transparency of the U.S. missile defense approach in Europe, we  recommend that the Secretary of Defense direct MDA’s new Director to  take the following four actions:  1. Include in its resource baseline cost estimates all life cycle costs,  specifically the operations and support costs, from the military  services in order to provide decision makers with the full costs of  ballistic missile defense systems. DOD concurred with two of our four recommendations and partially  concurred with the remaining two. We also  continue to believe that including these costs in that report will aid both  departmental and congressional decision makers as they make difficult  choices of where to invest limited resources. To assess the progress made as well as any remaining challenges MDA  faces in establishing program baselines that support oversight, we  examined MDA’s reported baselines in the 2010, 2011, and 2012 BMDS  Accountability Reports (BAR). We also interviewed officials with U.S.  Strategic Command’s Joint Functional Component Command for  Integrated Missile Defense and U.S. Northern Command as well as MDA  program offices and MDA functional directorates about MDA’s progress in  developing and deploying ballistic missile defense systems needed for  the defense of Europe and the United States. Although MDA is not required to do an AOA for its programs  because of its acquisition flexibilities, we have previously reported that an  AOA can be a key step to ensure that new programs have a sound  acquisition basis.
Why GAO Did This Study

Since 2002 MDA has spent approximately $90 billion to provide protection from enemy ballistic missiles by developing battle management systems, sensors that identify incoming threats, and missiles to intercept them. MDA plans to spend about $8 billion per year through 2017. For nearly a decade, we have reported on MDA's progress and challenges in developing and fielding the Ballistic Missile Defense System.
GAO is mandated by law to assess the extent to which MDA has achieved its acquisition goals and objectives, as reported through acquisition baselines. This report examines the agency's progress and remaining challenges in (1) selecting new programs in which to invest; (2) putting programs on a sound development path; (3) establishing baselines that support oversight; and (4) developing and deploying U.S. missile defense in Europe for defense of Europe and the United States. To do this, GAO examined MDA's acquisition reports, analyzed baselines reported over several years to discern progress, and interviewed a wide range of DOD and MDA officials.

What GAO Found

Although the Missile Defense Agency (MDA) has made some progress, the new MDA Director faces challenges developing and deploying new systems to achieve increasingly integrated capabilities as well as supporting and upgrading deployed systems while providing decision makers in the Department of Defense (DOD) and Congress with key oversight information in an era of fiscal constraints.
Challenge: Improve Investment Decisions
Determining the most promising and cost effective new missile defense systems to buy--considering technical feasibility and cost--remains a challenge for MDA. While MDA has conducted some analyses that consider alternatives in selecting which acquisitions to pursue, it has not conducted robust analyses of alternatives for two of its new programs. Because of its acquisition flexibilities, MDA is not required to do so. Robust analyses, however, could be particularly useful to DOD and congressional decision makers as they decide how to manage the portfolio of missile defense acquisitions. GAO has reported in the past that without analyses of alternatives, programs may not select the best solution for the warfighter, are at risk for cost increases, and can face schedule delays.
Challenge: Expand on Steps Taken to Place Investments on a Sound Footing
In the past year, MDA gained important knowledge by successfully conducting several important tests, including a test to show how well its systems will operate together. MDA has also taken steps to lower the acquisition risks of two newer programs by adding more development time. However, development issues discovered after three programs prematurely committed to production continue to disrupt both interceptor production and flight test schedules. In addition, two other programs plan to make premature commitments to production before testing confirms their designs work as intended. MDA is planning to fly targets for the first time in its first operational test using several systems, adding risk that key information may not be obtained in this major test.
Challenge: Ensure Program Baselines Support Oversight
While MDA has made substantial improvements to the clarity of its cost and schedule baselines since first reporting them in 2010, they are still not useful for decision makers to gauge progress. For example, the information they include is not sufficiently comprehensive because they do not include operation and support costs from the military services. By not including these costs, the life cycle costs for some MDA programs could be significantly understated.
Challenge: Developing and Deploying U.S. Missile Defense in Europe
DOD declared the first major deployment of U.S. missile defense in Europe operational in December 2011, but MDA is faced with resolving some issues to provide the full capability and is facing delays to some systems planned in each of the next three major deployments. MDA has also struggled for years to develop the tools--the models and simulations--to credibly assess operational performance of systems before they are deployed. It recently committed to a new approach to resolve this problem.

What GAO Recommends

GAO makes four recommendations to DOD to ensure MDA (1) fully assesses alternatives before selecting investments, (2) takes steps to reduce the risk that unproven target missiles can disrupt key tests, (3) reports full program costs, and (4) stabilizes acquisition baselines. DOD concurred with two recommendations and partially concurred with two, stating the decision to perform target risk reduction flight tests should be weighed against other programmatic factors and that its current forum for reporting MDA program costs should not include non-MDA funding. GAO continues to believe the recommendations are valid as discussed in this report.