MDA Experienced Mixed Progress in Development and Delivery Efforts

MDA experienced mixed results in executing its fiscal year 2011  development goals and BMDS tests. For the first time in 5 years, we are  able to report that all of the targets used in fiscal year 2011 test events  were delivered as planned and performed as expected. In addition, the  Aegis BMD program’s SM-3 Block IA missile was able to intercept an  intermediate-range target for the first time. Also, the THAAD program  successfully conducted its first operational flight test in October 2011. However, none of the programs we assessed were able to fully  accomplish their asset delivery and capability goals for the year. These as well  as a test anomaly and delays disrupted MDA’s flight test plan and the  acquisition strategies of several components. Overall, flight test failures  and an anomaly forced MDA to suspend or slow production of three out of  four interceptors currently being manufactured. While MDA has  incorporated some acquisition best practices in its newer programs, its  acquisition strategies still include high or elevated levels of concurrency  that result in increased acquisition risk—including performance shortfalls,  cost growth, and schedule delays—for these newer programs. Concurrency is broadly defined as overlap between technology  development and product development or between product development  and production of a system. In recent years, MDA has taken positive steps to incorporate some  acquisition best practices, such as increasing competition and partnering  with laboratories to build prototypes. For example, MDA took actions in  fiscal year 2011 to reduce acquisition risks and prevent future cost growth  in its Aegis BMD SM-3 Block IIA program. In our April 2012 report, we made two recommendations to strengthen  MDA’s longer-term acquisition prospects. We recommended that the  Secretary of Defense direct the Office of Acquisition Technology and  Logistics to (1) review all of MDA’s acquisitions for concurrency and  determine whether the proper balance has been struck between the  planned deployment dates and the concurrency risks taken to achieve  those dates and (2) review and report to the Secretary of Defense the  extent to which the directed capability delivery dates announced by the  President in 2009 are contributing to concurrency in missile defense  acquisitions and recommend schedule adjustments where significant  benefits can be obtained by reducing concurrency. DOD agreed with four of the five missile  defense element-specific recommendations and partially agreed with our  recommendation to report to the Office of the Secretary of Defense and to  Congress the root cause of the SM-3 Block IB developmental flight test  failure, path forward for future development, and the plans to bridge  production from the SM-3 Block IA to the SM-3 Block IB before  committing to additional purchases of the SM-3 Block IB. Parts Quality Issues Have Also Had a Significant Effect on Performance, Cost, and Schedule

MDA parts quality issues have seriously impeded the development of the  BMDS in recent years. For example, during a THAAD flight test in fiscal  year 2010, the air-launched target failed to initiate after it was dropped  from the aircraft and fell into the ocean. The test was aborted and a  subsequent failure review board investigation identified as the immediate  cause of the failure the rigging of cables to the missile in the aircraft and  shortcomings in internal processes at the contractor as the underlying  cause. This failure led to a delay of the planned test, restructuring of other  planned tests, and hundreds of millions of dollars being spent to develop  and acquire new medium-range air-launched targets. present examples of the parts quality issues we found at MDA below, the  June 2011 report also describes the parts quality issues we found with  other space agencies. This new clause shows  some leadership by MDA to hold contractors accountable for parts  quality. Our June 2011 report recommended greater coordination between  government organizations responsible for major space and missile  defense programs on parts quality issues and periodic reporting to  Congress. The parts quality issues will require sustained attention from both the  executive and legislative branches to improve the quality of the systems  in development, particularly because there are significant barriers to  addressing quality problems, such as an increase in counterfeit electronic  parts, a declining government share of the overall electronic parts market,  and workforce gaps within the aerospace sector.
Why GAO Did This Study

In order to meet its mission, MDA is developing a highly complex system of systemsground-, sea-, and space-based sensors, interceptors, and battle management. Since its initiation in 2002, MDA has been given a significant amount of flexibility in executing the development and fielding of the ballistic missile defense system. This statement addresses progress MDA made in the past year, the challenges it still faces with concurrent acquisitions and how it is addressing parts quality issues. It is based on GAOs April 2012 report on missile defense and its June 2011 report on space and missile defense parts quality problems.

What GAO Found

In fiscal year 2011, the Missile Defense Agency (MDA) experienced mixed results in executing its fiscal year 2011 development goals and tests. For the first time in 5 years, GAO was able to report that the agency delivered all of the targets used in fiscal year 2011 test events with the targets performing as expected. In addition, the Aegis Ballistic Missile Defense programs Standard Missile-3 Block IA missile was able to intercept an intermediate-range target for the first time and the Terminal High Altitude Area Defense program successfully conducted its first operational flight test. However, none of the programs GAO assessed were able to fully accomplish their asset delivery and capability goals for the year. Flight test failures, a test anomaly, and delays disrupted MDAs flight test plan and the acquisition strategies of several components. Flight test failures forced MDA to suspend or slow production of three out of four interceptors currently being manufactured. Some of the difficulties in MDAs testing and production of assets can be attributed to its highly concurrent acquisition approach.
Concurrency is broadly defined as the overlap between technology development and product development or between product development and production. High levels of concurrency were present in MDAs initial efforts and are present in current efforts. For example, MDAs flight test failures of a new variant of the Ground-based Midcourse Defense programs interceptors while production was underway delayed delivery to the warfighter, increased costs, and will require retrofit of fielded equipment. Flight test costs to confirm its capability has increased from $236 million to about $1 billion. MDA has taken positive steps to incorporate some acquisition best practices, such as increasing competition and partnering with laboratories to build prototypes. For example, MDA took actions in fiscal year 2011 to reduce acquisition risks and prevent future cost growth in its Aegis SM-3 Block IIA program. Nevertheless, as long as newer programs adopt acquisition approaches with elevated levels of concurrency, there is still considerable risk of future performance shortfalls that will require retrofits, cost overruns, and schedule delays.
MDA is also taking the initiative to address parts quality issues through various means, including internal policies, collaborative initiatives with other agencies, and contracting strategies to hold its contractors more accountable. Quality issues have seriously impeded to the development of the missile defenses in recent years. For example, during a fiscal year 2010 Terminal High Altitude Area Defense flight test, the air-launched target failed to initiate after it was dropped from the aircraft and fell into the ocean. A failure review board identified shortcomings in internal processes at the contractor to be the cause of the failure. This failure led to a delay of the planned test, restructuring of other planned tests, and hundreds of millions of dollars being spent to develop and acquire new medium-range air-launched targets. Parts quality issues will require sustained attention from both the executive and legislative branches. MDA is exhibiting some leadership, but there are significant barriers to addressing quality problems, such as the increase in counterfeit electronic parts, a declining government share of the overall electronic parts market, and workforce gaps within the aerospace sector.

What GAO Recommends

GAO makes no new recommendations in this statement. In the April 2012 report, GAO made recommendations to strengthen MDAs longer-term acquisition prospects including a review of MDAs acquisitions for concurrency to determine whether the proper balance has been struck between planned deployment dates and concurrency risks to achieve those dates. The report includes additional recommendations on how individual program elements can reduce concurrency. DOD agreed with six of the seven recommendations and partially agreed with one.
DOD generally concurred with the recommendations in the June 2011 report for greater coordination between government organizations responsible for major space and missile defense programs on parts quality issues and periodic reporting to Congress.