While some concurrency is  understandable, committing to product development before  requirements are understood and technologies are mature or  committing to production and fielding before development is complete  is a high-risk strategy that often results in performance shortfalls,  unexpected cost increases, schedule delays, and test problems. MDA has been challenged to meet some of its goals for the European  Phased Adaptive Approach (EPAA). MDA  reported baselines for several BMDS programs to Congress for the  first time in its June 2010 BMDS Accountability Report (BAR). Since  2011, although progress has been made to improve the reporting, we  have found issues affecting the usefulness of MDA’s acquisition  baselines for oversight due to (1) a lack of clarity, consistency, and  completeness; (2) a lack of high-quality supporting cost estimates and  schedules; and (3) instability in the content of the baselines. MDA Made Progress on Testing and Further Improved Some Management Practices

This year we found that MDA gained important knowledge about the  BMDS system-level performance and individual elements by successfully  executing several flight tests. We also found that MDA further improved  some of its acquisition practices for managing the European Phased  Adaptive Approach (EPAA) and improved the clarity of its resource and  schedule baselines. In addition, the Aegis BMD SM-3 Block IB and GMD  programs successfully conducted developmental flight tests in 2013 that  demonstrated key capabilities and modifications made to resolve prior  issues. In its 2013 BAR, MDA  continued to incorporate useful changes it made last year, and took some  additional actions to improve the completeness and clarity of the BAR  baselines by:  identifying the date of the initial baseline and, if applicable, the date  when the initial baseline was most recently revised; explaining most of the significant cost and schedule changes from the  current baseline estimates against both the estimates reported in the  prior year’s BAR and the latest initial baseline; and making the baselines easier to read by removing cluttered formatting  such as strikethroughs and highlights that made some of the events  listed in past BARs unreadable. Challenge: Implementing Higher Risk Acquisition Programs

While MDA has gained important insights through testing and taken some  steps to improve management and increase transparency, it still faces  challenges stemming from higher-risk acquisition strategies that overlap  production activities with development activities. Our  April 2014 report found that Aegis BMD SM-3 Block IB and GMD, which  have already produced some of their assets before completing testing,  discovered issues during testing that could affect or have affected  production. DOD partially concurred with the  recommendation on the Aegis SM-3 Block IB, stating that MDA will verify  the efficacy of any modifications by testing and that the full production  decision will be vetted through the DOD process. DOD did not agree with  the recommendation on GMD, stating that the decision to flight test the  interceptor will be made by the Director, MDA, based on the judgment of  other stakeholders. The agency also combined, delayed, and  deleted some tests, and eliminated test objectives in others. These  changes reduced the knowledge expected to be available to understand  the capabilities and limitations of the BMDS. Previously GAO has made recommendations to improve MDA’s ability to  gather expected knowledge from testing. Challenge: Managing Development and Deployment of U.S. Missile Defense in Europe

In March 2014, we found that while MDA made further improvements to  the way it manages EPAA, it has yet to develop or implement a complete   Specifically, MDA  management strategy for synchronizing these efforts.has not established an integrated schedule and has yet to completely  define EPAA requirements. As a result, it remains unclear how different  EPAA efforts are aligned together and what constitutes success in  delivering EPAA capabilities. Although DOD  generally concurred with these recommendations, it has not yet fully  implemented them. Additionally, issues with the  content and presentation of the schedule baselines continue to limit the  usefulness of the information for decision makers. For example,
MDA has not fully implemented its cost estimating handbook. As a result,  we did not make any new recommendations regarding cost this year. In April 2014, we also found that assessing MDA’s progress in achieving  its schedule goals is difficult because MDA’s 2013 schedule baselines are  not presented in a way that allows decision makers to understand or  easily monitor progress.identify numerous events, but provide little information on the events and  why they are important.
Why GAO Did This Study

In order to meet its mission, MDA is developing a diverse group of BMDS components including (1) land-, sea-, and space-based sensors; (2) interceptors; and (3) a battle management system. These systems can be integrated in different ways to provide protection in various regions of the world. Since its inception in 2002, MDA has been given flexibility in executing the development and fielding of the ballistic missile defense system. This statement addresses recent MDA progress and the challenges it faces with its acquisition management. It is based on GAO's March and April 2014 reports and prior reports on missile defense.

What GAO Found

The Department of Defense's (DOD) Missile Defense Agency (MDA) made progress in its goals to improve acquisition management, and accountability and transparency. The agency gained important knowledge for its Ballistic Missile Defense System (BMDS) by successfully conducting several important tests, including the first missile defense system-level operational flight test. Additionally, key programs successfully conducted developmental flight tests that demonstrated key capabilities and modifications made to resolve prior issues. MDA also made some improvements to transparency and accountability. For example, MDA improved the management of its acquisition-related efforts to deploy a missile defense system in Europe and MDA continued to improve the clarity of its resource and schedule baselines, which are reported to Congress for oversight.
Although some progress has been made, MDA acquisitions are still high risk, due to inherent technical and integration challenges, tight timeframes, strategies that overlap development and production activities, and incomplete management tools. More specifically:
MDA faces challenges stemming from higher-risk acquisition strategies that overlap production activities with development activities. While some concurrency is understandable, committing to production and fielding before development is complete often results in performance shortfalls, unexpected cost increases, schedule delays, and test problems. GAO found that the Aegis Ballistic Missile Defense SM-3 Block IB and Ground-based Midcourse Defense programs, which have already produced some of their assets before completing testing, discovered issues during testing that have affected or continue to affect production.
Testing continues to fall short of goals. For example, the first ever system-level operational flight test failed to demonstrate true integration. MDA also combined, delayed, and deleted some tests, and eliminated test objectives in other tests. These challenges reduced the knowledge they had planned to obtain in order to understand the capabilities and limitations of the BMDS.
MDA has not yet fully developed or implemented a complete management strategy for synchronizing its efforts to deploy missile defense in Europe. As a result, it remains unclear how different European Phased Adaptive Approach (EPAA) efforts are aligned together and what constitutes success in delivering capabilities in Europe.
Issues with the content and presentation of resource and schedule baselines continue to limit their usefulness as management tools. For the fourth year, GAO has found that MDA's cost estimates are unreliable for some BMDS elements and do not include certain costs for military services which may significantly understate total costs. Recently, Congress took steps to require that improvements be made to MDA's cost estimates, so GAO did not make any new cost recommendations. MDA's schedule baselines continue to be presented in a way that makes it difficult to assess progress. For instance, MDA's schedule baselines identify numerous events, but provide little information on the events and why they are important.

What GAO Recommends

In April 2014, GAO recommended that MDA verify any changes needed for the SM-3 Block IB missile through flight testing before approving full production; retest the fielded GMD interceptor to demonstrate performance and the effectiveness of changes; and take actions to improve the clarity of its schedule baselines. DOD partially concurred with the recommendation on the SM-3, stating that MDA will verify the efficacy of any modifications by testing and that the production decision will be vetted through the DOD process. DOD did not agree with the recommendation on GMD, stating that the decision to flight test the interceptor will be made by the Director, MDA, based on the judgment of other stakeholders. GAO previously made recommendations on EPAA and testing. DOD generally concurred with them. GAO continues to believe all recommendations are valid.