In April 1996, DOD changed the purpose of the NMD program from a technology readiness program to a deployment readiness program and designated NMD as a major defense acquisition program. Under the technology readiness program, the Ballistic Missile Defense Organization (BMDO) developed and matured technologies for possible use in an NMD system. 1). NMD Program Not Sufficiently Defined for Reliable Cost Estimate at the Time 3+3 Program Was Established

The NMD cost estimate has evolved as the system requirements and program plans have become better defined. DOD officials acknowledged in testimony that additional funds were needed to reduce program risks. Congressional Funding Increases

Because of concerns about the adequacy of funding to support the deployment readiness program and based on testimony by senior defense officials, Congress appropriated significantly more funds for the NMD program in fiscal years 1996 through 1998 than were requested in the President’s budgets for those years. According to NMD officials, these funding increases have been or are being used for risk reduction activities and to execute the 3+3 program. Future Funding Requirements Depend on Variables Yet to Be Chosen

Future NMD funding requirements depend in large part on how the system is designed and when and where it will be deployed. To provide a basis for estimating near-term funding requirements and to help determine how these differences will impact future funding needs, the program office prepared four different life-cycle cost estimates, based on two locations—one at Grand Forks, North Dakota, and the other in Alaska—and two capability levels—one available in fiscal year 2003 and the other in fiscal year 2006. Schedule and Technical Risk Remain High

In December 1997, we reported that DOD faces significant challenges in the NMD program because of high schedule and technical risk. Since our December report, DOD has revised program plans to mitigate schedule and technical risk to some extent. DOD officials told us, however, that overall schedule and technical risk associated with a 2003 deployment will remain high, despite these actions. In February 1998, a panel of former senior military, civilian, and industry leaders confirmed our assessment that the 3+3 program contained high schedule risk. In the judgment of the study panel, successful execution of the 3+3 program on the planned schedule is highly unlikely. As a result of added funding, BMDO has also increased the number of tests planned. The limitations cited in the report include (1) the limited amount of testing planned prior to the deployment readiness review; (2) the fact that the booster to be used in the ground-based interceptor will not be tested prior to the readiness review; (3) the interface between the system’s battle management, command, communications, and control element and the national command authority will not be tested before the decision review; (4) the system’s performance against multiple targets will not be tested; and (5) models and simulations used to support the review will have minimal validation by real flight data. Conclusions

The May 1997 Quadrennial Defense Review recommended significant increases in NMD funding. Increased funds provided by Congress in fiscal years 1996 through 1998 have enabled BMDO to conduct risk reduction activities, such as purchasing back-up hardware and preserving competition for the development of the exoatmospheric kill vehicle.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the National Missile Defense (NMD) program funding requirements and schedule and technical risks, focusing on: (1) why the Department of Defense (DOD) significantly increased the program's near-term funding in its May 1997 Quadrennial Defense Review; (2) how funding increases authorized and appropriated by Congress for the program in fiscal years 1996 through 1998 have been used or are planned to be used; and (3) DOD's planned level of future funding for the NMD program and planned uses for those funds.

What GAO Found

GAO noted that: (1) DOD significantly increased its NMD funding requirements in May 1997 because more rigorous cost estimates, based on more detailed program requirements and plans, showed that the program could not be accomplished within previously projected funding levels; (2) the 3+3 NMD program was not sufficiently defined for detailed cost estimating when it initially changed from a technology readiness program to a deployment readiness program, and was designated a major defense acquisition program in April 1996; (3) the May 1997 Quadrennial Defense Review included the first program estimate based on detailed system descriptions, requirements, and plans; (4) funding increases provided by Congress in fiscal years 1996 through 1998 were used for risk reduction activities, such as: (a) retaining competition in the development of the exoatmospheric kill vehicle, considered one of the most technically challenging components of the system; (b) increasing the number of planned tests; and (c) purchasing additional spare hardware; (5) Congress increased funding for NMD because of concerns about the adequacy of funding to support the program; (6) the Ballistic Missile Defense Organization (BMDO) Director acknowledged in an April 1996 testimony that an additional $350 million a year could be used to reduce program risks; (7) future NMD funding requirements will depend in large part on the system design and architecture, and when and where it is deployed; (8) details on the specific system and location are not expected for some time; (9) program life-cycle costs ranged from $18.4 billion by fiscal year 2003 to $28.3 billion by fiscal year 2006; (10) since GAO's December 1997 report, DOD has increased funding and revised NMD program plans to mitigate schedule and technical risks; (11) however, program officials told GAO that even with the mitigation actions resulting from the increased funding, schedule and technical risks associated with a 2003 deployment remain high; (12) according to a February 1998 report of a panel of former senior military, government, and industry officials, successful execution of the 3+3 program on the planned schedule is highly unlikely; and (13) this panel concluded that the program would benefit from the earliest possible restructuring to contain the risk.